Kraft Foods seeks partnerships with Romanian producers

Lachlan Grave, the new CEO of Kraft Foods Romania, the biggest player on the chocolate and coffee markets, this year relies on an over 10% sales increase from 2008 and says that improving profit margins is an unrealistic target in the current economic context.
“The market seems to be stagnating this year, in terms of sales volume. We kept the upward sales trend in the first quarter of 2009, as well, but at a lower pace than last year’s,” Lachlan Grave states.
The company’s revenues last year rose by over 20% from 2007 and for 2009 the manager expects a double-digit sales advance (of above 10%). Kraft Foods Romania sales can be put at over 240m dollars (164m euros) in 2008 based on the growth pace reported by Kraft. The manager also says he does not expect significant profit growth in 2009. According to him, Kraft Foods Romania did not improve its profitability last year because of the soaring raw material prices and RON decline.
Lachlan Grave has run the Romanian operations of Kraft Foods since last autumn and sees his experience in Romania as the biggest challenge in his career.
Kraft owns in Romania the brands boasting the biggest sales on the segment of chocolate tablets, Milka and Poiana, jointly holding a market share of around 50%, and Jacobs, the coffee with the biggest value share in retail. According to the company, the share held on the coffee market tops 30% now.
Grave says this year the domestic portfolio will be developed by expanding the product ranges under the brands already present on the market. “2009 is not a good year to launch new brands on the market”.
In late 2008, Kraft announced it would close its plant in Romania (Bra[ov) and lay off 440 employees in 2009 as the unit could not be expanded in the current area. Grave states Kraft is now seeking opportunities to seal partnerships with domestic producers to keep several lines of the Bra[ov facility on the Romanian market.
Should such partnerships be concluded, some of the 440 employees will be transferred to partner companies.
The manager also says that the effects of closing the Bra[ov facility and of cutting the number of employees by 40% are likely to be felt starting 2010. “(…) The main reason for closing the facility was the impossibility of expanding it in parallel with the development of the domestic business (…)”.