[ad_1]
Kraft Heinz shares fell by about 28%, reaching $ 34.51 Friday in 52 weeks. The sale reduced its market value from $ 16 billion to $ 42.1 billion.
From the third quarter of 2015 until today, Kraft's overall sales have stagnated – and this is not the only packaged consumer food company to feel the effects. Like others, Kraft blamed poor performance on changes in consumers' eating habits and the desire for organic foods over processed foods. The company has been trying to expand its brands by offering Capri Sun organic drinks and Oscar Mayer 100% natural hot dogs, but consumers do not bite.
The packaged food is out of service. Consumers seek to consume fresh foods, but if they do not, they often turn to niche brands, modern brands with a healthier image, or private label products that are cheap. If this trend continues, large packaged food companies such as Kraft, General Mills and Mondelez may lose sales.
Mondelez, maker of Oreo, Ritz and Chips Ahoy, has also struggled with sales over the past five years. Since posting net sales of $ 8.83 billion in the fourth quarter of 2014, the company's sales have continued to fall.
General Mills also saw its sales decline. In the last four years, sales have stumbled and, although they have started to increase again, they have not reached the same level as before.
Kraft had notably chosen to reduce costs after the merger between Kraft and Heinz in 2015, facilitated by Warren Buffett's Berkshire Hathaway and the Brazilian private investment group 3G Capital. These reductions have helped increase profit margins, but this leverage is being exploited now.
While Kraft Heinz's profit margins have decreased – and its competitors have caught up with them – it is simply one of many Big Food companies struggling with slower sales and rising inventories. costs.
[ad_2]
Source link