It appears that for Kraft smaller is better. According to a press release the food giant will be splitting itself into two separate companies with one autonomous business focused on snacks (Oreo, Trident, Cadbury, Milka) and one focused on the North American grocery business (Miracle Whip, Cheese, Kraft Dinner, Peanut Butter).

Of course, Kraft is a company that has been cobbled together through acquisitions and divestments over the years such as Dart (1980 – Duracell, Tupperware); General Foods (1988 – Post Cereals, Oscar Meyer, Maxwell House, Jell-O); Jacobs Suchard (1990 – European Coffee & Chocolate); and of course the Cadbury purchase (Dairy Milk, Trident, Halls) in 2010.

Since the merger with Cadbury, sales and profit results for Kraft have not met expectations and management apparently sees two leaner more focused companies as creating more value for shareholders.

Spin-offs are also familiar ground for Kraft which was itself spun off from its parent Altria (formerly Phillip Morris) in 2007 to focus on the food business independent from Altria’s tobacco holdings.

But what will this latest announcement mean for the Canadian business?

For starters, the Grocery business will be a shadow of its former self, losing the cookie brands and Tang as well as no longer having the Delissio frozen pizza business which was sold to Nestle in early 2010. Its negotiating power with Canada’s grocery retailers is likely to be less (although still significant) after all the organizational changes are made.

On the other hand, the Kraft snacks business in Canada will likely be a net beneficiary of these changes. The company will be basically made up of the old-Cadbury Canada, the Kraft cookie brands such as Oreo and LU, as well as the Tang brand. It will regain its focus on convenience channels and have slightly more scale in front of grocery retailers.

However, I am sure there are lots of former Cadbury folks now inside (and outside) the Kraft business who are going to be going though two big changes in two years with the company to only end up in a slightly stronger position than it was as Cadbury Canada prior to the integration with Kraft.

One thing is certain. This is not the last big news we will hear from Kraft. The buying and selling of brands will continue – it is part of their culture.

While only speculation on our part, the North American grocery business would be an attractive partner for a global food company looking to expand its market share in North America while providing new brands for growth in international markets.

For example, Unilever has stated that they would like to grow their business from 44 billion euro to 80 billion euro.

Kraft’s North American grocery business could add 11 billion euro in one fell swoop…