Kraft lines are toast

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Kraft Foods will abandon $35 million in sales from its Nabisco Kool Stuf toaster pastries and new Kool Stuf Fruit & Graham bars later this month, ceding to Kellogg Co.'s leadership in two categories where it played only a minor role.

The discontinuation of the lines Dec. 31 is part of Kraft's ongoing "optimization" of its portfolio following the purchase of Nabisco earlier this year, said spokeswoman Kathy Knuth. "The prospectus [sur- rounding the acquisition] mentioned we were going to look very carefully at Nabisco businesses and evaluate them to determine whether to discontinue or divest underperformers," she said.

Credit Suisse First Boston analyst Dave Nelson reasoned that "Kraft is used to being the leader. If you get the big brands such as Ritz, Chips Ahoy! and Oreo right, this stuff doesn't matter." Mr. Nelson said Kraft's business model historically has been to focus on the profitability of individual products while Nabisco had been more volume-driven.

Sales for Kool Stuf toaster pastries-which emerged in 1999 when Nabisco renamed its former Toastettes-fell 13% to $29 million for the 52 weeks ended Nov. 4, according to Information Resources Inc. That drop came despite the introduction of Chips Ahoy! and Oreo versions and $4 million in measured media spending this year, according to Taylor Nelson Sofres' CMR. With such lackluster sales, Kraft came nowhere near Kellogg-the formidable leader in the $520 million category with a 75% share for its Pop-Tarts brand.

The same is true for the Kool Stuf Fruit & Graham Bars, which were launched earlier this year to take the place of the Nabisco Fruit 'n Grain bar line Kraft discontinued in April. Sales for the brand grew to $6 million for the 52 weeks ended Oct. 7, according to IRI, a pittance compared to Kellogg's nearly $300 million and PepsiCo's Quaker brands' $245 million in the category. North Castle Partners, Stamford, Conn., handled advertising for the Kool Stuf toaster pastries and the $1 million put toward the new bars this year.

Meanwhile, just as Kraft withdraws support for its toaster pastries, Kellogg increases its efforts. In an attempt to draw women to its Pop-Tarts franchise, now driven mostly by kids, Kellogg in January will relaunch its more premium Pastry Swirls sub-line with an estimated $10 million TV campaign from Bcom3 Group's Leo Burnett USA, Chicago. The ads will tout the addition of 10% more fruit filling, and focus on the product's flaky crust and moist filling with the tagline, "They're that good."

"The base [Pop-Tarts] brand is brought into the house because of kid demand, but this campaign targets the need of female adults who are interested in a great-tasting indulgent morning food," said Kimberly Miller, marketing director for Pop-Tarts and Pastry Swirls at Kellogg.

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