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

2004 Annual Meeting of Stockholders Kraft Foods 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 Kraft Foods 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 food industry leader with great global potential. And we’re fully focused on tapping into our enormous strengths and unique advantages – our brands, 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 sugar-free desserts. Results in Biscuits, Snacks & Confectionery 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 -- cheese, 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 brand 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 Nabisco 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 snack 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 Capri Sun bottle can. The product was originally designed to build the brand’s presence in convenience stores.

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