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Ralcorp is rumored to be acquiring Post cereal from Kraft

BY Allison Cerra

NEW YORK Kraft Foods may be feeding its cereal to Ralcorp Holdings for about $2.8 billion, according to reports.

Kraft, the number 3 U.S. cereal maker, is rumored to be looking to sell its dry cereal brand, Post Cereals, which produces approximately two-dozen cereals. Ralcorp, a St. Louis-based company, sells store-brand cereals and other foods.

The Wall Street Journal reported that the deal will most likely consist of Kraft “spinning off the cereal business and then merging with Ralcorp, making it a stock-based deal.”

Kraft said that rising commodity costs, strong competition and a decision to stop advertising sugary cereal to young children have hurt sales of Post cereals. According to the Journal report, “sales of Post cereal at food retailers (excluding Wal-Mart Stores) fell 2 percent, to $699 million in the first nine months of this year. During that period, sales in the overall ready-to-eat cereal category fell flat, at nearly $5 billion.”

In January, Kraft sold several sectors, including its hot cereal business and several beverage products. Last year, the company sold its Milk-Bone and Minute Rice brands.

It is believed that Irene Rosenfeld, Kraft’s chief executive officer, is trying to get rid of the company’s glacially-paced products.

Kraft has not commented on the cereal-sale conjecture. The announcement of the company’s third-quarter earnings results, posted last week, caused rumors to swirl.

The nation’s biggest food and beverage maker posted better-than-expected revenue for its third quarter ended Sept. 30, but soaring dairy prices caused Kraft’s profit to tumble 20 percent from the prior-year quarter, which also included a one-time gain. Revenue rose 10 percent, to $9.05 billion from $8.24 billion in Q3 2006. Net income fell to $596 million, down from $748 million.

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Coors Light to again sponsor ING New York City Marathon

BY Tara Smith

GOLDEN, Colo. Coors Brewing Company, Manhattan Beer Distributors and New York Road Runners on Wednesday announced today that Coors Light will be the official beer of the ING New York City Marathon 2007 for the third consecutive year.

Coors Light will sponsor parties throughout the New York City metro area and also will provide product to all hospitality events leading up to the race. Once again, Coors Light has developed unique ING New York City Marathon graphics for its cans and packaging, available in participating retail locations throughout the metro area.

Manhattan Beer Distributors, the largest Coors distributor in the United States, will make it possible for runners and spectators to enjoy refreshing Coors Light on Marathon Sunday, providing Coors products to more than 21,000 licensed retailers in metropolitan New York on marathon day.

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Nestle outlines “extreme nutrition” build-up plan

BY Tara Smith

LAUSANNE, Switzerland Nestle on Tuesday laid out its plan to become the world’s largest provider of “extreme nutrition,” building up its high-tech health foods, with recent takeovers of Gerber baby foods and Novartis Medical Nutrition helping catapult the company into the No. 2 food spot for babies, hospitals and “pro-active health seekers.”

The world’s largest food company now is providing healthy nutrition products for patients leaving the operating room, cancer patients and is addressing the rising incidence of diabetes and obesity. Nestle also is targeting consumers seeking healthy foods that prevent other maladies or can enhance athletic performance.

“We deal with consumers at the extreme: extremely old, extremely young, extremely frail, or extremely fit,” said Richard Laube, head of Nestle Nutrition.

But integrating the recent takeovers into the group has its challenges that will keep the division busy if it aims to reach its profitability goal in two to three years, according to Laube. Changing formulas in medical foods, such as probiotics or protein levels for example, is more complicated than changed recipes for Nestle’s name-brand foods.

The Nutrition division aims to lift its operating profit margin to 20 percent in the medium term from the 16.9 percent reported at end 2006. “We’ll probably have two or three years in the 16 to 17 (percent) range as we integrate our acquisitions,” Laube said. “We’re on a nice glide path to 20 percent.”

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