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CHICAGO - Leading food manufacturer Kraft Foods Inc. announced Tuesday it plans to cut 6,000 jobs, or 6 percent of its work force, and close up to 20 plants worldwide by 2007 in a restructuring effort to reverse sluggish sales, The Associated Press reports.
The Northfield, Ill.-based company reported a 7 percent decline in fourth-quarter profits and said 2004 earnings also will come in below expectations.
Kraft c.e.o. Roger Deromedi attributed some of the company's loss to consumers' focus on healthy eating. "The growing importance of health and wellness has altered buying patterns to a degree I have not seen before in the food industry," Kraft Deromedi told analysts in New York. "Low-carb diets like Atkins and South Beach, the focus on trans fat, concerns about obesity and increased demand for organic and natural products are requiring a shift in how we market and what we market."
In response to those trends, Deromedi said the company plans to spend $500 million to $600 million more on marketing in 2004, focusing on healthier snacks.
Deromedi also acknowledged the "fundamental shift" that has occurred with consumers and retailers, who now put a higher priority than ever before on price and value.
"When we took pricing actions early last year in response to rising costs, we misjudged the magnitude of the value trend, and it took us too long to react with more competitive pricing," he said.
About 1,300 of Kraft's salaried positions in North America will be eliminated in the first quarter, with the remaining cuts occurring over three years. Three plants being shuttered initially are ones in Canton, N.Y.; Farmdale, Ohio; and central Europe.
Deromedi was given sole control of the company last month when co-c.e.o. Betsy Holden was removed from that post and put in charge of global marketing.
Kraft has about 50,000 employees in the United States and slightly more than 100,000 worldwide.