Kraft Heinz Company is the world’s 5th largest food and beverage company with revenues over $26.5 billion. It was formed after the merger of Kraft Foods Group and Heinz in the year 2015. The Company has 26 popular brands under its umbrella with eight popular $1 billion brands, namely, Kraft, Heinz, Oscar Meyer, Philadelphia, Planters, Lunchables, Maxwell House and Velveeta.
Strength in the SWOT Analysis of Kraft Heinz :
Strong market position in the world: Kraft Heinz is one of the largest food and beverage companies in the world. Kraft Heinz has leading market position in various categories which gives it a competitive advantage and also enhances its bargaining power.
Strong Product Portfolio: Kraft Heinz has a strong portfolio with 26 popular brands under its umbrella with eight popular $1 billion brands, namely, Kraft, Heinz, Oscar Meyer, Philadelphia, Planters, Lunchables, Maxwell House and Velveeta. Most of these brands are amongst the most valuable brands in the world and clock sales up to $1 billion.
Global Footprint: Kraft Heinz has a wide global footprint with high presence in developed markets and increasing presence in emerging markets. Kraft Heinz is present in North America, Asia-Pacific, Europe and Latin America etc. With a wide and diversified global footprint, the company has been able to dilute business risks of overdependence on a few markets. Also, the company is able to tap on to any opportunity created in any of these markets.
Weaknesses in the SWOT Analysis of Kraft Heinz :
Product recalls: Kraft Heinz has also had to face some controversies regarding product recalls in the recent past. In July 2015, the company had to recall wrapped slices and in August 2015, the company had to recall many products of turkey bacon doe to the possibility of adulteration. Such product recalls especially in the food and beverage industry affects the brand image and sales of the company.
Advertising Controversy: In November 2016, an advertisement for Heinz Beanz was banned for displaying the unsafe use of tin cans, in its “Lean the #CanSong campaign”. Such things affect the reputation of the company.
Opportunities in the SWOT Analysis of Kraft Heinz :
Growing foodservice industry: The foodservice industry is expected to grow rapidly in the near future due to improving lifestyle and rapid urbanization. Any potential demand created could be tapped easily by Kraft Heinz.
Nutritious Products: Increasing health awareness across the globe results in increasing demand for nutritious and trans-fat free products. Kraft Heinz is taking care of the increasing awareness towards health and is using the range of nutritious foods for adults as well as babies. The company should further look forward to expanding its product portfolio to include more nutritious products.
Growing Baby Food market: With the increase in incomes and changing lifestyle, the baby food market is growing around the globe. The global baby food market is expected to grow at a CAGR of 8% till 2019. Kraft offers a wide range of baby food and instant formula products and is set to benefit from the growth.
Threats in the SWOT Analysis of Kraft Heinz :
Intense competition: Kraft Heinz is subjected to competition from various companies across product categories and geographies. Its major competitors are Nestle, ConAgra Foods and PepsiCo etc. Higher competition forces a company to spend more on promotions and also induces price wars which affect revenues and profitability.
Safety Regulations: The food safety regulations around the world have become stringent over the years and thus a food company has to pass through various norms by the food regulation authorities in various countries. This increase compliance costs for the company.
Increasing Labour wages: The labour wages in the developed countries, especially in the US, Canada and Europe, are increasing year on year which increases the company’s expenditure and hence affects margins.