Kraft to Sell Veryfine And Fruit2O Brands

Kraft to Sell Veryfine And Fruit2O Brands
As It Focuses on Growth

 

Making good on a promise to sell businesses that don't fit its growth plans, Kraft Foods Inc. announced the sale of its Fruit2O water and Veryfine juice brands to Sunny Delight Beverages Co., of Cincinnati.

Kraft Chief Executive Irene Rosenfeld, who is trying to boost sales at the slow-growing food giant, prepared analysts and investors in August for parting with certain brands. She emphasized that divestitures won't be her primary goal and that she will focus on trying to improve brands.

Fruit2O and Veryfine had combined sales of about $135 million last year, according to Kraft, of Northfield, Ill. Financial terms of the deal, which is expected to be completed in the fourth quarter, weren't disclosed. When Kraft bought Veryfine Products Inc., the maker of those brands, in March 2004, it had about $150 million in annual sales.

"As we restore Kraft to reliable growth, we're focusing our investments on the brands that best fit with our long-term growth strategies," Rick Searer, president of Kraft North America, wrote in a release. "Fruit2O and Veryfine are great brands that have found a wonderful home in Sunny Delight. However, for Kraft, we believe we will create greater long-term shareholder value by selling, rather than investing in, these brands."

Ms. Rosenfeld is under pressure from activist shareholder Nelson Peltz to sell underperforming brands so Kraft can focus on its strongest brands. Mr. Peltz's hedge fund, Trian Fund Management LP, has amassed a 3% stake in Kraft, according to people familiar with the matter, and he has pointed to such brands as Maxwell House coffee and Post cereals as sale candidates.

Kraft is in the process of shopping Post cereals, according to people familiar with the process. Ms. Rosenfeld said recently that the company will try to improve the quality of Maxwell House coffee and introduce new packaging.

In addition to the juice and water brands, the sale includes a manufacturing facility. About 200 Kraft employees will join Sunny Delight.