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NORTHFIELD, Ill. — Kraft Foods Inc. plans to realign its U.S. sales organization and lay off about 1,600 employees as it readies for a spin-off of its grocery business, splitting the food manufacturing giant into two public companies.
Kraft had announced in early August that it aims to create two independent public companies: a global snacks business with sales of about $31 billion and a North American grocery business with revenue of about $17 billion. Leadership for the new entities was announced last month.
Under the U.S. sales realignment unveiled Tuesday, the snacks business will use a direct-store delivery model, with most U.S. retail sales employees shifting to the North American region of the global snacks company.
Meanwhile, the grocery company will reorganize within the United States in order to capitalize on its warehouse distribution strength, according to Kraft. Local retail support will be contracted to two leading sales agencies, with Kraft oversight and direction: Acosta Sales & Marketing (grocery store and mass retail channel) and Crossmark (convenience store channel)
Kraft said it expects to have both U.S. sales organizations set by April 1.
With the spin-off the North American grocery company, expected by the end of this year, Kraft also plans to cut its U.S. management center locations from four to two.
The Beverages business unit in Tarrytown, N.Y., and the Planters brand in East Hanover, N.J., will relocate to the Chicagoland area by December, the company said. Kraft also will close its Glenview, Ill., management center by the end of 2013.
The global snacks company will also have its headquarters in the Chicagoland area, with the choice of site currently under consideration. The North American region for the global snacks company will be based at the East Hanover campus.
In Canada, both companies will keep their sites in the greater Toronto area. The Kraft grocery business will stay in the current Don Mills offices, and the snacks business moves to recently opened offices in Mississauga. The Madison, Wis., management center will remain the site for the Oscar Mayer business unit.
Kraft reported that the restructuring actions will lead to the elimination of approximately 1,600 positions in North America during 2012, about 40% of which stem from the U.S. sales realignment.
"When we announced our decision to create two world-class companies last August, we said both would be leaner, more competitive organizations," Irene Rosenfeld, Kraft Foods chairman and chief executive officer, said in a statement. "For the past year, the North American team has been working to streamline operations to deliver sustainable top-tier performance and continue to invest in our iconic brands. We’re confident that this transformational work will improve effectiveness and fuel the future growth of both companies."
Kraft had 2010 revenue of $49.2 billion. Twelve of the company’s brands — Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Tang and Trident — each generate revenue of more than $1 billion annually.
