The share prices of Kraft Heinz took a major plunge and recorded an all-time low. This crash came amid signs of changing customer appetites, which has noted a drop in customer liking for the firm’s processed foods. The stocks of the US food giant dropped 27%. Prior to this, it had reported flat sales in 2018 and had declared that it would be writing down the projected value of its brands Kraft as well as Oscar Mayer by a value of $15.4 billion, which roughly translates to £11.8billion.
Further, the firm declared that the practices regarding its accounting have been under investigation. However, it also communicated that the firm was not expecting to face any material financial results to arise out of the inquiry.
Currently one of the largest food companies in the world, Kraft Heinz has well-known brands, including the likes of its famous ketchup, Amoy, Jello-O, and Wattie’s, under its wide umbrella. The company was initially conceived back in 2015 as a result of the merger between HJ Heinz and Kraft Foods. The control of the firm lies with the 3G Capital investment firm and Berkshire Hathaway. The latter is famous for the cost-cutting approaches it adopts towards its businesses.
This strategy has yielded mixed results when applied in the case of Kraft Heinz. Back in 2018, the firm had reported a loss of $10.2billion loss for 2018, followed by unwavering sales worth $26.2billion and the subsequent write-down imposed on the company’s brands. Kraft Heinz has chosen to place the blame for 2018’s shortfall solely on higher logistics and manufacturing costs. The CEO of the firm, Bernardo Hees opined that they had been overly optimistic when it came to delivering savings, which failed to materialize by the end of the year. Further, Kraft Heinz has stated that this write down reflects expectations of even lower profits henceforth.