Kraft Foods Inc., engaged in the manufacture and sale of packaged food products, reported net revenue for the first quarter 2008 increased 20.8% from the same period of 2007 to $10.4 billion compared.

First quarter net income declined to 13.4% to $608 million or $0.40 per diluted share versus $702 million or $0.43 per diluted share for the same quarter a year ago.

Operating income in the quarter increased 3.8% from the prior year to $1.2 billion.

U.S. Beverages organic net revenues grew 2.4% driven by solid growth in coffee, partially offset by a decline in ready-to-drink beverages. The successful re-launch of Maxwell House mainstream coffee with product quality and packaging upgrades resulted in high single-digit volumes.

Powdered beverage revenue was flat versus the prior year, as Crystal Light was offset by a decline in Kool-Aid.

U.S. Cheese organic net revenues grew 8.8% reflecting significant price increases and favorable product mix partially offset by lower volumes. Declines in natural cheese volume from higher pricing were partially offset by gains from innovative new products such as LiveActive snacking and cottage cheeses as well as Singles Select processed cheese slices.

Operating income excluding items declined 23.8% in the first quarter as the contribution from pricing was more than offset by continued high input costs, including an approximately 30% increase in dairy costs, as well as significant investments in marketing.

U.S. Convenient Meals organic net revenues grew 7.5% driven by balanced contribution from volume growth, favorable product mix and price increases. Volume growth was primarily driven by ongoing success in pizza, where all brands grew in the quarter.

U.S. Grocery organic net revenues grew 1.4% as price increases in several categories and favorable product mix more than offset volume declines. The re-launch of Kraft pourable salad dressings with improved product and package quality and integrated marketing support, began in March.

U.S. Snacks & Cereals organic net revenues grew 2.7% primarily from price increases as well as solid volume gains in biscuits. Cookie growth was driven by double-digit gains in Nabisco 100 Calorie Packs and successful new products and innovations such as Oreo Cakesters and Oreo snack ''n seal re-closable packaging.

Crackers also gained in the quarter, Ritz crackers resulting from improved quality and marketing. Revenue growth in ready-to-eat cereal was driven by higher pricing and gains from further recovery in the kids'' cereal portfolio.

Canada & North America Foodservice organic net revenues grew 6.4% from a combination of price increases and solid volume growth. Volume gains were primarily driven by new product innovation and improved retail execution.

European Union organic net revenues grew 9.5% from strong volume growth across all key categories combined with favorable product mix and modestly higher pricing.

Chocolate grew double-digits due to continued focus on core brands such as Milka, Toblerone and Cote d''Or. Gains in coffee were driven by growth of the Carte Noire brand in France and the Jacobs brand in Poland. Cheese growth in the region was driven by improved marketing and pricing under the Philadelphia brand.

Developing Markets organic net revenues grew 21.7% driven by strong gains in pricing, product mix and volume. Investments in marketing drove strong growth across all key markets in the Eastern Europe, Middle East & Africa region. Growth in the Latin America region was driven by pricing and solid volume gains, particularly in Brazil, Argentina, and Venezuela. Revenues in the Asia Pacific region grew due to strong consumption growth, distribution gains and improved marketing, particularly in China.

Kraft has raised its outlook for 2008 organic net revenue growth to at least 5%. The company also confirmed its expectation that 2008 EPS will be at least $1.56 per share, or $1.90 excluding items.

Additionally, the company continues to expect cumulative annualized savings from the restructuring program to reach approximately $1 billion by year-end and $1.2 billion by the end of 2009.

The company continues to expect to close the transaction with Ralcorp in mid-2008.