Why Kraft Heinz Is Warren Buffett's Worst Bet

Nine years after its megamerger, food behemoth Kraft Heinz is facing challenging times amid slumping sales, high inflation, a shift away from processed foods and stiff competition. Despite $27 billion in annual sales, the company must keep innovating if it wants to compete with private-label brands such as Costco's Kirkland or Wegmans' various brands which are quickly stealing market share as recent generations value lower prices over loyalty. With a new CEO, a renewed focus on core brands, and Brazilian private equity company 3G out of the picture, majority stakeholder Warren Buffett's Berkshire Hathaway is betting it can make a comeback. But experts say it could be difficult.

Chapters:
0:00 Introduction
2:01 Chapter 1. A bad deal
7:40 Chapter 2. Turn around?
11:37 Chapter 3. Industry Risks

Clarification: At 4:12 a speaker in this video misstated the relationship between 3G and Kraft. 3G owned Heinz prior to the Kraft Heinz merger.

Produced and shot by: Natalie Rice
Edited by: Evan Lee Miller
Animation by: Christina Locopo, Jason Reginato
Senior Managing Producer: Tala Hadavi
Additional Sources: FactSet, Reuters
Additional Footage: Getty, AP Photos, The Kraft Heinz Company

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Why Kraft Heinz Is Warren Buffett's Worst Bet

[ramsinbarkhoy]

Highly processed and addictive foods… their failure is a win for humanity!

[-KillaWatt-]

The brand is known for affordable food. Hotdogs, Kraft Mac and Cheese, etc, etc. Their prices don't reflect that and they lost touch with their consumers. Mac and cheese used to be a cheap meal a mom could put on for their kid when they came home for lunch from school. Now it's fine dining with the cost of their products.

[tommcfadden]

The quality of their products is awful compared to what it once was.

[MoneyPrinter]

I love how many euphemisms CNBC uses for layoffs: "private equity meritocracy", "zero-based budgeting", "cost-cutting", "streamlined operation".

[MarufulIslam-dpjg]

10:48 This lady is master of corporate jargon. She never said anything substantial throughout the video but talked a lot. Lol

[speucey]

When the merger happened, in Canada, there was a huge fiasco about heinz no longer buying tomatoes from Canadian farmers. Whether or not this has changed, it was irreparable brand damage at least in Canada. Many families I know still avoid heinz because of this.

[catmelvin]

KraftHeinz lost because they forgot they were in the business of feeding people. People who want premium branded food products aren't buying frozen pizza, and the people who are tend to look for value/bargains

[BobSmith-mpld]

This brand has lived off of boomer nostalgia for the last 20 years.

The biggest problem for this brand, is it pretends to be a premium food brand, but most of what they make is done better by private labels for a lower price.

[luiscamacho]

The problem with big corporations is their need for constant never-ending growth to make wall street speculators happy.

[andreww]

"elevating food experiences"

elevating rates of diabetes

[Casa-zqfm]

Kraft-Heinz’s story is similar to what happened to Boeing. Bring in MBA types, extract value with a zero budgeting strategy’, go goofy with 3G thinking, and destroy the product.

[JokerLurver]

Had to increase prices by 15% in 2023 ... to pay off ridiculous corporate bonuses? And shrinkflation? No mention of these things. Suspicious.

[jpringle]

All trash food like products, Your health is better off not touching that crap.

[larissa]

I just don’t see them innovating their way out of this one. Private label brands are just cheap with the same quality

[donovantobs]

As an lnvesting enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?.

[LayKxD]

These products are not cheaper than local alternatives. I noticed the cost in sandwich meat because I eat it everyday for lunch. I went to my local deli (I live in Louisiana) and noticed that a pound of fresh meat sliced is cheaper than than Kraft processed. Same with cheese singles.

I am not saying everything local is cheaper, but I noticed that this processed stuff and other Kraft products costs more than better quality ingredients. The only downside is that they don't last on shelf as long, but like I eat it all before it goes bad.

[jbarkley]

High fructose corn syrup in ketchup. Unbelievable. 😢

[zunedog]

Think how many years of life this processed junk food has taken from people.

[mralexpub]

It would seem Unilever dodged a bullet by strongly rejecting the merger.

[aviuspersona]

High fructose corn syrup doesn’t belong in ketchup. I hope brands that unapologetically use ingredients like this continue to fail