Kraft Repurchases LIFE SAVERS From Beta Brands in Canada.

Business Editors

NORTHFIELD, Ill./LONDON, Ontario--(BUSINESS WIRE)--Dec. 24, 2001

Cdn$19.5 million sale consolidates LIFE SAVERS brand

throughout North America 

Kraft Foods Inc. (NYSE:KFT) and Beta Brands Incorporated (CDNX:BBI) announced today that Kraft Foods has purchased the rights to the LIFE SAVERS confectionary brand for the Canadian marketplace from Beta Brands Limited, a subsidiary of Beta Brands.

Beta Brands received Cdn$19.5 million (US$12.3 million) for the sale of the LIFE SAVERS rights to Kraft. The transaction does not include the sale of any production assets, with the exception of certain tools and dies uniquely related to making LIFE SAVERS candies. Beta Brands' revenues from the Canadian LIFE SAVERS business were approximately Cdn$6.8 million (US$4.3 million) for FY2001. Net proceeds from the transaction will be used to reduce Beta Brands' senior debt and interest expense obligations.

Following last year's acquisition of Nabisco, Kraft assumed ownership of the rights to LIFE SAVERS in countries around the world, but not in Canada. Nabisco had previously licensed the rights to Beta Brands, which were restricted to certain hard roll candies for sale in Canada only. As such, the transaction does not have an adverse effect on Beta Brands USA's sales into the U.S. marketplace. As a result of this transaction, Kraft now owns the rights to LIFE SAVERS throughout North America.

"LIFE SAVERS is a favourite with consumers everywhere and we are pleased to welcome the brand back into the Kraft family in Canada," said Dan Butler, Chief Operating Officer, Kraft Canada Inc. "LIFE SAVERS will complement our existing confections and snacking portfolio and strengthen Kraft's position in this growing segment."

Under the terms of the transaction, Beta Brands will continue to own the rights to the BREATH SAVERS and BEECH-NUT brands in Canada. Beta Brands will continue to supply Kraft with LIFE SAVERS hard candy under a co-pack agreement with an initial term of two years, which is expected to partially offset lost sales for Beta Brands during the transition period. Concurrent with the sale, Beta Brands and Kraft entered into a broader license agreement, which will allow Beta Brands to pursue extensions to its current product line under the BREATH SAVERS and BEECH-NUT brands in Canada.

"This is a win-win situation for Beta Brands, Kraft and our customers," said John Lambert, President and Chief Executive Officer of Beta Brands. "We believe that Kraft is better suited to realize the full potential of the LIFE SAVERS brand in Canada. This transaction will strengthen our capital structure and allow us to concentrate on our core objectives, including growth in the U.S. marketplace and increased penetration in the Canadian market through enhanced focus on our BREATH SAVERS, soft candy and baked goods product lines. We look forward to working with Kraft during this transition to ensure a smooth transfer of the business."

In Canada, Kraft will add a variety of such popular LIFE SAVERS products as the five-flavour roll, sweet story books and lollypops to its already strong confections portfolio, which includes ALTOIDS mints, LIFE SAVERS GUMMIES, and TERRY'S, MILKA, COTE D'OR and TOBLERONE imported chocolates.

Kraft Foods markets many of the world's leading food brands, including Kraft cheese, Maxwell House and Jacobs coffees, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats, Post cereals and Milka chocolates, in more than 140 countries.

Beta Brands Incorporated is a leading Canadian manufacturer, exporter and marketer of quality confectionery and baked goods products. Beta Brands Incorporated produces a full line of hard candies, jellies, jubes, panned chocolates, chocolate enrobed products, marshmallows, crackers and biscuits through its wholly owned subsidiary, Beta Brands Limited. The Company manufactures a broad range of products under brand names including Breath Savers(R), Beech-Nut(R), McCormicks(R), Goody(R), Bite Life(R), Millwheat(R) and Country Harvest(R). Beta Brands Incorporated operates three manufacturing, warehousing and sales facilities in Canada through its wholly owned subsidiary, Beta Brands Limited. The Company carries out its operations in the United States through its wholly owned subsidiary, Beta Brands U.S.A., Ltd., based in Chicago, Illinois.

The Canadian Venture Exchange has neither approved nor disapproved the information contained in this press release.