Kraft shares rise as Oreo turns 100

Investors will get a better look at how the cookie crumbles after the company spins off its grocery business and changes its name to Mondelez.

By Jonathan Berr Sep 11, 2012 12:00PM
Shares of Kraft (KFT) are climbing this year, gaining almost 8%, as the food company celebrates the 100th anniversary of Oreo cookies, one of its most venerable brands, with an inventive ad campaign. The good times will continue, according to Wall Street analysts.

Kraft, which has outperformed rivals such as General Mills (GIS) and Kellogg (K), is expected to hit $44.47 in the next 52 weeks, about 11% above where it currently trades. One reason for the stock's strong performance may be the Oreo. The cookie, which was first sold in March 1912 in Hoboken, N.J., reportedly generates about $2 billion in annual revenue.

Some of my earliest childhood memories are of tearing apart the sandwich cookies to devour the white, creamy middle -- the best part, in my opinion. The brand evokes similar happy childhood memories for many -- that is, until Oreo decided to take a recent turn for the edgy.

As Advertising Age noted, "The brand's 'Daily Twist' campaign has made the cream-stuffed sandwich a social-media darling and sometime daredevil." Oreo kicked off the "Daily Twist" -- which features a different take on the cookie each day for 100 days -- on June 25 with a stuffed rainbow-colored Oreo commemorating Gay Pride Month. The cookie picture -- Kraft isn't planning to actually make any of the Daily Twist cookies -- generated an avalanche of publicity.

The campaign didn't stop there. There are Oreos commemorating everything from the first ZZ Top album in nine years -- shaped liked the band's legendary beards -- to the landing of the Mars Rover (tire treads on an orange filling). So far, the campaign is a huge success, generating 27.7 million likes on Facebook, Ad Age says.

Investors will get a better look at how the cookie crumbles after Kraft spins off its North American grocery business on Oct. 1 to focus on the faster-growing global snacks business and changes the Kraft name to Mondelez International Inc. Food companies have been dealing with a variety of headwinds, ranging from rising costs -- though commodity prices are on the decline -- to increased pressure from government officials over the obesity issue. Brands that resonate with today's consumers will be able to rise to meet these challenges.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter@jdberr.



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