Posts tagged with "Kraft Heinz"

The new pandemic shortage: Ketchup can’t catch up

April  9, 2021

After enduring a year of closures, employee safety fears, and start-stop openings; now, many American restaurants are now facing a nationwide supply chain shortage of one of their customers’ favorite condiments: ketchup.

More specifically, according to a report by The Wall Street Journal, ketchup packets are being grabbed up by the handful—as toilet paper was earlier in the year—depleting restaurant supplies.

To meet the demand, managers are using generic versions, pouring out bulk ketchup into individual cups, and hitting the aisles of Costco for substitutes.

“We’ve been hunting high and low,” Chris Fuselier, owner of the Denver-based Blake Street Tavern told the Journal, saying he has struggled to keep ketchup in stock for much of this year.

The pandemic turned many sit-down restaurants into takeout specialists, making individual ketchup packets the primary condiment currency for both national chains and mom-and-pop restaurants. Packet prices are up 13% since January 2020, and their market share has exploded at the expense of tabletop bottles, according to restaurant-business platform Plate IQ.

Even fast-food giants are pleading for packets. Long John Silver’s—a nearly 700-unit chain—had to seek ketchup from secondary suppliers because of the rush in demand. The industry’s pandemic shift to packets has pushed up prices, costing the Louisville, Kentucky-based company an extra half-million dollars, executives said, since single-serve is pricier than bulk.

“Everyone out there is grabbing for ketchup,” Chief Marketing Officer Stephanie Mattingly told the business news outlet.

The ketchup conundrum strikes at a cornerstone of American diets. The tomato spread is the most-consumed table sauce at U.S. restaurants, with around 300,000 tons sold to food-service last year, according to research firm Euromonitor. Even more is eaten at home, and the pandemic helped push retail ketchup sales in the U.S. over $1 billion in 2020, around 15% higher than 2019, Euromonitor data showed.

Kraft Heinz Co. is ketchup’s king, with the research firm saying Heinz holds nearly 70% of the U.S. retail market for the condiment. But the more than 150-year-old brand wasn’t prepared for the pandemic.

Kraft Heinz couldn’t keep up with orders for its sachets––the industry term for ketchup packets.

Steve Cornell, Kraft Heinz’s president of Enhancers, Specialty and Away from Home Business Unit, said restaurants need patience while it ramps up supply. The company plans to open two new manufacturing lines in April, and more after that— increasing production by about 25% for a total of more than 12 billion packets a year. Kraft Heinz already is running extra shifts at plants, and cut back on some varieties to focus on making more single-serve packets.

The company also invented a no-touch ketchup dispenser to help meet demand for COVID-safe alternatives to shared bottles.

“We’re busy doing everything we can,” Cornell said.

Research contact: @WSJ

Mr. Peanut joins the Skippy family in a $3.4 billion acquisition

February 12, 2021

It’s been a tough few years for Mr. Peanut, who died in early 2020 and was reborn as a baby nut as part of a Super Bowl ad campaign.

Now he has a new home: Kraft is selling Planters to Hormel—the parent company  of such brands as SPAM and Skippy—in a $3.35 billion deal, CNN reports.

The sale, which is expected to close this year, will give Hormel ownership of most products included in the Planters brand—among them, mixed nuts, trail mix, Corn Nuts, Cheez Balls, and Cheez Curls. Planters brought in about $1 billion in sales in 2020.

The deal could very well be a win-win for the companies: For Kraft, ditching Planters will offer a chance to focus on its most successful brands (for example, Lunchables), the company said in a news release Thursday. The deal also will help Hormel to expand its snack offerings at a time when people are eating at home more.

Kraft Heinz CEO Miguel Patricio has been leading an effort to turn the company’s prospects around, since he came to the company last July from Anheuser-Busch InBev. Kraft has been selling off lower-margin businesses. Last year, the company announced a sale of its natural cheese business, including Polly-O and Breakstone’s, to the French company Lactalis for $3.2 billion. 

Planters in particular is vulnerable to competition from private label products, said Patricio during an analyst call.

Before the pandemic, Kraft was struggling. Many on Wall Street said it failed to adapt to the changing tastes of consumers, who are shying away from processed foods.

According to CNN, analysts have also questioned the strategic decisions of private equity firm 3G Capital, which partnered with Berkshire Hathaway to first buy Heinz and then merge it with Kraft in a 2015 deal. After Berkshire Hathaway, 3G is the second-largest shareholder of the company. Following the merger, the combined company worked to cut costs—at the expense of much-needed innovation, many Wall Street analysts believe.

However,  the pandemic, which has driven people to stock up on pantry staples and nostalgic foods, has helped boost Kraft’s sales. In the fourth quarter of 2020, net sales grew 6% to $6.9 billion, beating Wall Street’s expectations.

Research contact: @CNN