2004 Annual Meeting of Stockholders Kraft Inc. April 27, 2004 East Hanover, New Jersey

Louis Camilleri, Chairman of the Board: Good morning, ladies and gentlemen. Thank you for coming. I am Louis Camilleri, Chairman of the Board of Inc. The 2004 Annual Meeting of Stockholders is now called to order. It is my pleasure to welcome the stockholders here in East Hanover, as well as those of you who are joining us via live webcast.

I’d like to introduce the executives here on the stage with me. First David Johnson, President of Kraft’s North America Commercial unit. Next is Hugh Roberts, President of our International Commercial unit. Also with us is Marc Firestone, Kraft’s Executive Vice President, General Counsel and Corporate Secretary.

As you know, Roger Deromedi, Kraft’s CEO, has been out on leave, with a serious viral infection. We are delighted that he is making a complete recovery and will be back in the office May 10 to resume his full responsibilities.

Next, I would like to introduce Larry Borek of PricewaterhouseCoopers, our auditors. He is in the audience, and he will be available to answer questions after the meeting. Larry, will you please stand?

Thank you.

The agenda and procedures for the meeting have been placed on your seat. I particularly want to remind everyone of the time limits for questions and comments and the fact that all questions and comments should be addressed to me as Chairman.

The secretary will now present certain formal documents. Marc…

Marc Firestone, Executive Vice President, General Counsel and Corporate Secretary: Thank you, Mr. Chairman.

I present to the meeting, together with Affidavit of Mailing, a copy of the Notice of Meeting, form of Proxy, Proxy Statement and Annual Report, including financial statements for the fiscal year ended December 31, 2003.

The holders of record of common stock at the close of business on March 3, 2004 are entitled to vote at this meeting. I am informed that common stock representing more than 99% of the voting rights is represented here today, and, therefore, a quorum is present for the transaction of business. 2

Louis Camilleri: The Secretary will file the documents with the records of the meeting.

I appoint, as Inspectors of Election, Oreste Casciaro and Kathleen Whelply of EquiServe Trust Company, the Transfer Agent for the Company’s common stock. The Inspectors are instructed to execute the oath, and to take custody of all proxies, and of the certified list of holders of common stock as of the close of business on March 3, 2004. The list contains the names and addresses of all holders of common stock, and the number of shares held by each. The list is available for inspection throughout the meeting. The Inspectors will certify the vote on each of the matters to be presented to the meeting. Proxies and ballots are kept confidential, except where shareholders have written comments on them.

Now, let’s turn to our business overview.

Kraft is a strong and profitable industry leader with great global potential. And we’re fully focused on tapping into our enormous strengths and unique advantages – our , our breadth, our scale, and, of course, our people – to deliver realistic, sustainable growth despite a challenging operating environment.

As you know, in January we announced a four-point Sustainable Growth Plan to strengthen our performance and achieve our long-term growth objectives.

Today, Dave, Hugh, and I will walk you through the components of this plan. And I’ll also talk about a subject of great importance to all of us at Kraft: our commitment to meet societal expectations and to maintain – without question – the highest standards of compliance and integrity.

But first, let’s outline our full-year 2003 and first-quarter 2004 financials.

In 2003, we faced some significant challenges, and we simply aren’t satisfied with our results. Our volume for the year was up 0.7%, or 1.6% excluding divestitures.

Volume, excluding divestitures, was up in five of six segments. Beverages, Desserts & Cereals led the way, with 5.3% growth, driven by strength in ready-to-drink beverages and -free desserts. Results in , & were disappointing, affected primarily by softness in cookies and consumers’ increasing focus on health and wellness.

Through August, we lost share in several other important categories -- , cold cuts, crackers and coffee. Beginning in September, we increased our investment in marketing programs and price gap management by nearly 200 million dollars, with the ultimate goal of restoring value in these categories. The results were encouraging, as you can see clearly in the final column here, with improved share trends in the last four months of the year in all categories, except cookies.

Revenues for the year grew 4.3%, helped, in part, by the strength of the Euro.

3

Operating income was down 1.7%.

Diluted earnings per share increased 2.6 percent, to $2.01. The increase was driven by lower financing costs, favorable currencies, and the absence of integration and separation charges versus 2002. These were partly offset by higher benefit costs, particularly pensions, and the loss of income from divested businesses.

An important bright spot was a 20 percent increase in our discretionary cash flow, which we define as net cash provided by operating activities less capital expenditures.

Finally, we increased our dividend by 20 percent, bringing the annual rate to 72 cents per share.

In the first-quarter 2004, we had fairly broad-based growth across much of our portfolio. However, weakness in a few key categories and international markets resulted in only modest top-line growth overall.

In general, the first quarter was one of progress: earnings were in line with our expectations; top-line growth, though modest overall, masked a strong response in several categories to our investment initiatives; and the key elements of our Sustainable Growth Plan are on track.

Our volume for the quarter was up 0.5 percent, or 0.8 percent, excluding divestitures. Revenues increased 4.5 percent, supported by a strong Euro and our increased investment in consumer marketing.

In the first quarter, we spent approximately 75 million of the anticipated 500 to 600 million additional dollars earmarked for increased marketing spending in 2004. In the three categories where we focused our spending – cheese, cold cuts and nuts – we saw strong results.

As anticipated, our operating income declined by 33.5 percent versus the corresponding prior- year period. This was due to charges associated with both our cost restructuring program and intangible asset impairments, along with higher commodity and benefit costs and increased marketing investment.

Finally, as expected, diluted earnings per share declined 32.7 percent to 33 cents. Twelve cents of this decline was due to cost restructuring and intangible asset impairment charges. Other factors were increased marketing investment, and higher commodity and benefit costs.

As we look ahead, we’re keenly focused on building an even stronger and better company. And our efforts are guided by a new vision you saw in the video that opened this meeting.

It is, “Helping People Around the World Eat and Live Better.”

4

Why these particular words? We wanted our vision to speak both to consumer needs and to our commitment to corporate responsibility. In this context, we view eating and living better very broadly. It’s about making food a more healthful, convenient and enjoyable part of life. It’s about quality. Safety. Value. And it’s about the services and solutions we offer to consumers and communities.

While our vision is meant to inspire, our Sustainable Growth Plan is designed to deliver consistent results over the long-term. Its four components include: • Build superior brand value • Transform the portfolio • Expand global scale and • Drive out costs and assets

I’ve asked Dave Johnson to share with you some of the actions we’re taking to build brand value and transform the portfolio. Hugh Roberts will describe how we are expanding our global scale. Then, I’ll return to discuss our efforts to reduce costs and assets and conclude with our social responsibility initiatives.

So with that, let me turn it over to Dave Johnson.

Dave Johnson, President, Kraft North America Commercial: Thank you, Louis.

Today, consumers and retailers are placing more importance on value than ever before. So, our first and highest priority is to build superior brand value.

The concept is simple. If we expect consumers to choose our products, we must deliver the right product benefits at the right price, and we must do it better than competition.

Each brand offers a unique bundle of benefits. And it all starts with superior taste. For example, Honey Bunches of Oats is a brand built on taste. Launched in the ‘80s, it redefined the category with the first adult cereal that actually delivers an indulgent taste and provides health and wellness benefits. The team is continuing to refresh the brand with great new banana and peach flavors.

The strategy works. Honey Bunches of Oats is now the fourth largest brand in the category and has grown share every year for more than a decade.

Just as we develop superior-tasting products, we develop superior packaging. Here are Kraft cheese packages with our innovative FRESHSLIDE recloseable zipper. By year-end, we expect to include this award-winning feature on every one of our shredded cheese packages all across the country.

5

We can even add value with an innovative shape – like our cool bottle can. The product was originally designed to build the brand’s presence in convenience stores. But, acceptance by young adults has been so strong that, in March, we expanded distribution to grocery stores nationwide.

We’re also building brand value with new product innovations, like Ritz Chips, an oven-toasted chip with less fat than fried potato chips. Ritz Chips achieved 40 million dollars in revenue in its first six months.

This great ad, featuring the “well-baked” George Hamilton, helped us get there. (Show commercial.)

As you know, we recreated the frozen category with rising crust technology and frozen pizza quality that stacks up to delivery. Now we’re entering a new segment – thin crust -- with the intention of grabbing a bigger slice of the 20 billion dollar carryout delivery market. Our new DiGiorno Thin Crispy Crust Pizza launches nationally in May.

Another benefit for consumers is the availability of our products, no matter where they shop. In the U.S. alone, we reach more than 48,000 stores, thanks to our 12,000-member sales team and our warehouse and direct store delivery systems.

Beyond our sheer size, we continue to look for new ways to make our brands available to consumers. Snacks To Go is a great example – it’s a new, convenient, portable snack that will be available exactly where consumers want it most…at convenience stores.

The service a brand provides can be a distinguishing benefit, too. Our food & family magazine is one of the largest custom-published magazines. It’s mailed directly to 12 million homes and is filled with great food ideas.

Finally, the image a brand projects also is an important benefit to consumers. You can see here that we’ve given the venerable Mr. Peanut a new, contemporary image, and he’s on-trend with health and wellness messages. The result is a double-digit increase in sales for the first quarter.

Let’s take a look at this fun, 15-second ad. (Show commercial)

The second component of our Sustainable Growth Plan, as Louis mentioned, is to transform our portfolio in line with changing consumer and customer trends.

By addressing macro trends such as health & wellness and convenience, we’ll drive growth across all of our global sectors – Snacks, Beverages, Cheese and Dairy, Grocery, and Convenient Meals.

In health and wellness, we’re pursuing key opportunity areas, including weight management, nutrient delivery, performance nutrition, and natural and organic.

6

We’ve introduced a host of new products in just the last six months alone, many of which address weight management needs. For example, our CarbWell line of barbecue sauces, dressings and cookies are for people who are counting carbs. We’re just about to expand this line to include cereals and cereal bars.

Kool-Aid Jammers 10, with just 10 calories per pouch, complements the successful base Kool- Aid Jammers business, which has grown to more than 120 million dollars in annual revenue in just three years.

Our string cheese business grew over 20 percent last year, and we anticipate that the launch of reduced-fat, 2 percent milk string cheese will continue to fuel that growth.

And mid-year, we plan to launch these Nabisco 100 Calorie Packs for people interested in portion control.

In the area of nutrient delivery, Sunrise, our new breakfast drink with only five calories, has 100% percent of the daily value of Vitamin C. It’s our latest entry from the growing $300 million Crystal Light brand.

In the fast-growing area of performance nutrition, Balance Bar grew consumption by over 20 percent in 2003 by increasing distribution and delivering great taste within the 40-30-30 ratio for carbs, fat and protein.

We’ve recently extended the brand to include new Balance GoMix, a mix of snacking ingredients with twice the protein and one-third less the fat of leading trail mixes.

Finally, our health and wellness initiatives also include expanding our presence in the growing natural and organic food channel. This year, our newly acquired Back To Nature line will grow to include cookies, crackers and organic , all with no artificial flavors, colors or preservatives and zero grams of trans fat.

Convenience is another growth driver. We’re responding with products that are easier to prepare, more portable and pre-portioned.

Nowhere has the convenience trend played out more powerfully than in our Beverages business. It wasn’t long ago that our refreshment beverage portfolio was made up predominantly of powdered beverages.

While the powdered business is still strong, ready-to-drink beverages now contribute more than half the revenues of our one–billion-dollar-plus U.S. refreshment beverage business. And it remains a key growth driver for us.

While many of our new products are born inside Kraft, we also look for great ideas outside the company. For example, several weeks ago we acquired Veryfine Products, the makers of Fruit- 2-O flavored water and Veryfine juices.

7

We also signed licensing agreements to market, sell and distribute Tazo teas and Seattle’s Best coffees to grocery retailers nationwide.

As we continue to build brand value and transform our portfolio, we will focus on the right consumer, customer and population trends. We will develop innovative products in our core categories. And we will create revolutionary opportunities beyond our current categories. I am confident we are on the right path to make this a reality.

Now I’ll turn it over to Hugh Roberts, who will share our plans for expanding our global scale. Hugh…

Hugh Roberts, President, International Commercial: Thanks, Dave.

Kraft’s global portfolio has seen a significant geographic shift over time, as we’ve captured more of the growth potential of international markets. In 1990, 23 percent of our total business was in international markets. By 2003, it grew to 31 percent. And, within these, developing markets have grown from 2 percent to 11 percent of our total business.

We’ve made good progress, but we want to continue to expand our global scale as part of our Sustainable Growth Plan. We will place particular emphasis on developing markets, where faster population and income growth rates are driving increased packaged food and beverage consumption growth.

Today, developing markets account for 84 percent of the world’s population, 30 percent of its packaged food consumption, and 23 percent of its Gross Domestic Product. Yet, as I mentioned, they account for only 11 percent of Kraft’s revenues. So even with our growth in recent years, developing markets are still a tremendous opportunity for us.

The large markets of China, Russia, Brazil and Mexico are particularly attractive. Their size not only offers us the potential for growth, but also the opportunity to build scale and efficiency to ensure that growth is profitable. We performed well in these countries in 2003, and look to build on that success going forward.

We have three strategies for expanding our scale in developing markets.

First, we will grow categories in their existing markets.

For example, in China, we are building our existing business with additions such as our Pacific brand of seaweed flavored crackers, which leverage global technologies but deliver a local taste.

New products like these will continue to help build our business in China, which has grown 12 percent a year since 1998.

8

In Brazil, our acquisition of Nabisco enabled us to establish a leading presence in the third largest biscuit market in the world. Among our offerings are , our mainstream fun brand for kids and the country’s #1 cookie brand and Club Social, now the #1 brand in Brazil.

Our net revenues in this country have grown 9 percent every year since 1998.

Our second strategy is to expand our core categories across new geographies.

Tang is one of our best examples of how we’ve adapted a global brand to meet local needs in countries around the world.

Tang is an especially good fit for developing markets. It’s affordable. It’s easy to distribute. And it has broad appeal for the whole family. Today, we sell Tang in over 80 countries, with about 85 percent of sales coming from developing markets.

The core of the franchise is the original orange flavor. But we’ve also introduced new flavors that appeal to local tastes.

Today, Tang has 38 flavors, such as sour cherry in Turkey and mango in Saudi Arabia and the Philippines.

We’ve made nutrition another key component of Tang’s success by combining great taste with the benefits of vitamin C. In several markets, we’ve also introduced Tang Plus, which is fortified with Vitamins A and C as well as iron, iodine or calcium, depending on local market needs. We’ve even taken a global advertising concept – “a mother always knows” – and adapted it to respect the unique cultural aspects of local markets.

This ad is running in the Czech Republic. (Show commercial)

The payoff? Our “best of global, best of local” approach has helped grow Tang into a nearly 500 million dollar brand, up 12 percent per year since 1998.

Our third strategy for developing markets is to build infrastructure in new geographies where it makes sense. A good example is how we have built our business in Russia.

Our product portfolio in Russia today consists of: • Confectionery, chiefly under the Alpen Gold and Pokrov brands. • Coffee, under , and Carte Noire • And salted snacks, under our Nordic brand Estrella.

In 2000, we built a packing plant near St. Petersburg to support our rapidly growing coffee business, and today Kraft is #2 in the large Russian coffee market.

9

But what really transformed our business was the 2001 acquisition of the Stollwerck confectionery business. This gave us a strong #2 position in the Russian chocolate market.

Stollwerck also gave us an extensive distribution system, and we’ve leveraged it to expand our coffee and salted snacks business, as well as confectionery.

The result of these efforts? Our revenue in Russia has grown 31 percent per year since 1998.

We’ve made good progress building our international business. But we need to accelerate our efforts. With three strong growth strategies, our goal is to leverage our scale and strength across international markets – more than ever before.

Now let me turn it back to Louis.

Louis Camilleri: Thanks, Hugh.

The fourth, and final, component of Kraft’s Sustainable Growth Plan is to drive out costs and assets.

In addition to our ongoing aggressive productivity efforts, we’ve launched a three-year restructuring program to improve our overall cost structure and help fund our future growth. Under the plan, we anticipate closing or exiting up to 20 of our 197 plants over the next three years. Thus far, we’ve announced the planned closures of seven of these facilities. We also expect to shed about 6,000 positions across all levels of the organization, or about 6 percent of our worldwide employee base, over the same period.

It’s never easy to close a plant or eliminate a job, because of the obvious impact it has on the people who have worked hard to make this company successful. Wherever possible, we are using natural turnover to achieve these reductions. But for those employees who are affected, we’re committed to doing all we can to treat them fairly and help them through their transition. However difficult, these actions are needed to build a stronger, more competitive Kraft and to meet our responsibilities to the greatest number of employees, investors and communities over the long run.

To implement the restructuring program, we expect to incur total pre-tax charges of about 1.2 billion dollars over the next three years, primarily reflecting asset write-offs, severance and associated implementation costs. We expect about half of these costs to be non-cash. Importantly, we anticipate that ongoing annual savings from the program will approach 400 million dollars pre-tax by 2006. These savings will be reinvested back into the business to help us build brand value, transform our portfolio and expand our global scale – all as part of our Sustainable Growth Plan.

Turning now to our financial outlook for 2004 and beyond…

10

We project earnings per share in 2004 at the lower end of our range of $1.63 to $1.70. This includes about 30 cents per share in asset impairment charges and exit costs for the restructuring program.

Finally, we believe we can deliver long-term earnings per share growth of 6 to 9% per year, driven by revenue growth, our focus on cost reduction, and the financial leverage from our strong cash flow. We believe these are realistic, sustainable goals for us in today’s operating environment.

No matter what our financial results, we are committed to meeting our obligations as a responsible corporate citizen.

Our most fundamental duty is to manage our business with the highest ethical standards and in full compliance with the law. With the guidance and oversight of our Board of Directors, last year we enhanced our already rigorous compliance programs with an updated code of conduct and extensive training for employees around the world.

As a global company, we also have a responsibility to support communities worldwide.

By providing more than 90 million dollars in food and financial support last year alone, we’ve helped address important concerns such as hunger, the need for healthier lifestyles and increased access to the arts for under-served populations.

And as the boundaries of accountability and responsibility continue to expand, we’ve taken a number of steps to address some important societal issues related to our business. Two of our major initiatives are focused on obesity and sustainable coffee.

As you know, obesity rates in the U.S. and elsewhere clearly are cause for concern. And we believe that all sectors of society – including Kraft and our industry – have an important role to play in addressing this issue.

In that spirit, we’ve undertaken a long-term, global initiative in four areas: • First, we’re improving the overall nutrition profile of our portfolio. Today, you heard about our new products, but we’re also making meaningful changes to existing products.

One of our most comprehensive, challenging efforts is to reduce or, wherever possible, eliminate trans fat across our portfolio. We just launched several products with zero grams of trans fat, including reformulated , Reduced Fat and two varieties of Golden Oreo.

We expect to continue to roll out reduced trans or zero trans products during the remainder of 2004 and into 2005.

11

• The second component of our health and wellness initiative is strengthened marketing policies, especially those governing marketing to children.

As part of these efforts, we have eliminated advertising and promotion in schools in the U.S. and most parts of the world, with plans to end the practice completely in 2004.

• The third area is to provide additional nutrition information to help consumers make healthy food choices. In 2003, we began a program to provide nutrition labeling in all markets worldwide, even in countries that don’t require it.

• The fourth area is stepped-up advocacy efforts to encourage constructive changes in public policy. As we embarked on our health and wellness initiative, one of our first steps was to create an outside advisory council of leading experts to provide input on our health and wellness initiatives. We’ve also continued to meet with other stakeholders who have varied points of view on obesity, health and wellness, and related topics.

Another corporate responsibility initiative focuses on the sustainability of our agricultural supply chain. We have formed a partnership with the Rainforest Alliance to improve conditions on coffee farms, provide better economic returns for coffee growers, and help move sustainable coffee from market niche to mainstream popularity.

We’re purchasing more than 5 million pounds annually of certified sustainable coffee to blend into some European mainstream coffee brands. And we’re introducing 100 percent certified sustainable coffee products in several Western European markets and within our U.S. business. In fact, if you’ve had a cup of regular coffee at today’s meeting, it’s our new certified sustainable coffee.

Corporate responsibility is not only consistent with business success, it can help drive it. Because of these efforts, together with our Sustainable Growth Plan, I have full confidence in our ability to build shareholder value, today and in the future.

That concludes our review of the business. The meeting is now open for questions and comments. This period will be followed by the presentation of proposals for voting.