Is This New Plan Finally Going to Turn Kraft Heinz Around?
Heinz was bought out by 3G Capital in 2013, with the new owners focused on cutting costs. That's the playbook that 3G Capital is known for, championing so-called "zero-based budgeting." The goal is to reduce costs to improve profits. Heinz then bought Kraft in 2015, creating Kraft Heinz (NASDAQ: KHC), and started looking for even more fat to trim. The problem is that this business approach hasn't performed nearly as well as expected for the company or investors.
Kraft Heinz recently came out with a different plan -- will this one work?
Consumer staples stocks like food makers tend to be fairly stable businesses built around iconic brand names, broad distribution systems, and significant advertising might. Effectively, the major players own the brands you know by name and have the reach to get them into the places you shop. There are a lot of companies in the space, and competition can be fierce. Missing a trend or lagging behind a new industry development can have devastating consequences. Look no further than General Mills (NYSE: GIS) for confirmation of that, as its Yoplait yogurt brand lost important market share when the company didn't jump on the Greek yogurt craze.
Source Fool.com
