When you go into the grocery store, one of the biggest companies on the shelves is KraftHeinz. In early August, in an article by Richa Naidu and Aishwarya Venugopal of Reuters the company reported weak sales and wrote down the value of several business units by $1 billion.
The competition for KraftHeinz is shoppers buying private label or store named products, changing consumer tastes, and lower investment in brands as management has been aggressively cutting costs. The trick is to cut costs without gutting the marketing budgets too much. In addition, costs for inputs and transportation have risen.
The company will try to move from cost cutting to focus on efficiency and a stronger balance sheet said new President Miguel Patricio. Mr. Patricio joined KraftHeinz from Anheuser-Busch InBev in April.
The writedown by the company is the second in 2019, the first was in February when the company wrote off $15.4 billion in assets on Kraft and Oscar Mayer brands.
Linking to dividend paying companies, the writedowns by KraftHeinz shows how competitive the marketplace is and although the large companies have most of the advantages in front of them in terms of shelf space, marketing dollars, consumer loyalty, when a market is competitive watch out.
There are more questions than answers, till the next time – to raising questions.