Kraft Heinz Explained

The Kraft Heinz Company
Type:Public
Industry:Food
Hq Location City:Chicago, Illinois and Pittsburgh, Pennsylvania
Hq Location Country:United States
Area Served:Worldwide
Key People:Todd Kaplan (CMO)
Revenue Year:2023
Operating Income: US$4.572 billion
Income Year:2023
Net Income: US$2.846 billion
Net Income Year:2023
Assets: US$90.34 billion
Assets Year:2023
Equity: US$49.67 billion
Equity Year:2023
Num Employees Year:2023
Footnotes:[1]

The Kraft Heinz Company (KHC), commonly known as Kraft Heinz, is an American multinational food company formed by the merger of Kraft Foods and H.J. Heinz Company co-headquartered in Chicago and Pittsburgh.[2] [3] Kraft Heinz is the third-largest food and beverage company in North America and the fifth-largest in the world with over $26.0 billion in annual sales as of 2021.[4] [5]

In addition to Kraft and Heinz, over 20 other brands are part of the company's profile, including Boca Burger, Gevalia, Grey Poupon, Oscar Mayer, Philadelphia Cream Cheese, Primal Kitchen, and Wattie's, eight of which have total individual sales of over $1 billion.[6] Kraft Heinz ranked 114th in the 2018 Fortune 500 list of the largest United States corporations based on 2017 total revenue.[7]

History

The boards of both companies agreed to the merger of Kraft Foods and H.J. Heinz, with approval by shareholders and regulatory authorities in early 2015.[8] [9] The new Kraft Heinz Company became the world's fifth-largest food and beverage company[10] and the third-largest in the United States.[8] [11] The Kraft Heinz co-headquarters are in Chicago at the Aon Center and in Pittsburgh at PPG Place, with other offices across the United States, Canada, South America, Europe, Asia, and Australia.[12] The merger was completed on July 2, 2015.[13]

The merger in 2015 did not immediately affect the naming rights to Heinz Field in Pittsburgh, home of the Pittsburgh Steelers.[14] In July 2022 reports leaked that the company did not renew the rights, which Heinz initially acquired in 2001.[15]

On February 17, 2017, it was reported that Kraft Heinz Co. had made a $143 billion approach to take over the British-Dutch multinational Unilever, a significantly larger competitor with 126,000 more employees and £24bn larger revenue than Kraft Heinz.[16] Unilever declined the initial proposal.[17] The takeover was subsequently abandoned on February 19 soon after UK Prime Minister Theresa May had ordered regulators to examine the potential deal.[16]

On October 19, 2017, Kraft Heinz announced that it was acquiring Cerebos Pacific, including the Saxa salt, Gregg's, and Bisto brands, from Suntory.[18] On March 9, 2018, New Zealand's Commerce Commission approved the purchase, on the condition that they sell the licenses for Gregg's brand of sauces and the F. Whitlock Worcestershire sauce brand due to competition concerns.[19]

In May 2018, Kraft Heinz launched Springboard Brands, a business focused on growing organic, natural, and "super-premium" food brands.[20] [21] Later that year, it was announced Kraft Heinz would acquire the Primal Kitchen brand as part of the company's Springboard Incubator.[22] The $200 million deal was completed in early 2019 and was expected to generate $50 million in new annual revenue.

On October 24, 2018, Kraft Heinz announced that it was selling its Indian nutritional beverage assets, including Complan and energy drink Glucon-D to Zydus Wellness.[23] The sale was completed on January 30, 2019.[24]

In April 2019, it was announced Miguel Patricio, former Chief Marketing Officer of InBev would replace Bernardo Hees as CEO of Kraft Heinz.[25] Patricio took position of CEO in late June 2019 and Alex Behring remained chairman of the company.[26] Later that year, Paulo Basilio returned to his role at Chief Financial Officer and Corrado Azzarita assumed the position of Chief Information Officer.[27] [28] Todd Kaplan has been named chief marketing officer of North America at Kraft Heinz.[29]

In June 2019, Kraft Heinz reached a milestone in achieving a 100 percent Corporate Equality Index score from the Human Rights Campaign.[30] The score recognized the company for its LGBTQ inclusion efforts and becoming a leader in the area among food CPG companies. On July 2, 2019, Kraft Heinz sold its Canadian natural cheese business, including the Cracker Barrel, P’tit Quebec, and aMOOza! brands to Parmalat for C$1.62 billion.[31]

In September 2020, Kraft Heinz reached a deal to sell part of its cheese business to French multinational dairy product corporation Lactalis for $3.2 billion.[32] [33] The sale included the Breakstone's, Knudsen, Polly-O, Athenos, Hoffman's, and Cracker Barrel cheese brands for the United States, and Cheez Whiz outside of North America.[34] Kraft Heinz then partnered with Lactalis to manufacture Kraft and Velveeta cheeses. On November 10, 2021, the U.S. Justice Department approved the acquisition on the condition that they divest the Athenos and Polly-O businesses.[35] The sale was completed on November 29.[36] The divestiture of Athenos to Emmi Roth was completed on December 1,[37] while the divestiture of Polly-O to BelGioiso was completed on December 3.[38]

On September 15, 2020, Kraft Heinz announced its new Strategic Transformation Plan, including a new company purpose, "Let's Make Life Delicious" and an all-new vision, "To sustainably grow by delighting more consumers globally."[39] The next day Kraft Heinz also released its updated 2020 Environmental Social Governance (ESG) report with goals to make 100% of Kraft Heinz product packaging recyclable, reusable, or compostable by 2025 and plans to sustainably source 100 percent of Heinz Ketchup tomatoes by 2025.[40] [41]

On February 11, 2021, Kraft Heinz announced its Q4 2020 and full-year results, resulting in 6.2 percent increased sales and over $26 billion in revenue.[42] The same day, Kraft Heinz announced their plans to sell its nuts business, including the Planters brand to Hormel for $3.35 billion.[43] The transaction was completed on June 7.[44]

In September 2021, Kraft Heinz announced that Hemmer, a Brazilian company focused on condiments and sauces, was being acquired for an undisclosed amount.[45] This acquisition followed the recent agreement to purchase Assan Foods – a Turkish company focused on sauces – belonging to Kibar Holding, for approximately $100 million.[46]

On January 19, 2022, Kraft Heinz announced that it had completed its acquisition of an 85% stake in Germany-based Just Spices GmbH. Launched in 2014, Just Spices is a start-up with approximately €60 million annual sales. Its 170-plus product portfolio includes spice blends, salad dressings, easy-to-prepare "In Minutes" blends, and organic offerings for diverse meal occasions ranging from breakfast and light snacks to salads and baking, with a broad range of savory, sweet, classic, and exotic flavors. The proposed deal was first announced on Dec. 10, 2021.[47]

On September 21, 2023, Kraft Heinz announced that it had signed a MoU with the Gujarat Government (In India) to start the first Global Capability Center (GCC) in Ahmedabad.

Brands

As of 2023, a partial list of global brands included in the Kraft Heinz portfolio:[48]

Kraft and Heinz:

Other:

Finance

For the fiscal year 2017, Kraft Heinz reported earnings of 11.0 billion, with annual revenue of 26.2 billion, a decline of 0.6% over the previous fiscal cycle. Kraft Heinz's shares traded at over $61 per share, and its market capitalization was valued at over 136 billion in September 2018.[50]

In February 2019, shares in Kraft Heinz fell to a record low of under $35 after the company reported a $10.2bn loss for the previous year as the company announced that it would take a $15.4 billion writedown of its Kraft and Oscar Mayer brands, cut its dividend, and acknowledged that the U.S. Securities and Exchange Commission had opened a probe into its accounting practices.[51] In August 2019, Kraft Heinz announced a further $1.22 billion in writedowns,[52] as well as the return of its former CFO, Paulo Basilio, who held the position until 2017, to replace David Knopf, saying that it wanted a "seasoned veteran" following a series of accounting errors.[53]

On February 21, 2019, Kraft Heinz reported that they received a Securities and Exchange Commission (SEC) subpoena in October that aimed to look into the company's accounting policies and internal controls.[54] Kraft Heinz also announced that they cut their dividend from 62.5 cents a share to 40 cents. The company also announced a goodwill impairment charge that wrote down the value of the company's Kraft and Oscar Mayer brands of $15.4 billion in the fourth quarter, which resulted in a net loss of $12.61 billion.[55] The all-resulting news made the company's stock crash more than 20% in after-hours trading. The stock plunge resulted in Berkshire Hathaway, the largest stockowner, recording a write down of $3 billion and a stock value loss of $4.3 billion just a day before Berkshire Hathaway's quarterly earnings and annual report to investors.[56] [57]

In September 2020, Kraft Heinz announced its new enterprise strategy, including plans to cut $2 billion in costs over five years, resulting in an estimated generation of 4% to 6% adjusted earnings per share growth.[58] The announcement resulted in multiple stock upgrades by CFRA and Guggenheim due to the renewed positive financial outlook of the company.[59]

In September 2021, Kraft Heinz was fined $62m to settle the U.S. Securities and Exchange Commission probe into an improper claim of $200m in cost savings.[60] [61] The $200 million in "bogus cost savings" (reportedly from merger) forced the company to restate its financial results for the years 2015 through 2018.[62]

YearRevenue
in mil. USD-$		Net income
in mil. USD-$		Price per Share
in USD-$		Employees
201017,7973,534
201118,5761,775
201218,2711,637
201311,5291,013
201410,922−63
201518,338−26677.0142,000
201626,4873,45281.9141,000
201726,23210,99961.7539,000
201826,300−10,200
201924,9771,935
202026,1851,03234.6638,757
2021[63] 26,0401,020
2022[64] 26,4852,368

Lawsuits

In 2017, the claim that the Kraft Parmesan Cheese label was misleading was rejected by judges. The label reads "Kraft 100% Grated Parmesan Cheese". It was argued that a "reasonable consumer" would know the product could not be 100% cheese, as any dairy product degrades quickly without preservatives.

On December 1, 2023, a federal jury in Illinois awarded $17.8 million to several large food companies, including Kraft Heinz, in a lawsuit against Cal-Maine Foods, Inc. and others over allegations of egg price fixing. Cal-Maine Foods, contesting the verdict, insists on its innocence and the absence of wrongdoing in its business practices.[65]

See also

Further reading

External links

NASDAQ:

Notes and References

  1. Web site: SEC Form 10-K. 15 February 2024 . U.S. Securities and Exchange Commission.
  2. Web site: The Kraft Heinz Company – Locations . www.kraftheinzcompany.com . April 26, 2020.
  3. News: Kraft Heinz headquarters to move to Chicago . Chicago Tribune.
  4. Web site: The Kraft Heinz Company . www.kraftheinzcompany.com . February 11, 2021.
  5. Web site: Form 8-K . Kraft Heinz Company . U.S. Securities and Exchange Commission . February 11, 2021.
  6. Web site: The Kraft Heinz Company . www.kraftheinzcompany.com . June 26, 2019 . https://web.archive.org/web/20190608144648/http://www.kraftheinzcompany.com/company.html . June 8, 2019 . live .
  7. Web site: Fortune 500 Companies 2018: Who Made the List. Fortune. en-US. November 10, 2018. https://web.archive.org/web/20181110190356/http://fortune.com/fortune500/list/. November 10, 2018. live.
  8. Web site: Kraft Foods to merge with Heinz. March 25, 2015. BBC News. October 9, 2016. https://web.archive.org/web/20170226154706/http://www.bbc.co.uk/news/business-32050266. February 26, 2017. live.
  9. Web site: H.J. Heinz, Kraft Foods to merge. Institute of Food Technologists. March 25, 2015. March 28, 2015. https://web.archive.org/web/20150328222402/http://www.ift.org/food-technology/daily-news/2015/march/25/hj-heinz-kraft-foods-to-merge.aspx. March 28, 2015. dead.
  10. News: Kraft and Heinz Merge to Become World's 5th-Largest Food Company. Nolan Feeney. March 25, 2015. TIME magazine. October 9, 2016. https://web.archive.org/web/20161008055448/http://time.com/3757678/kraft-heinz-merger/. October 8, 2016. live.
  11. News: Heinz, Kraft Merger Creates 5th Largest Food, Beverage Company . January 12, 2020 . Natural Products INSIDER . November 21, 2017 . en . January 12, 2020 . https://web.archive.org/web/20200112173911/https://www.naturalproductsinsider.com/operations/heinz-kraft-merger-creates-5th-largest-food-beverage-company . dead .
  12. Web site: Kraft-Heinz Company FactSheet. February 17, 2017. www.kraftheinzcompany.com. https://web.archive.org/web/20170202015802/http://www.kraftheinzcompany.com/KraftHeinzCompany_FactSheet.pdf. February 2, 2017. live.
  13. Web site: The Kraft Heinz Company Announces Successful Completion of the Merger between Kraft Foods Group and H.J. Heinz Holding Corporation. July 2, 2015. January 23, 2015. The Kraft Heinz Company. https://web.archive.org/web/20150714043557/http://files.shareholder.com/downloads/ABEA-3QV6OO/323056694x0x837780/6F5AAFFE-7E3B-4804-8EEF-0B3F8743B03D/FINAL_Closing_Day_Press_Release.pdf. July 14, 2015.
  14. Web site: Officials: Heinz Field name will not change with merger deal. Lindeman. Teresa F.. March 25, 2015. Pittsburgh Post-Gazette. October 9, 2016. https://web.archive.org/web/20160531040942/http://www.post-gazette.com/business/pittsburgh-company-news/2015/03/25/CEO-Heinz-Field-name-will-not-change-with-merger-deal/stories/201503250174. May 31, 2016. live.
  15. Web site: Farabaugh . Nick . 2022-07-10 . Report: Heinz Field to be Renamed, New Name to be Picked Soon . 2022-07-11 . Steelers Now . en-US.
  16. News: Kraft Heinz abandons £115bn Unilever mega-deal. Armstrong. Ashley. February 19, 2017. The Telegraph. February 19, 2017. en-GB. https://web.archive.org/web/20170219235846/http://www.telegraph.co.uk/business/2017/02/19/kraft-heinz-abandons-115bn-unilever-mega-deal/. February 19, 2017. live.
  17. News: Kraft's $143 Billion Bid for Unilever Highlights Squeeze in Consumer Goods. Chaudhuri. Saabira. February 17, 2017. Wall Street Journal. February 17, 2017. Gasparro. Annie. en-US. 0099-9660. Steele. Anne. https://web.archive.org/web/20170217125004/https://www.wsj.com/articles/kraft-heinz-says-it-made-a-takeover-proposal-to-unilever-but-was-rejected-talks-continue-1487334065. February 17, 2017. live.
  18. News: Watrous . Monica . Kraft Heinz to acquire food and instant coffee business in Australia . June 10, 2021 . www.foodbusinessnews.net . October 23, 2017 . en.
  19. News: Hartley . Simon . Kraft Heinz to buy Cerebos, Asian . June 10, 2021 . Otago Daily Times Online News . March 10, 2018 . en.
  20. Web site: Kraft Heinz is going after small organic food brands just as Whole Foods abandons them. Business Insider. September 18, 2018. https://web.archive.org/web/20180918054435/https://www.businessinsider.com/kraft-heinz-appeals-to-organic-brands-as-whole-foods-abandons-them-2018-3. September 18, 2018. live.
  21. Web site: Springboard – Shaping the Future of the Food and Beverage Industry. Springboard. September 18, 2018. https://web.archive.org/web/20180918054335/https://www.springboardbrands.com/#operate. September 18, 2018. live.
  22. News: Hirsch . Lauren . Kraft Heinz agrees to buy paleo mayo and dressing company Primal Kitchen . July 30, 2019 . CNBC . November 29, 2018 . en . https://web.archive.org/web/20190730032524/https://www.cnbc.com/2018/11/29/kraft-heinz-nears-deal-for-mayo-and-dressing-company-primal-kitchen.html . July 30, 2019 . live .
  23. News: Mehta . Tanvi . Kraft Heinz to sell part of India business for about $630 million . June 12, 2021 . Reuters . October 24, 2018 . en.
  24. News: Torrance . Luke . Kraft Heinz sells off Indian brands, facilities . June 12, 2021 . www.bizjournals.com . January 31, 2019.
  25. News: Sorvino . Chloe . Kraft Heinz Names New CEO: Exclusive Interview . July 30, 2019 . Forbes . en . https://web.archive.org/web/20190730032539/https://www.forbes.com/sites/chloesorvino/2019/04/22/kraft-heinz-names-new-ceo-exclusive-interview/#6086528c1ee2 . July 30, 2019 . live .
  26. News: Smith . Connor . 3 Things to Know About New Kraft Heinz CEO Miguel Patricio . July 30, 2019 . www.barrons.com . https://web.archive.org/web/20190503123123/https://www.barrons.com/articles/kraft-heinz-ceo-miguel-patricio-51555953192 . May 3, 2019 . live .
  27. News: Lucas . Amelia . Kraft Heinz says Paulo Basilio to return as CFO . January 12, 2020 . CNBC . August 26, 2019 . en.
  28. News: Giles . Martin . Kraft Heinz Appoints New CIO To Deliver An AI Growth Recipe . January 12, 2020 . Forbes . en.
  29. News: July 16, 2024 . Kraft Heinz Names Todd Kaplan CMO, North America .
  30. News: How One Company Got Top Marks for Inclusion HRExecutive.com . December 29, 2020 . hrexecutive.com . June 3, 2019.
  31. Web site: Parmalat Canada Announces Closing of its Acquisition of Kraft Heinz's "Natural Cheese" Division . 2 July 2019 . Bloomberg . 2022-04-05.
  32. 2022-10-27.
  33. Web site: September 15, 2020. Kraft Heinz to sell part of cheese business for $3.2 Billion. September 16, 2020. The Wall Street Journal. en-US.
  34. Web site: Kraft Heinz Announces Agreement to Sell Its Natural Cheese Business to Groupe Lactalis . news.kraftheinzcompany.com . September 18, 2020.
  35. News: Bartz . Diane . U.S. allows Lactalis to buy Kraft's U.S. natural cheese business, with conditions . November 16, 2021 . Reuters . November 10, 2021 . en.
  36. News: Channick . Robert . Lactalis completes $3.3 billion acquisition of Kraft Heinz natural cheese business, launches new Chicago office . December 11, 2021 . chicagotribune.com . November 29, 2021.
  37. News: Roth . Emmi . Emmi Roth Expands Its Range of Specialty Cheeses With Addition of Athenos . December 11, 2021 . www.prnewswire.com . December 2, 2021 . en.
  38. News: Cheese . BelGioioso . BelGioioso Cheese Completes Polly-O Acquisition . December 11, 2021 . Perishable News . December 3, 2021.
  39. News: The Kraft Heinz Company Unveils Its Strategic Transformation Plan, Updates 2020 Outlook, and Provides Long-term Financial Algorithm . December 29, 2020 . www.businesswire.com . Business Wire . September 15, 2020 . en.
  40. News: Danigelis . Alyssa . Kraft Heinz Reports Progress on Sustainable Packaging Goals . September 18, 2020 . Environment + Energy Leader . September 17, 2020.
  41. Web site: Kraft Heinz Renews Global Commitments in 2020 Environmental Social Governance Report . news.kraftheinzcompany.com . September 18, 2020.
  42. News: Kraft Heinz Reports Fourth Quarter and Full Year 2020 Results . February 11, 2021 . finance.yahoo.com.
  43. News: Lucas . Amelia . Kraft Heinz sells nuts business, including Planters, to Hormel for $3.35 billion . CNBC . February 11, 2021 . en.
  44. News: Tascarella . Patty . Planters packs a punch as Kraft Heinz pockets $3.35B in cash from sale of nuts business . June 12, 2021 . www.bizjournals.com . June 7, 2021.
  45. Web site: Kraft Heinz Enters Into Agreement to Acquire Brazilian Food Company Hemmer The Kraft Heinz Company. September 30, 2021. ir.kraftheinzcompany.com. en.
  46. Web site: June 11, 2021. Kraft Heinz Announces Agreement to Purchase Assan Foods, Headquartered in Istanbul, Turkey The Kraft Heinz Company. September 30, 2021. ir.kraftheinzcompany.com. en.
  47. Web site: Kraft Heinz Completes Acquisition of Majority Stake in Just Spices, a Technology-Enabled Direct-to-Consumer Business. 2022-01-30. news.kraftheinzcompany.com. en-US.
  48. Web site: Global Brands. September 29, 2021. The Kraft Heinz Company.
  49. News: 2017-08-24 . U.S. judge tosses lawsuits about labels on Parmesan cheese . en . Reuters . 2023-02-28.
  50. Web site: Kraft Heinz – 3 Year Stock Price History KHC. MarcoTrends. October 27, 2018. https://web.archive.org/web/20181027185841/https://www.macrotrends.net/stocks/charts/KHC/kraft-heinz/stock-price-history. October 27, 2018. live.
  51. News: Kraft Heinz shares fall as appetites wane. February 22, 2019. BBC News. February 22, 2019. https://web.archive.org/web/20190223021017/https://www.bbc.co.uk/news/business-47336304. February 23, 2019. live.
  52. News: Kraft Heinz Writes Down $1.2 Billion as Brands Wither. August 18, 2019. www.wsj.com. https://web.archive.org/web/20190817193932/https://www.wsj.com/articles/kraft-heinz-books-1-22-billion-in-impairment-charges-11565267075. August 17, 2019. live.
  53. News: Kraft Heinz Replaces Finance Chief. Maidenberg. Heather Haddon and Micah. WSJ. en-US. August 26, 2019. https://web.archive.org/web/20190826143155/https://www.wsj.com/articles/kraft-heinz-replaces-finance-chief-11566824303. August 26, 2019. live.
  54. Web site: LaVito . Angelica . Wang . Christine . 2019-02-21 . Kraft Heinz slashes dividend, discloses SEC subpoena . 2019-02-23 . CNBC.
  55. News: Wattles . Jackie . 2019-02-21 . Kraft Heinz posts huge loss, slashes dividend and reveals SEC investigation . CNN . 2019-02-23.
  56. Web site: Imbert . Fred . 2019-02-23 . Berkshire Hathaway battered by Kraft-Heinz woes, posting a Q4 loss and a $3 billion writedown . 2019-02-23 . CNBC.
  57. Web site: Franck . Thomas . 2019-02-22 . Buffett's Berkshire Hathaway loses $4.3 billion on Kraft Heinz plunge . 2019-02-23 . CNBC.
  58. News: Lucas . Amelia . Kraft Heinz looks to revamp Oscar Mayer brand, cut 20% of products, as it rethinks business . September 18, 2020 . CNBC . September 15, 2020 . en.
  59. News: Garcia . Tonya . Kraft Heinz stock upgraded twice with analysts upbeat about ongoing business transformation . September 18, 2020 . MarketWatch.
  60. Web site: SEC.gov SEC Charges The Kraft Heinz Company and Two Former Executives for Engaging in Years-Long Accounting Scheme . September 11, 2021 . www.sec.gov.
  61. Web site: Stacey . Kiran . Evans . Judith . 3 September 2021 . Kraft Heinz to pay $62m to settle SEC false accounting charges . September 11, 2021 . . London.
  62. Web site: September 3, 2021 . Kraft Heinz Fined $62 Million For Phony Accounting . May 30, 2022 . Forbes.
  63. Web site: The Kraft Heinz Company 2021 Form 8-K. February 16, 2022. U.S. Securities and Exchange Commission. sec.gov. February 16, 2022.
  64. Web site: SEC Form 10-K. 31 December 2022.
  65. Web site: Court awards companies $17.8 million in egg price fixing lawsuit Food Business News . 2023-12-04 . www.foodbusinessnews.net . en.

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