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Weighing Kraft Heinz’s Strengths and Opportunities

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Kraft Heinz’s international presence

The Kraft Heinz Company (KHC) has a wide and extensive geographical presence throughout the globe, including the US, Canada, Europe, the Asia-Pacific, Latin America, and RIMEA (Russia, India, the Middle East, and Africa).

In comparison, ConAgra Foods (CAG) has a presence only in the US, whereas Mondelēz International (MDLZ) has a presence in Europe, North America, Latin America, the Asia-Pacific, the Middle East, and Africa.

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Brand equity, diverse product portfolio, strong manufacturing, and solid distribution

Kraft Heinz has a globally recognized brand portfolio, with eight brands contributing more than $1 billion of sales apiece, and five brands contributing $500 million to $1 billion. The company has a diverse product portfolio consisting condiments, sauces, cheese and dairy, meat, meal replacement, coffee, and replacement beverages.

Kraft Heinz has an extensive network of manufacturing and processing facilities and distribution centers, which allow the company to supply fresh and high-quality food and beverages to its customers. These distribution centers include facilities for refrigeration.

Market expansion in an untapped market

Even though Kraft Heinz has a presence in many countries, 79% of its revenue came from the US and Canada in 3Q15. The North America market is mature, and opportunities for expansion arise in emerging markets, where Heinz has developed its presence.

Kraft Heinz’s better-for-you option

According to the Nutrition Business Journal, over the last five years, natural and organic food and beverage sales in the United States grew at a CAGR (compound annual growth rate) of 15%, reaching $80 billion in 2015. Increasing demand for better-for-you products presents an opportunity for Kraft Heinz as it invests into the better-for-you options.

Kraft Heinz is a component of the S&P 500 Index (SPY) and the Consumer Staples Select Sector SPDR ETF (XLP). Kraft Heinz constitutes 0.23% and 2.4% of SPY and XLP, respectively. Food companies make up 18.5% of XLP’s portfolio, while food and beverage companies make up 39.6% of XLP’s portfolio.

But what challenges is Kraft Heinz up against in 2016? Continue to the next part for more analysis.

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