New Kraft CEO to Fire Up Marketing

Insiders, Analysts Herald Rosenfeld's Return as Much-Needed Catalyst

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It's a victory of a passionate marketer over a numbers-cruncher.

The ascension of Irene Rosenfeld to the CEO suite at Kraft Foods to succeed Roger Deromedi is being hailed as long overdue to rouse the country's largest food company from its lethargy. While both Mr. Deromedi and Ms. Rosenfeld-who left Kraft in 2004 to become chairman-CEO of Frito-Lay-each have logged more than two decades at $34 billion Kraft, their management styles could not be further apart.

"She's not a bureaucrat, and she will shake the place up," said Barbara Pickens, founder and president of executive-search firm Pickens & Co. Ms. Rosenfeld, she said, is "made of different material than a lot of people at Kraft-the overanalytical, super-playing-it-safe types. She is a tiger, she really is."

Or, as some describe her, a ruthless change agent-just what's necessary to quell the ponderous over-reliance on data and diffuse systems at a company that spends more than $1 billion on media.

The 53-year-old executive declined to give an interview, but one Kraft insider said she has a passion missing in Mr. Deromedi, even though "his heart was in the right place, and what he wrote sounded great." What's been lacking at Kraft is the succession of take-charge leaders the company has lost in recent years, including Ms. Rosenfeld and Ann Fudge (now CEO of Y&R Brands), who "make you want to run through a brick wall for them and show you that the idea of not growing, of not being first, is not an option," he said.

D.A. Davidson analyst Tim Ramey said Ms. Rosenfeld will be viewed as a returning hero, one likely to aggressively pursue the type of product development and innovation strategy largely ignored by Mr. Deromedi, who has been viewed as "a cost-cutting micromanager paralyzed by the numbers," Mr. Ramey said.

Mr. Deromedi tried to cure the company's ills by "cutting people and costs versus investing in brands and ideas." The one growth initiative he championed, Mr. Ramey said, was the single-cup coffee system Tassimo, "which I bet you is a write-off sometime soon."

Mr. Deromedi, 52, announced last February a "work simply, act quickly" strategy to make Kraft more nimble. But he did so, ironically, by adding another management layer: a new senior VP-business process simplification. And has the simplistic approach caught on? "We've fallen a little short on implementing those changes," the Kraft insider said.

Prudential Securities analyst John McMillin said Ms. Rosenfeld is likely to add elements of creativity and leadership. Mr. Deromedi was brought in to do what Mr. McMillin calls "the heavy lifting," while Ms. Rosenfeld is free to focus on innovation. "The business world is starting to resemble sports, where you change managers every time a new strategy is desired," he said.

Ms. Rosenfeld, last year named one of the most powerful women in business by Fortune magazine, rejoins a Kraft leaner on products and people than the one she left, but one still struggling for sales growth in key categories including cheese, deli meats and ready-to-eat cereal. In addition, Kraft still is wrestling with international expansion and finding ways to market to fast-growing consumer groups including blacks, Hispanics and Asians.

Kraft's net sales for its recent first quarter grew 2.6% to $8.5 billion, and analyst estimates peg Kraft's annual sales growth at a mere 0.2%, compared to food-company norms of 6% to 10%.

'Perfect blend'

Strategic Resource Group principal Burt Flickinger expects the results-oriented Ms. Rosenfeld to take a hard look at the strategic performance of Kraft's ad agencies rather than sticking with agency relationships "because of their legacy." Kraft's roster has little changed over the years, with Ogilvy & Mather, Young & Rubicam and Foote, Cone & Belding commanding the bulk of its $1 billion budget.

Kraft did move roughly $30 million in billings for its salad dressings, mayonnaise and barbecue sauce to independent McGarry Bowen, New York, in January, but that's a relationship Ms. Rosenfeld may opt to re-examine given that it's born of Mr. Deromedi's history with the shop's principals.

Ms. Rosenfeld, who has degrees in marketing and statistics, was described by one agency executive who has worked with her as "smart and decisive, fact-based but trusting her own judgment." Paula Sneed, Kraft's VP-global marketing resources, calls Ms. Rosenfeld "the perfect blend of insights generated from analytics as well as intuition."

Hershey CEO Rick Lenny-said to have been approached for the Kraft CEO post as well-said Ms. Rosenfeld, with whom he worked at Kraft in the '90s, was always "grounded in strong fundamentals and consumer insights but able to convert those insights into strong marketplace initiatives."
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