Kraft Finds Success in Russia Selling Communist Hero Cookies
Kraft foods has found success in Russia by adapting to local tastes. The maker of such all-American products such as macaroni and cheese and Oreo cookies is now selling a line of cookies based on Communist Heroes. It all started when Kraft bought the largest Russian cookie baker, Bolshevik Cookies. Americans might be shocked that Kraft owns a cookie company which is named after the organization of professional revolutionaries founded by Vladimir Lenin, but shareholders couldn't care less so long as the cookies sell.
Bent on worldwide cookie and cracker domination, Kraft is now trying to buy Cadbury PLC.
Kraft's sales reached more than 24 billion rubles ($815 million) last year in Russia, where it has about 20 percent of the biscuit market. Kraft inherited Bolshevik, Russia’s biggest cookie baker, two years ago with the purchase of Groupe Danone SA's cookie and cracker unit. The acquisition made Kraft the world leader in biscuits.
The combination of Kraft and the Danone unit has exceeded growth targets, helped by Oreo cookie sales, which grew 30 percent outside the U.S. last year, said Sanjay Khosla, president of Kraft International.
The acquisition "gave us scale, it strengthened our expertise in biscuits worldwide, it brought in talent and helped our distribution in developing markets," Khosla, 57, said in a telephone interview.
Kraft now aims to create a "global powerhouse" in snacks and confectionery with its $16 billion offer for Cadbury Plc. The Northfield, Illinois-based company has three weeks to make a formal offer for Cadbury, which rebuffed its initial approach.
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Bolshevik, which makes butter cookies, wafers and crackers, was founded in central Moscow in 1855 by a French company to produce cookies and cakes. Its name was changed to the Bolshevik Biscuit Factory in 1924 to honor workers who took part in the revolutionary movement, according to the unit's Web site.
"When you have an established brand with a strong heritage, it doesn’t make sense to rebrand," Claire Regan, a Kraft spokeswoman, said in an e-mail about the Bolshevik name.
Analysts say Russians love their sweets and during the recession they are buying more mid-priced cookies and sweet biscuits. That has really been to Kraft's advantage: sales are booming. Kraft has four new factories in Russie, which may eventually replace the old plant in Moscow. Kraft next wants to introduce Oreo cookies to the Russian market. Oreos are sold in China, but they had to be remade to suit local tastes. If you buy Oreos in China, you will find them to be smaller and less sweet than American Oreos.
