France's dairy group Lactalis has acquired the Italian cheese maker Invernizzi from Kraft Foods, leaving the US group to concentrate on cutting prices and increasing its advertising spending.
Kraft has decided to sell Invernizzi's gorgonzola, crescenza and mozzarella businesses, as well as a manufacturing facility in Caravaggio, in order to focus on its leading brands such as Philadelphia cream cheese, Hag coffee and Milka, Cote d'Or and Toblerone chocolate.
Lactalis did not say how much it would pay for Invernizzi, which last year posted revenues of €95 million.
Assuming regulatory approval is granted for the sale, Lactalis will begin producing all Invernizzi's brands alongside its Locatelli branded crescenza, mozzarella and other cheeses.
Family-owned Lactalis is one of the world's largest dairy companies with total sales over €5 billion in 130 countries. It is best known for its President brand.
Meanwhile, Kraft - the number two international food manufacturer after Nestlé - is planning to give greater support to its leading brands, which also include Maxwell House and Jacobs coffees, Nabisco cookies and crackers, Oscar Mayer meats and Post cereals.
Betsy Holden and Roger Deromedi, co-CEOs of Kraft Foods, told delegates at the Prudential Securities Back-to-School Consumer Conference in Boston earlier this week that the company would spend an additional $200 million in the second half on marketing its biscuits, coffee, cold cuts and cheese brands.
Holden said that 70 per cent of the additional spending would be on price management programmes, with the remaining 30 per cent going to consumer marketing, such as advertising. She also indicated that recent communications regarding the programmes with Kraft's trade partners had gone well.
The spending will begin this month, and the company expects to see improvements in share trends in the fourth quarter of this year, Holden added.
The company also confirmed that it expected to see volume growth of around 2 per cent for 2003, a most figure in light of the tough economic conditions in the majority of the company's leading markets. Kraft added that its estimates did not account for the potential gain or loss on the possible future sale of any businesses - a hint, perhaps, that we can expect to see more disposals by the end of the year.