Kraft 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

It would be hard to call this a great first 9 months

“Against the backdrop of a challenging consumer and customer environment and some executional missteps, it would be difficult to call this a great quarter or an outstanding first nine months in absolute terms.”

Highlighting an agreement with GMCR like Coke did

“Given our agreement with Keurig Green Mountain that we announced in August, we’ll have the opportunity for expanded distribution and increased capacity to supply multiple channels and on-demand formats. ”

Unprecedented price levels in parts of our commodity basket

“we have priced aggressively in the face of what are truly unprecedented price levels in certain parts of our commodity basket. ”

The landscape is shifting

“At the center of it all, consumers with new emerging cohorts who have a whole new set of expectations of food and beverages and companies that make and deliver them. Our customers are coming to terms with changing shopping patterns and channel shifting and the rise of digital media driving the need for new communication tools and capabilities. It is clear that this is not a one-time market shift. This is a transformative time in our industry. It is also clear that this is pressuring returns on traditional advertising and promotion.”

Promotional environment may be moderating some

“I think the industry behavior has moderated somewhat, but we’re still up a bit in quarter three. ”

Proteins: cheese and nuts have the wind at their backs

” our protein offerings like meat, cheese, nuts are doing quite well. There is a wind at the back in those categories. They are in the perimeter of the store. We’ve executed our playbook quite well across those businesses, even with higher commodity costs.”

We have an obligation to the center of the store

“we have an obligation to the center of the store and the great brands we have in them to execute the playbook equally well. And we think we can contemporize our offerings in meals and desserts to address the center of the store lack of traffic.”

Relentless measurement

“this is a land of relentless measurement and continuous improvement. And it’s always a journey when you’re making food to make sure that you’re consistently seeking root causes and improving every day”

Pricing for volatility

“We priced early based on expectations and there was continued volatility. So some of those commodity trends didn’t move in a normalized curve like we would expect.’

There are no mature brands

“I’m a believer. There are no such things as mature brands and it’s all about energetic idea-driven marketers. It’s all about ideas in people. And when you think about it, would you have guessed that Velveeta would have had the five-year run it’s had in the face of millenials? ”

“So when I look at an A1 or a Shake’N Bake or a JELL-O, I say it’s our job to contemporize the ceremony of those great brands. They actually play to the preparation of the new millennial, right?”