Cue the hazing ritual... Kraft Heinz announced Monday it's replacing its CEO with Miguel Patricio. Shares barely budged on the switch, but they're still down 43% in the past 12 months. Some of that's caused by you not eating hot dogs and mac anymore. The rest is on the company:
- Kraft Heinz revealed in Feb. that its Oscar Mayer and Kraft brands were worth $15B less than expected.
- Then it cut its quarterly dividend payout to shareholders by over a third because of smaller profits.
- And the SEC's investigating it over something in its accounting books.
An "obsession for cutting costs"... That's been the un-fun, un-secret, unsuccessful formula baked into Kraft Heinz lately. It's the business doctrine of Brazilian private equity firm 3G, which teamed up with Warren Buffett to finance the $49B Kraft and Heinz merger back in 2015 (3G also bought Budweiser). Cutting company-wide budgets may have made some short term extra profits, but insiders say it's hurting long term sales.
Kraft's pulling a 180... "I bring a very different profile" (Patricio's words, not ours). The former Budweiser exec focuses on more than just ruthless low-cost efficiency — He expanded beer brands abroad at Bud. Now Kraft Heinz wants him to pour the same marketing formula on its ketchup to revive sales.