Cheese accounts for 12% of Kraft's U.S. revenues and as much as 20% globally, but has been a "problem area," according to Prudential Securities analyst John McMillin, as costs have jumped and private-label cheese has done well. Sales of Kraft Singles fell 1.3% to $616 million for the 52 weeks ended Jan. 27, according to Information Resources Inc.
Rip-Ums, cheese strips rather than sticks, come in American and Pizza varieties. The line will be supported with TV advertising in July from WPP Group's J. Walter Thompson USA, Chicago, using the tagline "There's something about Kraft cheese" that supports Kraft's family of cheese products. The commercials will appeal to moms, touting the brand's 20% recommended daily allowance of calcium per serving and the fact that kids will love the taste and play value of the product.
"Kraft Singles was convenience, then they grated it, put it in cubes, added calcium and made it lower-fat," said Dave Nelson, Credit Suisse First Boston analyst. "They've added a lot of new news, and here's some more, with specific appeal to kids that moms are likely to endorse."
To put the portable focus on its other cheeses, Kraft's primarily East Coast Polly-O string cheese brand will be recast as Kraft Polly-O String-Ums, and regional Kraft Handi-Snacks string cheeses will be relaunched as Kraft Handi-Snacks String-Ums.
The drive for convenience has reached practically every aisle in the supermarket, and Kraft is doing its part. Over the last few years, it has successfully transformed already-easy meal solutions such as Oscar Mayer luncheon meats and Kraft Macaroni & Cheese into even easier meals. Oscar Mayer Lunchables has become a $597 million franchise, and microwaveable Easy Mac has grown to $56 million in sales.
"Easy Mac puts [Mac & Cheese] in another realm of convenience and gets it into the usage occasion as a snack," said Kraft Foods North America President-CEO Betsy Holden. Likewise, she said, Rip-Ums help to expand the usage occasions for cheese as it offers kids the popular Kraft Singles flavor in an interactive, fun-to-eat form.
Snacking has become a $10 billion-plus business for Kraft, and is an area Ms. Holden cites as a continued growth platform. In addition to new products, snacking is also being pushed in advertising to take advantage of consumers' on-the-go eating habits. A recent ad for Nabisco Triscuit crackers pictures a Triscuit loaded with pieces of ham and cheese alongside the caption, "Snack? Heck, it's a meal." JWT, Chicago, handles.