Kraft (NYSE:KFT) reports market share growth in Mac & Cheese! Well, perhaps this isn't big enough news to make major newspapers rewrite their headlines for the day. But it is an encouraging sign for big cheese in its first quarter since being spun off by Altria Group (NYSE:MO).

Free at last
As you may know, the company declared its complete independence on March 30th. But the changes began last June, when Kraft tapped former PepsiCo (NYSE:PEP) executive Irene Rosenfeld as its new CEO. She embarked on a new strategic course that included divesting businesses, pruning brands, making investments in product quality, and improving marketing efforts.

Sales up, earnings down
First-quarter results for this Motley Fool Income Investor pick are in, and they look like a mixed bag of one step forward, one step back. The backward step is operating earnings declining 3% for the quarter (excluding unusual items). Key drivers of the earnings slide were spending on product quality upgrades, new product support, and distribution infrastructure. It also didn't help that raw material costs continue to increase.

The step forward was revenue growth. First quarter "organic" revenues notched a solid 3.6% gain overall, and were positive in nearly all segments. That's well on track for the company's goal of 3%-4% annually. And yes -- our old standby mac & cheese improved market share, helped by the ongoing success of Easy-Mac cups.

Organically speaking
When Kraft talks about "organic" growth, it doesn't mean foods grown with fewer pesticides. Instead, this refers to higher sales excluding the effects of acquisitions, divestitures, and currency. It's key to understanding whether a packaged food company is growing share by selling more core products, and whether new product introductions are capturing consumer acceptance. Acquisitions are nice, but the huge base of existing staples needs to perform.

Other Kraft organic growth success stories for the first quarter include frozen pizzas licensed from California Pizza Kitchen (NASDAQ:CPKE), the recent launch of DiGiorno Ultimate pizza, and strong growth in developing markets.

I think Ms. Rosenfeld is on the right track here, demanding that staple product categories must grow, and backing that up with quality and marketing investments. She admitted on the earnings call that the company still faces many challenges, but she expects to see continued progress in upcoming quarters.

Time to take a bite?
The stock has been stuck mostly in a trading range of $30-$35 for the last four years. Although it pays a reasonably tasty dividend of more than 3%, I don't expect a breakout anytime soon. It's a defensive stock, like other big food producers Sara Lee (NYSE:SLE) and ConAgra (NYSE:CAG), which may have some appeal as the market navigates choppy waters. The Motley Fool CAPS community isn't feasting on Kraft, which I consider a negative leading indicator. We'll see as the year plays out whether the company can deliver a big bite of organic growth, and the profits to match.

Ready to bite off some organic investments?

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Sara Lee is a former
Income Investor pick.

Fool contributor Timothy M. Otte samples organic fare from Dallas and welcomes comments. He doesn't own stock in any of the other companies mentioned in this article.