Kraft Heinz plans to streamline food businesses

Kraft Heinz plans to streamline food businesses

Kraft Heinz, which reports fourth-quarter earnings tomorrow, has a plan to move on from a disastrous 2019. 

Chief executive Miguel Patricio says the path forward depends on streamlining the company’s sprawling product lines while putting renewed emphasis on its proven winners.

“The business is extremely complex,” Mr Patricio said, rattling off the various products the company makes at its 80 factories around the world, from fruit juice and coffee to ketchup and macaroni and cheese. 

“What we’re trying to do is to see what are really the similarities among these businesses, to see if we can group and give a better purpose for these groups for the future. Simplifying,” he said.

The quarterly numbers themselves are expected to be unimpressive -- analysts project a fourth consecutive period of falling revenue as the company deals with fierce competition and a drop in consumer loyalty to established brands. 

Efforts to revitalise well-known names and develop new, more appealing products may be “an extended journey”, according to Bloomberg Intelligence analyst Jennifer Bartashus. She predicts Kraft Heinz will try to stabilise the business this year to lay a foundation for growth in 2021.

Mr Patricio took the reins last year amid a US Securities and Exchange Commission subpoena and a $15.4bn writedown, and promptly told investors the company needs a “comprehensive strategy”.

He has now been in charge for over seven months, so pressure is rising for more concrete information.

Kraft Heinz shares have fallen almost 6% this year, adding to last year’s 25% decline.

For now, Mr Patricio says the company will trim fat where possible and put some muscle back into the brands doing the heavy lifting for the company. 

He imagines a more agile food manufacturer that saves money on operations, while reinvesting the savings in bestselling flagship brands like Heinz ketchup and Philadelphia cream cheese. 

- Bloomberg

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