The Kraft Heinz Company is the fifth-largest food and beverage company in the world and provides high quality, great tasting products for people of all ages. With a leading market position in various categories, it is no wonder Kraft Heinz has a competitive advantage in their industry and has high bargaining power. As the result of a merger in 2015, the company is still considered very new, but with several globally recognized brands, most being staples in the diets of millions of families, it is unlikely revenue will ever see a huge decline. Kraft Heinz has also been backed by both Berkshire Hathaway and 3G Capital and the fact these two giants hold a significant stake in the company is a great sign for investors, since many of the companies they have invested in usually show improved performance (3).
The company includes many successful and iconic brands such as Kraft, Heinz, Capri Sun, Jell-O, Kool-Aid, Lunchables, Oscar Mayer, Weight Watchers Smart Ones, and Velveeta (1). In recent years there has been a shift towards a more health-conscious society, and while this has hindered some of its processed food selections, baby food, cheese, and ketchup are still some of the food sector's more attractive categories (2). The familiarity of their products offered is a great strength of theirs, considering generations of families have grown up eating their foods as well as recognizing their brands.
Kraft Heinz not only is relying on its powerhouse brands, but they are also reinventing some of their products to make them more relevant to trends today as well as making new innovations. Artificial ingredients are being taken out of things like their Kraft Mac ‘n Cheese and the company has found recent success with their Devour frozen meals and the new “Just Crack an Egg.” In the company's recent post-integration update, management credited its new Devour line with returning its frozen food category to growth after several years of declines. With a plethora of steady products already in production, as well as the success they've found with some of their new products, Kraft Heinz is doing a great job of making itself a reliable and consistent company.
Kraft Heinz Company may be one of the most well-known food brands in America, but that doesn't mean that the company doesn't come with its share of weaknesses. One of Kraft Heinz's largest weaknesses is its struggle to expand. Kraft Heinz may be a household brand in America, but its attempts to expand further into other countries haven't seen the same success that they have seen at home. Throughout 2017, Kraft Heinz saw a significant decrease in net sales that totaled about 15% in Canada, which comprises a large part of the company's consumer base, making up almost 10% of its total sales (1). Kraft Heinz also saw a decrease in net sales in Europe as well, however they only dropped about 2.6% throughout the year, much better in comparison to their performance in Canada (1).
Kraft Heinz has also struggled to expand not only into other countries, but into new product lines as well. The range of their products is fairly limited for such a large company, consisting almost exclusively of ready-to-eat meals, cheeses, condiments, dressings, and snack foods (2). They recently tried to expand their portfolio by acquiring Unilever, a UK-based food and beverage company that also produces cleaning agents and personal care products. This merger ended up failing due to a difference in administrative strategy between the heads of both companies (3). The two companies had very different priorities, with Unilever feeling that large corporations have a responsibility to practice sustainability and try to balance the needs of their workers and their communities with the needs of their shareholders, while Kraft Heinz has maintained a much more traditional “cost-reduction-first” approach (3).
This limited product variety and corporate mindset of trimming off every ounce of fat the company can is part of another larger weakness that Kraft Heinz suffers from, which is that they have a declining public image. With legislation constantly calling for companies to be more straightforward with the nutritional information on their products and society as a whole becoming more aware of what we are putting into our bodies and the effects that it has on us; the public is beginning to steer away from heavily processed foods, which is a significant factor in why the company's net sales have been steadily decreasing since its merger. The general public is also becoming much more concerned with the growing wage gap between the rich and poor and the effect that humans are having on the environment and are calling for large companies to change their way to make for a better world for everyone. This vision is directly opposed to Kraft Heinz's goal of producing processed foods as cheaply as possible, and it seems that the company isn't doing anything to change that image or address the social and environmental issues that they are contributing to.
This negative company image can be largely attributed to another weakness, Kraft Heinz's lackluster marketing ventures. They don't have any large advertising campaigns going on and seem to have not taken advantage of the digital age, as they don't have as large of a social media presence as many other large companies. The company relies almost solely on the familiarity that most American customers have with the brand because of its deeply-rooted American history to create sales, but with society and its priorities moving forward, Kraft Heinz hasn't capitalized on this opportunity to show consumers that the company is improving and pivoting as well. This largely limits their consumer base from gaining new customers and risks the possibility of losing loyal customers as the company stubbornly continues to push the same products without trying to appeal to the new world paradigm.
Kraft Heinz has production lines in over thirty countries with one-hundred thirty brands, and although they are a new company, their roots go back almost two hundred years. Thanks to their coverage and thorough partnerships, they are able to expand their distribution and product lines, such as a the recent (August 30th) team up with Hershey's & Reese's to make chocolate and peanut butter flavored whip cream. They also want to help the community at large, through a partnership with the Movember campaign. They have chosen Mr. Peanut to help men with early detection of testicular cancer #SaveYourNuts, and they made a how to video with a step-by-step self-cancer screen instructions.
Kraft Heinz as a whole is also environmentally conscious, with plans to have their packaging be one hundred percent recyclable, reusable, or compostable within the next eight years. Kraft Heinz is a savvy company and knows that sometimes you have to give a little to gain a lot, such as in India, where they are planning to sell off four companies/brands to gain a stronger present in the country. In September, Kraft Heinz had taken over/bought Ethical Bean Coffee a fairly new company, currently they are a top tier roaster of fairtrade coffee beans. Fairtrade means they pay a fair price for products, only partner with eco/environmentally friendly growers who pay their workers a fair wage, and don't use children/indentured workers.
With the ever expanding tech industries, Kraft Heinz know they should not only rely on their food products, and recently they launched Evolv Ventures with the hopes of expanding into the tech industries. Their past successes with building up and expanding companies has given them the confidence they will need in the current tech climate and only time will tell how it pans out.
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