Commentary
Debt And D2C: What We're Learning From Kraft Heinz
- by Dave Morgan , Featured Contributor, March 14, 2019
Global food conglomerate Kraft Heinz, owner of brands like Oscar Meyer, Velveeta and Maxwell House, surprised a lot of folks in mid-February when it announced a loss of over $18 billion for 2018 and said more losses would be coming in 2019 as well. Kraft Heinz stock lost more than …
3 comments about "Debt And D2C: What We're Learning From Kraft Heinz".
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Sometimes companies amass too much debt to acquire and merge and believe they can grow sales more than historical data shows and also cut costs. Are people buyong less ketchup and beans or are they not so buying them online? Sometimes people just pay too much.
Dave, is it possible that firms in the K/H situation are just too beaurcratic, via legacy management structures, to pivot? To foster innovation?
Servicing debt is hardly new; cost-cutting to generate savings in operating costs is also familiar territory. But isn't that financial-person stuff? And how many folks out of finance have been leaders in brand innovation? (No offense meant to financial people.) Of course, one wonders, if a CPC foods company can't make an easy opening/closing packet of Swiss cheese...their forecast is already: cloudy, with rain ahead.
Jack, thanks for making the point i was trying to, and doing it in a much simpler way. Net. Net. There is too much debt because they paid too much. In a less competitive world - without direct seiing and online shopping - they could have probably driving more profit from price and channel stuffing. But, no more.