Kraft Heinz Sends Mr. Peanut to a Better Place -- Heard on the Street
2021年2月4日 - 12:14AM
Dow Jones News
By Aaron Back
Kraft Heinz is close to fetching a very attractive price for its
Planters business. Next, it must use the proceeds wisely.
The company might reach a deal to sell the business to Hormel
Foods as soon as next week for around $3 billion, The Wall Street
Journal reported Tuesday.
At first glance the nuts category is an attractive one, fitting
the contemporary trend toward healthier, protein-based snacks. But
it also lends itself to competition and commoditization:
private-label brands hold about a one-third share, according to
Barclays analyst Andrew Lazar.
Compounding the problem has been years of underinvestment in the
brand under Kraft Heinz's old mantra of cost-cutting above all.
This left Planters largely confined to plain canned peanuts, while
competitors invested in products such as flavored almonds marketed
as an alternative to chips. Wells Fargo analyst John Baumgartner
estimates that Planters' market share fell around 7 percentage
points to 18% between 2016 and 2019.
It appears to be a natural fit for Hormel's protein-focused
portfolio of meats and nut butters, but it might be overpaying. At
$3 billion, Planters would be going for around three times 2019
sales, according to Wells Fargo's Mr. Baumgartner. That would be a
similar valuation to Campbell Soup's acquisition of organic soup
brand Pacific Foods in 2017 and Danone's 2016 dea l for organic
specialist WhiteWave Foods, maker of the Horizon organic milk
brand, Mr. Baumgartner notes. But those are both more premium
categories with better growth potential.
Investors should be encouraged that Kraft Heinz has turned its
strategy all the way around from reckless acquisitions to prudent
divestitures at attractive valuations. It likely has more
struggling brands in its vast portfolio that it could and should
part with.
But a long-term turnaround will only come when Kraft Heinz shows
it can take the proceeds from divestitures and invest in updating
its remaining brands, so they don't meet the same fate as poor Mr.
Peanut.
Write to Aaron Back at aaron.back@wsj.com
(END) Dow Jones Newswires
February 03, 2021 09:59 ET (14:59 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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