Business Overview Of The Kraft Heinz Company
Company Introduction
The Kraft Heinz Company, now the fifth-largest food and beverage company worldwide, is the result of decades of takeovers and ingenious business strategy that shows no signs of letting up. The merging of both successful Kraft and Heinz companies actually occurred very recently in 2015, despite the roots of both companies going back much further than that. Heinz was based out of Pittsburgh and dates back to 1869 and was formed by Henry John Heinz.
Heinz’s company first started as a business to prepare and market horseradish, although it didn’t survive the business panic in 1875 and as a result, Heinz reorganized his company in 1876 and by 1905, it was the largest producer of pickles, vinegar, and ketchup in the United States. The company continued to expand through great marketing of its products and in 1978, the corporation acquired Weight Watchers International, Inc. This acquisition set in motion a rapid period of global expansion into different markets for the Heinz company that continues into the 21st century. Heinz established food-processing companies and subsidiaries in China, Africa, central and eastern Europe, and the Pacific Rim.
Currently, Heinz has expanded its core products to include Ketchup, various other condiments and sauces, full meals, snacks, and baby food, all of which bring substantial profits to the Kraft Heinz Company. Kraft Foods, the other half of the Kraft Heinz Company, also has a long history. It was established in 1903 in Chicago by James L. Kraft. He and his brother Charles started by processing cheese for distribution to area retailers. Two of their other brothers joined the firm and in 1909, their firm was incorporated as J. L. Kraft Bros. & Company. Their claim to fame was their patented spoil-resistant processed cheese, which they then sold in large amounts to the U. S. Army during World War I. The company was then acquired by National Dairy Products Corporation in 1930, under whom their name was changed multiple times, eventually settling on Kraft, Inc. in 1976.
After being purchased by National Dairy Products Corporation, Kraft, Inc. changed leadership constantly, from merging with Dart Industries, Inc. in 1980, to being acquired by tobacco giant Philip Morris Companies in 1988. Philip Morris Companies also purchased General Foods in 1984 and Nabisco Holdings in 2000. Kraft’s, General Foods’, and Nabisco’s businesses all merged to create the giant Kraft General Foods, Inc. By 2007, after Philip Morris had begun to sell its stake in Kraft, Kraft Foods Inc. became the fully independent, publicly traded corporation that we know it as today, before it was merged with Heinz in 2015. Kraft’s division within the conglomerate is very successful and creates products like Kraft cheese, Milka and Toblerone chocolates, Philadelphia cream cheese, Planters nuts, Jell-O desserts, Kool-Aid powdered beverages, Jacobs and Maxwell House coffees, Lu biscuits, Nabisco cookies and crackers, Oscar Mayer meats, and Cadbury Creme Egg and Cadbury Dairy Milk chocolates.
Company’s Standing in the Industry
Kraft Heinz Company is currently ranked by industryweek. com to be the 6th largest food and beverage manufacturer in the United States. Industryweek. com ranked them to be the 43rd largest U. S. company in 2018. In 2017, they pulled in a revenue of $26. 232 billion and had a net income of $10. 999 billion. However, the revenue they earned in 2017 was. 96% lower than the previous year. Because the Kraft Heinz Company was only created in August of 2015, there are only 39 months of data to look at rather than 5 years’ worth. When the company went public, their stock price started at $72. 96 per share. Their company’s stock peaked at $96. 65 in February of 2017, but since its conception, the price of their stock consistently hung between $70 and $90 until it began to drop rapidly in February of 2018 (5). Since then, their stock has fallen slowly but steadily to the point where it is at today, a price of $55. 89 per share.
The most likely cause for the fall in stock pricing is probably a result of the general public moving towards becoming more aware of our diets and trying to eat more organic foods rather than processed foods for health reasons. Because Kraft Heinz specializes in processed foods, it is likely that this movement has affected the company’s performance.