The iconic food company, Kraft Heinz, has been struggling to keep up with changing consumer tastes and stiff competition from new brands. The news of the exit of CEO, Bernardo Hees, only adds to its ongoing troubles by denting the company’s reputation.
Nevertheless, the company’s shares rose 1.3% on Monday following the announcement that former Anheuser-Busch InBev executive Miguel Patricio will be the new CEO.
Valued at $40.2 billion, the company’s stock fell more than 43% in the last year. Sales have stagnated coupled with increased commodity costs resulting in shortage of cost cutting.
But there's more. The company received a subpoena from the SEC earlier this year over accounting policies and internal controls. Further, it slashed its dividend by 36% taking down $15.4 billion on Kraft and Oscar Mayer, two of its biggest brands. Revenue and earnings also fell short of Wall Street estimates. Soon after, Warren Buffett, who in 2015 teamed up with Brazilian private equity firm 3G Capital to finance the merger between Kraft and Heinz, disclosed that he overpaid for Kraft. 3G, one of Kraft’s biggest shareholders, also trimmed its stake in the company by 7% bringing its total ownership to about 22%.
Because of these troubles, Kraft Heinz is contemplating a number of divestitures of some of its renowned brands like Maxwell House coffee business and Breakstone’s sour cream and cottage cheese brand.