Kraft Foods is splitting its brands, such as Oreo cookies, into two separate… (Luis Sinco / Los Angeles…)
Packaged goods giant Kraft Foods plans to cut 1,600 jobs in North America this year as it splits into two separate public companies focusing on snacks and groceries.
About 40% of the layoffs will come from sales departments, with many of the rest stemming from Kraft’s corporate and business units. The company said about 20% of those positions are unfilled. Workers at manufacturing facilities are safe for now, Kraft said.
Kraft is in the process of creating a $31 billion global snacking company that will include brands such as Oscar Mayer and Planters as well as a $17 billion North American grocery arm focusing on brands such as Oreo cookies, Cadbury chocolates and Trident gum.
“When we announced our decision to create two world-class companies last August, we said both would be leaner, more competitive organizations,” said Chief Executive Irene Rosenfeld in a statement.
Most of Kraft’s current U.S. retail sales employees will shift over to the snacks businesses while the grocery side will rely on two third-party companies for its distribution. Kraft plans to have the sales teams for both spinoffs ready by April.
The company will also close half of its four management centers in the U.S., shuttering its beverages branch in Tarrytown, N.Y. and operations for its Planters brand in East Hanover, N.J. and moving both to the Chicago area. The Oscar Mayer center in Madison, Wis. will stay put, but the test kitchens in Glenview, Ill. will shut down by the end of 2013.
“Making these tough choices is never easy and we recognize the impact these changes will have on many of our people and their families,” said Executive Vice President Tony Vernon in a statement. “But our plan for a more nimble company, combined with the current economic and competitive pressures, led us to this point.”
Northfield, Ill.-based Kraft also said Tuesday that it expects strong earnings for fiscal year 2011, which will be released Feb. 21. The company expects its net revenue to be up 10% compared with 2010 and said its diluted earnings per share will be at least $1.95. In 2010, EPS was $2.39.
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