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Aussies Losing Their Taste for 'Horrible' Vegemite

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While President Barack Obama's position may have evolved on some matters, on the issue of Aussie spread Vegemite, he stands firm: "It's horrible."

Kraft Foods (KFT), which has owned the brand since 1926, is finding its latest generation of customers who echo the president's sentiment.
The brown spread, which can taste to late initiates not unlike rancid soy sauce, is made from the yeasty castoffs of beer brewing. Since children in Australia cannot earn money to buy their own food, eating of the spread is generally relegated to them. Once trained, Australian palates reportedly continue to crave the salty stuff well into adulthood, just as Americans crave peanut butter and French people Nutella.  

Shifting demographics in Australia have interrupted this mother-to-son culinary apprenticeship, however, leaving Kraft scrambling to find ways to appeal to new consumers, especially Australia's increasing Asian population. The company tried and failed to lure eaters in with "iSnack 2.0," a blend of Vegemite and cream cheese, as well as with a low-salt version called "My First Vegemite." New Vegemite sold 350,000 jars in its first year, compared with 22 million for the classic version.

"I refused to try the kids' version," one Canberra mother and Vegemite eater told the Wall Street Journal. "Part of the appeal of Vegemite is the saltiness."??

While Australians all seem to have Vegemite on hand, Kraft estimates most of them only buy one jar a year. Even the neighboring Kiwis can't be lured in. Unilever's (UN) similarly vile Brit spread Marmite has taken hold in New Zealand, which makes its own local variation on it. Demand for it there is much higher than it is for Vegemite -- so much so that when the only local plant shut down temporarily for repairs, a jar of Marmite sold for $1,674 at auction.

Meanwhile, Kraft is still hoping to find a way to reconnect Aussies abroad with their childhood treat using social media -- for now, 296,529 "like" it on Facebook. "The core Vegemite is loved," said Kraft's Aussie director of corporate affairs told the Wall Street Journal. "We just need to get more Vegemite to them in a better way, rather than try and reinvent a new product."

As Kraft has done with other hard-to-stomach items like Miracle Whip, it could start a "love it or hate it" campaign for Vegemite. Or it could combine brewer's yeast sloppy seconds with lean, finely textured beef trimmings to make Vegemite burgers for the barbie.
POSITION:  No positions in stocks mentioned.