FEBRUARY 1, 2007

So much for the Toblerone Ferrari

The idea that Philip Morris might use food brands for its Formula 1 sponsorship was always a little tenuous but now it seems even less likely with the news that the company is finally planning to spin off its food operations, operating as Kraft Foods, in order to leave both companies in a better position to expand. Tobacco is a better-performing industry than food but increased anti-tobacco legislation (and the reaction of investors to it) has meant that Kraft's value has been reduced by the link with the tobacco industry. The tobacco company is expected to concentrate on expanding its operations in China and India where anti-tobacco legislation is still limited. The company is also looking to grow business in alternative tobacco products such as chewing tobacco and snuff.