American household name Kraft Foods said it would cut off 1600 jobs in the U.S. and Canada this year before it moves forward to splitting its giant business into two separate entities, the company announced in a statement.

"When we announced our decision to create two world-class companies last August, we said both would be leaner, more competitive organisations," said Irene Rosenfeld, Kraft chairman and chief executive, in a statement.

Employees in sales and corporate operations are expected to make up most of the layoffs, even as Kraft said most of the 1600 jobs were currently not filled anyway.

Kraft further said the cuts did not include manufacturing facilities, but hinted the sector could be affected eventually.

"With the impending separation into two independent companies, Kraft is continuing its review of manufacturing facilities to consider what's best for both new companies."

Kraft is reorganizing to separate its businesses on snacks and groceries.

"Our plan for a more nimble company, combined with the current economic and competitive pressures, led us to this point," said Kraft executive vice-president Tony Vernon, who will lead the grocery company after the split.

Kraft owns famous food brands like Cadbury, Jacobs, Maxwell House, Nabisco, and Oscar Mayer.