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Chicago-based Kraft Heinz posted total 2021 sales of $26 billion, nearly identical to 2020, while net profit of $1 billion skyrocketed 184 percent, benefitted by 2020 divestitures and favorable foreign exchange rates.
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if its profit comes from xch rates and divestitures,divestitures is one time deal,the other (foreign exchange) can reverse any time.
Chicago-based Kraft Heinz posted total 2021 sales of $26 billion, nearly identical to 2020, while net profit of $1 billion skyrocketed 184 percent, benefitted by 2020 divestitures and favorable foreign exchange rates.
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if its profit comes from xch rates and divestitures,divestitures is one time deal,the other (foreign exchange) can reverse any time.
Kraft Heinz is a disaster of a company ran by 3G capital and their terrible cut throat business model of zero based budgeting. 3G is a ruthless Brazilian firm that is absolute scum of the earth.
They’ve had years of low margin in dying, unhealthy areas of food. Several of their brands were so damaged by their cost cutting insanity that they had to take multi billion dollar asset impairments on their former acquisitions.
They’re probably using this time to boost margins because they haven’t been able to push cost increases into Walmart and others for a while. It’s normally hard to do anything when your company doesn’t understand value and resorts to cost cutting as the answer to everything. They cut so far into the bone that there’s nothing left.
dont these food companies have to compete with store brands?Walmart,Kroger,HEB of the world all have their own brands.
I just bought Kr butter !
That’s one of their things that puts a lot of pressure in the legacy CPG companies. Not only do they sell right next to them with the lower price, but the grocery store middle aisles are a graveyard. There’s a war for the end cap space that touches the dairy/and or fresh food sections. Fighting for this space is ruthless and kills any margin.
One of the few answers is selling high margin on the go items or attempting to shift to direct to consumer. Many of the food manufacturers have disassembled their distribution networks as well. This system used to be what drove their power, but now it’s irrelevant. The shelf space is what matters and the targets, Amazon’s, Walmarts have their own distribution…but relying on their distribution puts even more pressure on the CPG companies because all they have left is throwing themselves at holding shelf or freezer space.
At the end of the day, they’re not manufacturers, they’re marketing companies and their spending patterns reflect it.
Some people say the reason for the high inflation now is because of the pandemic and other people say because of the US government have been printing way too much money over the years and the US debt is out of control.
So what really is the main reason? I hear Europe also is experiencing high in inflation just like Canada and Mexico.
This inflation is getting out of control and getting worse every month.
Inflation has a definition.
That definition is the answer to your question.
Last edited by Led Zeppelin; 03-12-2022 at 08:06 AM..
True, but I'll repeat it means nothing until the reason for printing too many dollars is understood. It wasn't one day government decided to do that to destroy the economy. It was done because of an emergency and the need to keep people and businesses on their feet.
Isn't it funny how Kraft, which has been around forever, all of a sudden got greedy the day Biden was sworn in?
Kraft has been rebuilding their business for the past several years. They had been dealing with increasing costs and decreased earnings for several years. Their stock got hammered dropping over 70% from 2017 to 2019. They made significant investments and divestures to improve their cost structure. This started well before Biden was elected and was being demanded by long-term investors. Their recovery just started to take hold right before COVID hit. They are not being a greedy company, they are operating a business model. They, like any other business, are a business dealing with cost increases throughout their supply chain. In order for them to survive as a business they have to utilize a combination of further reducing their costs, increase their prices, substitute cheaper ingredients into their products, reduce portion sizes, etc. This is an unprecedented inflationary environment. A pandemic, conflict, significant stimulus, changes in work structure, demographic shifts contributing to significant labor shortages, tariffs, along with work visa policy that further restricted the labor force, have all led to where we are today. Some of it is within our control and some of it is a worldwide issue.
On a small scale, ask any small restaurant business owner why they are raising their prices? Are they being greedy when they have higher labor, utilities, materials, and food costs? My local pub had to raise their prices nearly 50% across the board from March 2020 to today. They are a family business and at one point only had enough business to support the owner and his wife to manage take-out only orders during the pandemic. Many others could not cover their overhead expenses and simply closed the doors and are now permanently gone.
Large companies, like Kraft, supplying the grocery stores fortunately have not had to raise their prices 50% on most products. Hopefully, they will continue to be able to control their costs enough to soften the blow to consumers and avoid contributing to a full out recession.
Their “business model” is to merge with other food companies and slash and burn cost. After the legacy food companies saw what 3G did the Kraft Heinz in that merger, the walls are up for a takeover and they already implemented many of 3GS cost cutting ideas to make merger/slash and burn less attractive. Many of the legacy food companies are also either partially family owned higher than 20% to prevent consolidation or owned by family trusts higher than 20% to prevent consolidation that are some of the largest charitable trusts in the world. Will these charities sell the company soul to a Brazilian company that has no corporate responsibility what so ever, and relies entirely on feeding more companies into the furnace? Likely no.
After unilever politely told Kraft Heinz to go F itself, they have “stalled” because they have no actual ideas beyond slash and burn. In fact, all they did was incinerate value by destroying the IPs they acquired which required multi billion dollar permanent write downs (Oscar Meyer, Kraft)
They were under SEC investigation and the stock pretty much lost 60% of its value. The “recovery” from covid was them getting sales because covid forced people to eat at home and caused panic buying/hoarding. It’s not a coincidence that their “business model” started “paying off” at that time (it didn’t pay off since the stock is flat and is $10 under what it was a decade ago, which is horrific for a stable dividend stock and this transpired during a time when the rest of the market skyrocketed.
Last edited by Thatsright19; 03-12-2022 at 11:17 AM..
True, but I'll repeat it means nothing until the reason for printing too many dollars is understood. It wasn't one day government decided to do that to destroy the economy. It was done because of an emergency and the need to keep people and businesses on their feet.
Funny thing is, it really was not necessary.
Much of the money was ever spent and is just sitting there. Many or most businesses had an uptick in business and profitability, the free government money was just gravy. A few small businesses took big hits and did need the government money. Mostly food service or other service or entertainment oriented businesses. The great resignation is hitting many businesses harder than COVID did. The government's solution of dumping money into things is not gong to help with that either. Printing money is a short term tactic that at best delays the eventual outcome. It usually makes the long term impacts worse.
Much of the money was ever spent and is just sitting there. Many or most businesses had an uptick in business and profitability, the free government money was just gravy. A few small businesses took big hits and did need the government money. Mostly food service or other service or entertainment oriented businesses. The great resignation is hitting many businesses harder than COVID did. The government's solution of dumping money into things is not gong to help with that either. Printing money is a short term tactic that at best delays the eventual outcome. It usually makes the long term impacts worse.
I wholeheartedly agree with this. EVERYONE was getting money, even though office workers were making the same money, if not more, and their expenses were cut precipitously due to eliminating their commutes, vacations, and typical weekly spend.
White collar workers were a powder keg of cash, which grew worse in the lockdowns, and the stimmies lit the fuse.
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