CEO Forum: Kraft's Irene Rosenfeld says innovation is key
DURHAM, N.C. -- People have to eat, even in a recession. So you might think that Kraft CEO Irene Rosenfeld has a cushy gig selling some of the world's most iconic packaged comfort foods.
But since 2006 — when she landed the top job at Kraft after its spinoff from Altria Group (formerly Philip Morris) — Rosenfeld, 55, has struggled to reinvigorate a giant that was losing market share at a time of rising costs.
One of just six female CEOs at the top 500 corporations, the 27-year food-industry veteran made innovation a top priority. She introduced products including Bagel-fuls (a frozen bagel prefilled with cream cheese) and Oreo Cakesters (a soft version of the classic cookie), while selling sleepier lines including Post cereals.
Her moves impressed legendary investor Warren Buffett, who became Kraft's biggest shareholder in late 2007 when he bought 8.6% of its stock. This year Kraft shares have fallen 18%, but that is less than half the 39% drop in the benchmark Standard & Poor's 500 index.
Now, the USA's largest food company, expected to generate more than $40 billion in revenue this year, is grappling with a weak economy and questions about the industry's contribution to childhood obesity.
Rosenfeld shared her thoughts about her company, the economy and leadership with USA TODAY's David Lieberman at the ninth USA TODAY CEO Forum in conjunction with Duke University's Fuqua School of Business.
The interview took place in front of an audience. Edited for length and clarity, here are Rosenfeld's thoughts on:
The economy
Q: It's now official: We've been in a recession for a year. What does your crystal ball tell you about 2009?
A: We see more of the same. We (in the U.S.) are at the forefront of some of the economic challenges that we're seeing elsewhere in the world. Europe is starting to be affected. We're seeing even developing markets, where our growth rates are still quite robust, they're slowing down relative to where they had been.
The great news is that as the economy has softened around the world, we're seeing people eating more at home. And as they come home, they're coming home to Kraft. So we are battening down our hatches and preparing to continue to compete in a difficult environment.
Q: What particular products are doing well?
A: We're certainly seeing (strength in) products that provide obvious value: powdered beverages like Kool-Aid and Crystal Light, for example, in comparison to ready-to-drink alternatives. We're finding that people are eating grilled cheese a lot more.
We're seeing products like DiGiorno pizza, in contrast to pizzeria pizza or restaurant pizza, are performing quite well. Even products like Oscar Mayer meats are having a resurgence. People are eating hot dogs more for dinner.
Innovation
Q: Can you take us through the thinking behind two of your new products: Oreo Cakesters and Bagel-fuls?
A: We have an incredible powerhouse trademark, called Oreo, which competes in a very defined segment in the U.S.: the sandwich-cookie segment.
Cakesters was an opportunity for us to compete in a whole new segment of the snack market, soft moist cakes, which is about a $1.5 billion segment. We have an original version, we have a vanilla version, which we called Golden Oreo, and we're about to introduce a peanut butter version which will be our Nutter Butter version of it.
Bagel-fuls was another opportunity for us to make one of our crown jewel, iconic trademarks, Philadelphia Cream Cheese, more convenient. For those of you who aren't familiar with it, it's essentially a bagel with cream cheese in it that's easily microwaved in the morning.
Q: You have something online called "Innovate with Kraft" where ordinary people can submit product ideas. Is it useful or just a gimmick?
A: They're gimmicks if you don't use them. Very often people submit ideas and, if they don't see anything happening to them, they stop very quickly. They have a really good smell test on those kinds of programs.
