Agenda

• Business Description
• Industry Analysis
Overview • Peer Selection

• Business Analysis
Analysis
• Financial Analysis

• Dividend Discount Model

Valuation
• Relative Valuation

• Moving Forwards
Conclusion
Business Description

• Kraft Foods Inc. (Kraft Foods) is a US based food and beverages

company

• They are also the 2nd largest food group after their acquisition of
Cadbury.

• Kraft Foods manages numerous popular brands such as Oreo,

Planters, Philadelphia cream cheese and now Cadbury as well.
 Peer Comparison
Porter’s 5 Model Threat of New
Entrants

Degree of Rivalry Threat of Substitute

Among Competitors Products

Bargaining Power of Bargaining Power of

Suppliers Consumers
 Peer Comparison
Kraft Unilever Danone
Sales Revenue USD 40 billion USD 55 billion USD 20 billion
Total Assets USD 65 billion USD 53 billion USD 38 billion
Market Capitalization USD 55.2 billion USD 73 billion USD 38 billion

Geographical Segment Geographical Segment

(Kraft) (Unilever)

19% 27% 34% US

48%
Europe
33% Others
39%
Peer Comparison

• With the opening of a new R&D Centre in Zurich, Kraft

brings its total number of centers to 14.

• Danone, a much smaller firm, has close to 30 R&D centers

• Threat from efficiency gap and response to changing

consumer preferences
 Business Segments
Business Segment Business Segment (Kraft)
(Danone)
10% Convenient
Meals
10% Grocery
22% 8%
Fresh Dairy Confectionary
Products
20%
Waters Cheese
17% 29%
Others Beverages
14%
60% Snacks
Revenue Drivers

• Kraft’s main revenue driver will be mainly from switchover

customers.

• This will in turn rely largely on consumer preferences which

will be difficult to model and predict.

• A large bulk of their revenue will result from returning and

loyal customers
Cost Drivers

• Kraft Foods will naturally be affected by fluctuations in

commodity prices.

• These include major commodities such as cocoa, coffee

and other raw materials.

• To a lesser extent, Kraft may also be affected by fuel prices

due to shipping costs.