Skimming through big food companies’ press releases and financial reports is not necessarily the most exciting activity one can imagine, but it does provide some deeper context as to where they are heading from a business perspective.
We came across 2 recent press releases from Kraft. The first one is very interesting. The Tang product line is reaching the coveted Billion Dollar status. Yes, one billion dollars in annual sales. Most of the recent growth is due to success in international markets:
“Tang is right on trend with what consumers thirst for – affordability, convenience, nutrition and great fruit taste,” said Gustavo Abelenda, President, Kraft Foods Latin America. “In Latin America, which is a major growth engine for Tang, we developed exciting flavors, new packaging innovations and breakthrough marketing to help propel the brand’s growth.”
The second press release talks about a $10M donation / investment the Kraft Foundation has made in Indonesia and Bangladesh. The purpose of the funds is to eradicate childhood malnutrition through agricultural education:
By teaching sustainable farming skills, creating microenterprises and providing nutrition education, Kraft Foods is empowering women and thereby helping to eradicate child malnutrition in some of the neediest areas of Indonesia and Bangladesh.
What you need to know:
Seemingly 2 disconnected topics aside from the name “Kraft”.
But there is a connection. Big companies know they can’t grow their revenue in the US anymore. So they are looking to expand internationally – Latin America, Eastern Europe, and developing markets. Any country moving from sustenance farming to a market economy that can pay for packaged goods is an opportunity.
Investing $10 million to get inroads into Bangladesh is but a small pittance for Kraft, which will probably be able to make billions of dollars in revenue in that country as its population switches to more western foods over the next few decades.
Not that Tang drink mix deserves to be called a food. Tang is a nutritional abomination, despite 40 years of claiming to be a great source of vitamin C. It’s all fake folks. Just look at the ingredient list:
SUGAR, FRUCTOSE, CITRIC ACID (PROVIDES TARTNESS), CONTAINS LESS THAN 2% OF ORANGE JUICE SOLIDS, NATURAL AND ARTIFICIAL FLAVOR, ASCORBIC ACID (VITAMIN C), VITAMIN E ACETATE, NIACINAMIDE, VITAMIN A PALMITATE, VITAMIN B6, RIBOFLAVIN (VITAMIN B2), MALTODEXTRIN (FROM CORN), CALCIUM PHOSPHATE (PREVENTS CAKING), XANTHAN AND GUAR GUMS (PROVIDE BODY), SODIUM ACID PYROPHOSPHATE, ARTIFICIAL COLOR, YELLOW 5, YELLOW 6, BHA (PRESERVES FRESHNESS).
It’s mostly sugar, with a sprinkling of vitamin and minerals, artificial colors shown to cause cancer and hyperactivity in kids, and BHA which is a questionable preservative. Your kids and kids around the globe are better off drinking water and not getting hooked on this junk.
To summarize, companies like to show good citizenship by “donating” to the poor. In reality, they are sowing the seeds for a much larger future revenue stream. Along the way, they’ll assimilate another country to our processed food culture with all its woes.
BTW, we’re not specifically picking on Kraft here, as the pattern is true in so many other companies as well. Can food companies figure out other growth engines that don’t involve ruining other countries’ food cultures?