Over the last century, Kraft Heinz Co. (KHC) has grown into a foods company behemoth with more than 200 household brands under its umbrella after decades of acquisitions.
About 40 Kraft Heinz brands are more than 100 years old, including Heinz’s ketchup and Kraft’s processed cheese products. Five Kraft Heinz products bring in between $500 million and $1 billion in sales each year: Jell-O, Kool-Aid, Ore-Ida, CapriSun, and Cracker Barrel.
On April 29, 2021, the company released first-quarter earnings, reporting net sales of $6.4 billion, up 3.9% compared to the same period last year.
- Heinz may be known for Ketchup and Kraft for American Cheese—but the combined company is parent to several hundred household brands.
- Seven Kraft Heinz brands alone draw more than $1 billion in revenue annually on their own.
- The Kraft Heinz Company was created by a 2015 merger between Kraft and Heinz.
- After a multi-year market decline which saw Kraft Heinz lose more than half its value, the share price has started to rebound.
- In 2017, the Kraft Heinz Company offered $143 billion to acquire Unilever, which was rejected.
Kraft Heinz Merger
In 2015, Kraft announced a $23 billion dollar deal to merge with Heinz, with help from Berkshire Hathaway and equity firm 3G Capital. The combined entity, called the Kraft Heinz Company, would bring eight billion-dollar food brands under the same corporate umbrella, creating the third-largest food and drink company in North America, and the fifth-largest in the world. At the time, it was projected that annual revenues could exceed $28 billion.
Following the merger, the Kraft Heinz company underperformed expectations, losing more than half of its value between 2015 and 2020. The company has since reversed some of those losses, thanks in part to pandemic-related demand.
With the slogan “Good to the last drop,” Maxwell House was the number-one selling coffee in the U.S. until the 1980s. Since then, it has been vying with Folgers, Keurig, Starbucks, Dunkin’ Donuts, and other popular coffee brands for market share.
In an effort to target younger coffee drinkers, Maxwell launched a new coffee called MAX Boost that lets users customize the amount of caffeine in their drinks. “Younger consumers love the taste of coffee, but are looking to other beverage categories for functional benefits to address their different needs throughout the day,” Maxwell director of marketing, Luke Cole, said in a statement.
Maxwell was previously under the umbrella of General Foods Corp. but was acquired by Philip Morris Companies. Philip Morris also bought Kraft Inc. and merged the two businesses into Kraft General Foods.
Kraft Heinz’s Oscar Mayer meat and cold cut products include hot dogs, bacon, and lunch meats. The brand’s staple product is the hot dog, which has been undergoing changes lately in response to consumer demand.
Oscar Mayer recently announced it would make “radical changes” by removing all added nitrates and artificial preservatives from its hot dogs. “As the most iconic brand, we’re going where other hot dogs can’t,” said Oscar Mayer head of marketing, Greg Guidotti, in a statement.
German immigrant Oscar F. Mayer and his brother Gottfried began the meat-selling business with bratwurst and liverwurst in Chicago in the early 1880s. Oscar Mayer remained an independent company until 1981, when stockholders voted to sell it to General Foods, which then merged with Kraft Foods Inc in 1989.
Under the J.L. Kraft and Bros. Company in 1916, Kraft secured a patent on a pasteurized processed cheese that used salts to extend the shelf life of cheese and cheese products. It has since had sustained success with its longer-lasting, cheese-based products like Kraft Macaroni and Cheese Dinner, Kraft Mayo, and Kraft Singles.
Kraft Macaroni & Cheese Dinner, a packaged dry pasta and cheese product, was introduced in the U.S. in 1937. Kraft Singles, individually wrapped slices of processed cheese, launched in 1949.
Heinz’s brands include Heinz Tomato Ketchup, which launched in 1876 and has become the most popular ketchup brand in the U.S. Hundreds of millions of bottles sell worldwide each year. Heinz also sells Dip & Squeeze, small ketchup packages designed to be used one-handed, to U.S. fast-food restaurants.
Household name products under the Heinz brand also include Heinz Beanz, which was introduced in 1901 as “Heinz Baked Beans.”
Marketed under the Oscar Mayer brand in the U.S. and Canada, Lunchables were introduced nationally in 1989 as an on-the-go light meal.
Oscar Mayer sought to sell more processed meat and bologna as it promoted the packaged lunch dishes as a time-saver. Kraft, which merged with Oscar Mayer in 1988, provided the cheese. Now Lunchables offers 26 meal combinations like small hot dogs, nuggets, and nachos.
Velveeta, a processed cheese product that has become synonymous with American cheese, was invented in 1918 under the Velveeta Cheese Company, which was sold to Kraft Foods in 1927.
Because of its creamy texture, Velveeta is a common ingredient in cheese dips, cheese soups and grilled cheeses.
Philadelphia brand cream cheese, created from milk and cream, was sold under the Phenix Cheese Company until it merged with Kraft Foods in 1928.
As cream cheese-based recipes like cheesecakes and crab rangoon remain popular with consumers, Kraft Heinz’s Philadelphia brand thrives as one of its strongest brands among both cream cheese products and Kraft Heinz’s lineup.
Kraft Heinz FAQs
Who Are Kraft Heinz Largest Shareholders?
By far the largest shareholder of the Kraft Heinz Company is Warren Buffett's Berkshire Hathaway, with 26.6% of outstanding shares, according to CNN. The next largest shareholders are Vanguard Group with 3.97%, Blackrock Fund Advisors with 2.39%, and SSgA Funds Management with 2.35%.
How Much of Kraft Heinz Does Warren Buffett Own?
Warren Buffett's firm, Berkshire Hathaway, owns 325.6 million shares of the Kraft Heinz company, or 26.6% of all shares. While it is not known if Buffett is personally invested in Kraft Heinz, it is unlikely, as that could create the appearance of a conflict of interests.
Is Kraft Heinz a Good Dividend Stock?
The Kraft Heinz Company offers dividends of $0.40 to $0.60 each quarter, amounting to approximately 3.63%. However, the decline in the stock's value—from over $80 after the merger to under $30—indicates that those dividends could be unsustainable, with one analysis suggesting that the dividend is "too good to be true."
What Happened to the Kraft Heinz Bid for Unilever?
In 2017, Kraft Heinz bid $143 billion to take over Unilever, a food and beverages company based in the United Kingdom. Although the offer delighted Unilever shareholders, the company's board rejected the offer. This turned out to be a wise decision, as Unilver shares continued to climb in the market and Kraft Heinz shares fell.
The Bottom Line
The Kraft Heinz Company is one of the world's largest food and drinks companies, with multiple billion-dollar brands all sharing the same roof. It was created in a multi-billion dollar merger between Kraft and Heinz, facilitated by Warren Buffett's Berkshire Hathaway and Brazilian equity firm 3G Capital. Despite high cash flow and dividends, the company's stock price has fared poorly as consumers turned towards natural foods.