Yahoo Finance Kraft Heinz's Canada Unit to Gain From Ethical Bean Buyout
In an effort to enhance its product offerings, The Kraft Heinz Company’s KHC subsidiary, Kraft Heinz Canada acquired Ethical Bean Coffee. The addition of this Vancouver-based organic coffee provider reflects Kraft Heinz’ focus on keeping up with consumers’ rising preference for healthy options.
Launched nearly 15 years back, Ethical Bean engages in roasting 100% Fairtrade, certified organic coffee. The inclusion of this leading coffee brand to Kraft Heinz Canada’s kitty goes in line with the latter’s efforts to provide premium quality, fine and diverse products to consumers. As for Ethical Bean, it is set to gain from Kraft Heinz’s solid experience and scale.
Kraft Heinz Canada, which includes brands like Cracker Barrel, Classico, Philadelphia, Renée’s Gourmet and more, is the leading food and beverage firm in Canada. However, we note that Kraft Heinz’s Canadian sales went down 4.5% year over year in second-quarter 2018, owing to an 8.2% drop in organic sales.
Volume/mix declined 8.8%, owing to the absence of promotional activities that benefited results in the year-ago period. Adverse trade inventory adjustments and product discontinuations also hurt results. Sales in this region have been falling year over year for two straight quarters now. Also, sales in Kraft Heinz’ U.S. division have been declining for more than a year now.
Such factors along with input cost inflation have been weighing on this Zacks Rank #4 (Sell) stock that has lost 6.4% in the past six months against the industry’s growth of close to 5%. Nonetheless, Kraft Heinz has solid innovation initiatives planned in the foodservice space to fuel growth across all regions, The company is also making innovation efforts in its growing e-commerce channel.
Also, the company is committed toward saving costs and enhancing productivity, which is evident from initiatives such as zero-based budgeting, modernization and capability building within the manufacturing footprint, and building a performance driven culture in the company. As part of these initiatives, savings are being re-invested in the business for innovation, brand building and marketing to stimulate top-line growth. The company is also working for whitespace expansion in both food services and geographic channels.
We expect such growth strategies, including the aforementioned acquisition of Ethical Bean, to improve Kraft Heinz’s performance and help uplift investors’ confidence.
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The Kraft Heinz Company (KHC) : Free Stock Analysis Report
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