
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, August 15, 1995                   TAG: 9508150041
SECTION: BUSINESS                    PAGE: B5   EDITION: METRO 
SOURCE: ASSOCIATED PRESS
DATELINE: NORTHFIELD, ILL.                                 LENGTH: Short

KRAFT CUTS THE STICKY BUSINESS

In a deal that touches the taste buds of several generations, Kraft Foods Inc. will sell the business that makes its familiar cube-shaped caramels.

An investment group made up of Texas Pacific Group of Fort Worth and InterWest Partners of Menlo Park, Calif. will buy the Kraft caramel and marshmallow businesses.

Kraft caramels, introduced in 1933, have long been popular around Halloween, when the package traditionally includes a bundle of wooden sticks and a recipe for caramel apples. The deal also includes Kraft Fudgies, Kraft Jet-Puffed marshmallows and Kraft Marshmallow Creme.

The businesses employ about 575 people at three Kraft divisions.

Philip Morris Cos., Kraft's owner, has been trying to sell Kraft's low-profit businesses and focus on highly profitable lines such as Kraft cheese and Maxwell House coffee.

Philip Morris wants to keep only the Kraft businesses that produce double-digit returns, said food industry analyst Stephen Long of Wheat First Securities Inc. in Richmond. He estimated Kraft caramels and marshmallows return profits in the high single digits.

The investor group will assume ownership of Kraft's Kendallville, Ind., plant. Kraft said it will continue to make the products for an ``extended'' but unspecified period. The buyer will continue to use the Kraft name on the products ``for a limited time'' under a licensing agreement, then will phase it out, Kraft said.

by CNB