Kraft Heinz Reverses Course on Company Split as Sales Continue to Slide

Old_Joe

Following are edited excerpts from a current report in The New York Times:

The company’s new C.E.O. said he saw opportunities to fix and grow the food giant — and cut prices for consumers.

Just a few months ago, the food giant Kraft Heinz had a plan to boost sales: It would split into two separate companies. On Wednesday, executives at Kraft Heinz unveiled a new plan to boost sales: The company would remain a single entity, for now.

The chief executive, Steve Cahillane, who joined Kraft Heinz in early January to guide the company through the split, said the business needed to be put on firmer ground first. He told Wall Street analysts and investors that the split was postponed because it wanted to focus on “returning the company to growth and not be distracted” by the work required to break it up.

He said there were a number of brands that, with a little investment, could see a growth in sales. For consumers, the strategy will likely mean a reduction in prices for some Kraft Heinz products. Mr. Cahillane said that over the last few years, the industry, responding to commodity inflation, “busted through four or five levels of price points in a very accelerated fashion.” He added: “The consumer was left very disappointed in that, and that’s been very well understood and obvious.”

He said that in 2027, Kraft Heinz would revisit the proposal to split the company. The company warned that sales would likely fall again this year by as much as 3.5 percent, noting, among other challenges, cuts to the federal food stamp program. Purchases from customers using food stamps make up about 13 percent of its business.

Kraft Heinz, with $25 billion in revenue and the home to brands like Kraft Singles and Philadelphia Cream Cheese, has been struggling for years.

Comment:   Kraft-Heinz seems to have been one of the very few missteps by Mr. Buffett.

WABAC

Nothing beats Heinz ketchup. We also love their chili sauce for shrimp cocktails.

Cheese and cream cheese at Aldi work just fine.

YMMV.

Old_Joe

Are there even other brands than Heinz ketchup or Skippy Super Chunk peanut butter?  

WABAC

Old_Joe said:

Are there even other brands than Heinz ketchup or Skippy Super Chunk peanut butter?  

No. Of course not. But I don't want to think too much about the company that makes Spam also makes Skippy.

Per the OP:

Mr. Cahillane said that over the last few years, the industry, responding to commodity inflation, “busted through four or five levels of price points in a very accelerated fashion.” He added: “The consumer was left very disappointed in that, and that’s been very well understood and obvious.”

I'll say they did. In spades. I doubt I'll ever by another box of Triscuits now that I know Kroger makes a fine alternative at half the price.

Old_Joe

“The consumer was left very disappointed in that..."

No, “The consumer was left very PISSED AT THAT..."

Sven

While Heinz do make good products, their price points are higher. Generally we experienced a wider range of quality among store brand food. In college, we stayed away from plain label beers. An exception are Costco Kirkland brand food products.