James Kraft Founded Kraft Food Company

Background

James Kraft founded Kraft Food Company in 1903 where he sold few varieties of cheese wholesale in Chicago. The company grew and expanded to 30 different varieties of cheese packer under the names of Kraft and Elhorn. By then, Kraft was granted a patent in 1916 for what was to be known as processed cheese. They began to mass produce their products like Gouda and blue cheese and began to export products to Canada and Europe in 1920, latter on establishes in England and Germany.

James Kraft have highlighted on one of their success that commitment is very vital in developing new products and using innovative advertising methods. They have used different channels and during at that time it was concentrated more in Chicago. Due to their extensive scale of media channels in advertisement they headlined notable show business personalities which boosted their company’s image. It is evident that Kraft’s commitment to innovation was demonstrated through the variety of products that were introduce items like Velveeta, Miracle Whip salad dressing, Kraft macaroni and cheese dinner, Parkay Margarine, sliced processed cheese and Cheez Whiz.

Through the years Kraft became the largest food company in North America after they merge with General Food and was Knows as Kraft General Food in 1989. With its expansion in December 2000 internationally it had establish in the market its Kraft Foods International and with Philip Morris acquired Nabisco, it was later on renamed Kraft Food North America and Kraft Foods International having it as its two main unit.

It has undergo management changes and practices but the most intriguing factor is that Kraft Food Company’s  first quarter in 2009 profit increase in 10 percent and organic revenues increased in 2.3 percent. With this the company’s North American sales rose 2.9 percent in the first quarter but in the second quarter in 2009 earnings increased 11 percent to $827 million but suddenly sales dropped to $5.9 percent.

Problem

The increase in price of 9.8 percent they didn’t suffer much on losing 0.3 market share this implies that they have a stronghold in the Market. Despite of it, in their financial aspect particularly in the balance sheet it shows that Krafts Food Company has an over $27.5 Billion in good will, which is not good, and also has over $18.5 billion in long-term debt, which is also not good. It implies that Kraft’s long-term debt increased about 50% in 2008 from 2007.

As well as with the shifting of trend in the consumer’s preference of food it has a major effect in Krafts Food Company where they have a larger holding in grocery retailing. Also the movement on developing and having healthy food was a concern, along with this is large expenditure and investment is invested to develop such product. There were also concern on raising cost of petroleum that causes a twofold increase in cost for the company and the issue on Illinois where salmonella content was found in December 2007 which has affected the reputation of the company.