Replies to post #5045 on The Rising Influence of Rising Affluence

[DewDiligence]

The big difference between our markets and the rest of the world is the size of the packaging. A family size box of Ritz in the U.S. is 3 or 4 (22 cracker) slugs while overseas a 'family pack' equals about one slug.

True; moreover, in poorer countries such as India, some consumer-products companies sell extremely small sizes—sometimes enough for only a single use—because some shoppers literally purchase their consumer goods one day at a time.

[DewDiligence]

Mondeléz, the Kraft spinoff previously discussed on this board, begins life on Oct 1; it is already trading on a “when issued” basis:

http://online.barrons.com/article/SB50001424053111904414004578016491894910064.html

Kraft (KFT) is separating into new Kraft (KRFT) and the larger Mondeléz International (MDLZ), which will hold the company's global snacks business, including Nabisco cookies, Cadbury chocolate, and Chiclets gum. New Kraft's portfolio includes some familiar American products like Jell-O, Kool-Aid, Velveeta, Planters, Oscar Mayer, Kraft macaroni and cheese, and Kraft refrigerated cheeses. Until Tuesday, new Kraft will trade in a when-issued market with the ticker KRFTV, and Mondeléz as MDLZV. Old Kraft (KFT) shares will stop trading after the split.

Mondeléz will have a more modest dividend, around 2%. In an indication of the importance of dividends in a yield-parched environment, Mondeléz has a P/E ratio similar to new Kraft's, despite a stronger growth outlook. Mondeléz looks more appealing than new Kraft.

No kidding. KRFT is for suckers, IMHO, while MDLZ looks like an excellent play on The Global Demographic Tailwind.

On Oct 1, each share of KFT will be converted into one share of MDLZ and 1/3 share of KRFT.

[DewDiligence]

MDLZ soars 8% on partial sale of coffee business and more cost-cutting:

http://online.wsj.com/news/articles/SB10001424052702304655304579547440661257808

Mondelez International Inc. plans to combine its coffee business with D.E Master Blenders 1753 B.V. of Europe to create a more formidable rival to Nestlé SA in the battle for the world's bubbling coffee market. Under the deal announced Wednesday, Mondelez will hand over its coffee brands, including Gevalia and Jacobs, in exchange for $5 billion in cash and a 49% stake in the new company, to be called Jacobs Douwe Egberts.

… Master Blenders is owned by investment group Joh. A. Benckiser, which bought it last year for nearly $10 billion after the coffee company was spun off from Sara Lee Corp. in 2012.

…The deal is part of a broader restructuring for Mondelez, unveiled on Wednesday and designed to cut costs and focus its business on snacks. Mondelez said it plans to spend about $3.5 billion by 2018 to cover severance payments and other charges in an effort to trim $1.5 billion from its annual budget…. Mondelez already has closed, sold or downsized about 30 plants, reducing head count by 3,000 plus another 1,000 contractors in 2013, the company said. It has several other projects still in the works.

MDLZ, which was spun off from Kraft in Oct 2012, hit an all-time high today.

--
MDLZ’s own PRs today:
http://www.sec.gov/Archives/edgar/data/1103982/000119312514186128/d719556dex991.htm (1Q14 results and restructuring)
http://www.sec.gov/Archives/edgar/data/1103982/000119312514186113/d722646dex991.htm (partial sale of coffee business)