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Heinz + Barrel = Time to Shoot the Fish?
The front page story in today’s Wall Street Journal about H.J. Heinz is sad indeed. (Behind pay wall.)
It’s hard to avoid the epithet “vulture” when considering the recent ownership changes and financial imperatives driving this venerable old consumer goods company. First Nelson Peltz’s campaign drove Heinz to best-in-show gross and operating margins over the decade leading up to Heinz recent sale to 3G Capital. Now 3G appears to have started burning the furniture.
You can’t begrudge management that seeks efficiency and improved profitability. But when it becomes a pitiless effort to satisfy unrealistic payout ratios, then the whole ship is in jeopardy.
Cut! Cut! Cut! That’s what finance folks like to do.
But how can Heinz even hope to compete when they’ve had three different bosses of the North American unit in 8 months!? Let alone the huge disruption in their supply chain? (Which, by the way, was likely not as inefficient as the Journal’s article leads one to believe. Prepared foods often require such seemingly byzantine supply lines because of the need to locate close to critical and perishable agricultural commodities.)
And when was the last time you saw a Heinz Ketchup ad? Where is the marketing and promotion campaign to push comfort food? Eating at home? Reinforcing the trust in Heinz great old brands?
Net, Heinz could hardly be more vulnerable than it is right now!
ConAgra … Nestle’ … General Mills … are you planning your attacks? Market share is cheap and available.
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