Nabisco Situation Analysis

Executive Summary

In 1898, the United States Baking Company, New York Biscuit Company and the American Biscuit & Manufacturing Company formed to become the National Biscuit Company. The name Nabisco first appeared on a new sugar wafer product in 1901, but the corporate name did not change to Nabisco, Inc. until 1971. During Nabisco's 113 years in existence, they have grown through natural growth, mergers, and acquisitions, which has allowed them to be the leading snack maker in the world. Nabisco offers a diverse selection of foods. In 2000, Philip Morris Companies acquired Nabisco and merged it Kraft Foods, Inc. Nabisco Company includes brands such as: Arrowroot, Better Cheddars, Cameo, Fudgee-O Cookies, Barnum's Animal Crackers, Triscuit, Captain Table, Wheat Squares, Chips Ahoy!, Shredded Wheat, Orchard Crisps, Mallomars, Fig Newtons, Nutter Butter, Nilla, Honey Maid, Oreo, Premium, Ritz, Teddy Grahams, Toasted Chips, Toastetts, Wheat Thins, Rice Thins, Snackwells, Nabisco Classics, Club Social, and Kraker Bran.

Situation Analysis

Nabisco is the world's largest manufacturer and marketer of cookies and crackers, based on retail sales. However, in recent years Nabisco has been reluctant to adapt to current market trends. The company has been focusing on producing new versions of existing products to make them more convenient. Nabisco was ignoring that other companies were creating similar products that were cheaper and also healthier products. Eventually, Philip Morris integrated the Nabisco brands with its Kraft Food operations in 2000. In March 2001, Philip Morris created a new holding company for the combined operations known as Kraft Foods Inc. Since the merger, Nabisco realized the growing health trend and began creating healthier foods such as 100-calorie snack packs, low carb foods, and low fat foods. With these new products, Nabisco has been able to serve people that have chosen to adapt to a healthy eating life style.

The people of Kraft have recognized that the business has an important role in society- a responsibility that included understanding and meeting the public's expectations, helping to address important social, environmental and economic issues and making a difference in local communities and the world. They firmly believe that "Our success will depend importantly on our willingness and ability to listen, get feedback on what we're doing from those both inside and outside Kraft and act responsibly on issues of important concern."

Beginning in the early 1990's cookie sales began to slowly decline because consumer's buying habits were shifting towards lower calorie. When more brands began making low fat products, then sales began to slowly increase again. By the early 2000s the low fat trend was out and the low carb trend was in. Therefore, cookie sales fell by 1.9 percent. The low carb craze has since diminished in the eyes of Americans. There are numerous diets that are setting the trend for the low fat craze. Among them are the South Beach Diet, Jenny Craig, and Weight Watchers. In order to gain back old consumers and attract new consumers, companies have had to develop a wide variety of products containing a low or no amount of fat. Numerous companies are creating low fat/no fat versions of their products.

Strengths

Among Kraft Foods' many strengths is its standing as the largest branded food and beverage company in North America and the second largest worldwide. Kraft Foods are found in more than 99 percent of all households. Nabisco is one of the seven Kraft brands that bring in more than $1 billion in revenues each year, $3.5 billion to be exact. Nabisco is ranked as the top cookie maker and has consistently been the leader in the industry, selling nine of the top twenty cookies worldwide.

One of Kraft's most important strengths is the power of their brands. Everyone recognizes the iconic heritage brands and they are loved by consumers worldwide. They work to grow these brands by focusing on fast growing sectors, addressing consumer needs for health and wellness, expanding their presence in faster growing distribution channels, and targeting fast growing demographics and economic segments. As Nabisco closely observed the shift in society's eating habits, they realized that they needed to come up with new products to accommodate those who do not purchase Nabisco products.

Another strength for Kraft is delighting global snack consumers. Consumers around the world are pressed for