Meet Warren Buffet's Worst Investment: Kraft-Heinz
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- Опубликовано: 2 июл 2024
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Kraft and Heinz are two of the most recognizable food brands in the world and are basically synonymous with cheese and ketchup respectively. Considering this, you would think that merging the two companies would create a food supergiant that would be untouchable. But, this merger has actually turned into a massive disaster. Kraft-Heinz has had trouble keeping up market share against generic brands and healthier options. Meanwhile, they had a few internal issues as well such as an accounting scandal. All of these factors combined have left of Kraft-Heinz worse than ever before with the stock being down over 50% from its all-time highs. Ironically, one of Kraft-Heinz’s biggest investors is Warren Buffett. And while he has admitted that he overpaid for Kraft and that he probably wouldn’t have a position in Kraft-Heinz if he could reasonably liquidate his position, Buffett is still optimistic that Kraft-Heinz can recover. This video explains the various shortfalls of Kraft-Heinz and whether Kraft-Heinz can recover.
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Timestamps:
0:00 - Kraft-Heinz
1:21 - The Coming Of Kraft-Heinz
3:36 - Generic Brands
6:06 - Healthy Trends
8:10 - Internal Affairs
10:18 - Bagholding
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One has to admire Warren Buffet's honesty.
Most people in his position would lie and try to pump the stock.
Ah yeah very true
He pumps stocks regardless. He did that for snowflake. Not bashing-just don't mistake what's truly there. He gets in cheap, so he can wait.
The problem is you can't pump craft like snowflake so he genuinely made a bad investment. Lol
If he wasn’t honest about the bad investment no one would trust him with their money and that trust is the biggest thing Berkshire Hathaway has going for it.
Wat about fraud
the problem for me bud is that i dont care what warren buffet thinks , i am kinda addicted to this fake ketchup s, the company is very known but the price is somehow dead , but still i believe there may be a better times , i dont hold right now but who knows@@cmath6454
The company is highly successful, why does it need to keep being more and more successful? Even if the company sales are flat, their sales are flat, they aren't going down really or up.
Yeah, that’s fine, but it doesn’t make a good investment.
Welcome to capitalism
If your sales are flat they are actually down because inflation is a thing.
Investors wouldn't be happy, they would pull investment and stock would go down
Either you grow or get out grown
Crazy story about ketchup:
Heinz made 100s of variations of its ketchup in order to get the taste just right. They wanted an equal amount of sweet, sour, bitterness, umami and saltiness since this would hit all 5 taste buds in the right way resulting in you wanting more. Its ones of the most researched foods that ever hit the market. They knew if they got the recipe just right that they would make a lot of money so they spent millions into research. Theres more about it in a Malcom Gladwell essay called "The Ketchup Conundrum" he also uses this exact essay in one of his books but im not sure which one, it might be tipping point but im not sure.
I owned some shares in Heinz before Buffet bought it. It was generating a nice dividend flow, and I love the brand. They would send out discount coupons of their products to investors as well, one of few investor freebies I actually used.
Seemed like a better company before the merger.
i miss the glass bottled heinz, it tasted way better than the plastic bottles, and also a way different consistency
Because glass does not react with the product inside it thats why cocacola taste much better in a glass bottle
Those microplastics really add a zing that can't be replicated
I'm surprised they Kraft-Heinz lasted since 1836 but every company takes a fall eventually
Yep, that’s true
@@LogicallyAnswered No company is too big to fail ;)
@@LogicallyAnswered he is so diverse
@@LogicallyAnswered it doesn't count
long story short: They kept making stuff that was more processed, while the consumer wants healthier options. They simply did not sell what they should have sold.
very few people eat healthy (% wise)
ohh , they may talk about it
people love quick easy junk food.
I bought so more KHC on the huge dip
thanks for saving me 12 minutes
The large problem with Kraft is that it doesn't know what it is anymore. Their products are over processed with superior versions from competitors readily available for less, they've stripped most of their established products out of the line (Kraft no longer sells cheese in Canada!) and new products aren't gaining any traction. The leadership has been abysmal for decades even with their efforts to expand by merging with Dart just in time for Dart's markets to crash. I can see Heinz drowning because of this boat anchor with the premium brand recognition.
Heinz also shot itself in the foot when they closed their ketchup plant near Toronto. Their brand lost value in Canada as a result.
Still love kraft Mac and cheese, and heinz ketchup. They might not do well but if they adapt and maybe reorganize their company, they will be a giant like before.
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Their food is great hahaha
Companies that size are rarely able to adapt in time.
Honestly Kraft Mac n' Cheese is one of the worst brands that you can eat. It really is like slightly salty gloop. Try a brand like Annie's or even the PC Deluxe cheddar is infinitely superior to kraft
I'm 21 and still love Mac and cheese, I don't care how old you are it good
I read stuff about it when the merger happened, there were actually 2 partners on the buffet side, Buffet provided the money but a Brazilian fund or company was actually the managing partner, they are famous for asset stripping, firing as many employees as they can and basically running their companies on skeleton staff. It was speculated when the deal happened that their “growth” was gonna happen thru firing as many people as they could and having as many low salary, entry level, minimum wage employees as they could. Think I even remember the Brazilian company boasting that 70% to 80% of their employees will be those employees. That is serious brain drain on a company of that size. Switching to more processed products while the market is moving away from those doesn’t help.
When the merge happened, Heniz corporate came through an downsize the kraft plants by 50%... my production plant was on the verge of closing till a deal with NY state happened an the governor stepped in
@@jamesschneck1797 project footprints cough cough lol.
I worked for Kraft corporate in the 70's. It was a running joke among employees about how stagnant the company was. All their growth in subsequent years, pre-Heinz, was from acquisitions. Their attempts at new products were disastrous. Anybody remember Koogle?
Lets face it, generic foods are worse quality, they dont taste as good as the branded foods
Kirkland signature has some pretty good stuff like their beef hot dog's and lasagna is top notch. Great value is just whatever usually but at least hey have cheap snacks i guess. An walmarts lil brother sam's club also has some pretty good stuff it really just depends what store u go to.
Amazon has happy belly now
My friend, most foods are all made by the same factories they just change the stickers. Modern manufacturing is highly specialized, so these brands just own the logos and marketing.
We have switched almost exclusively to Aldis and we either eat what they sell or don’t buy it. I used to pitch a fit if my wife came home with anything other than French’s mustard or Heinz ketchup. After raising a family you cut costs and now I’m over the legacy brands and happiness is a lower food bill
Store brands may be cheaper but they do NOT taste the same and the ingredients tend to be that of lesser quality. That's the entire reason I avoid them. Yes, I read labels on everything I buy lol and it's why I continue to support name brands the majority of the time.
The business is at an interesting phase. On the one hand, the legacy brands are trying to stay relevant, and on the other, the younger generation have no connection to those brands. Only way I see it, is to slowly erase the legacy brand names, and rename their products to appeal gen Z, with a gen Z marketing team. They need to tie up with trendy shops like Whole Foods with these new brands. The "Kraft-Heinz" brand can become a holding company of these new brands and stay hidden behind the screens. Of course all this requires huge capital and a lot of patience. With the access to cheap capital they have, I am sure they can pull this off.
my neice only eats mac and cheese, the younger generation has plenty of connection to these brands.
@@mattx9260 1 person = entire generation?
And then there is Coca-Cola, that will outlast the earth.
@@darth3261 from lmao
you have a point there, massive companies can sometimes get too comfortable with their successes in the past, when they start to showing signs of lagging innovation, then can be a long slow death for such companies, which makes it a less ideal investment
Store or generic brands are not manufacturing the good.they usually outsource it to the original manufacturer of the product and reduce the price since they don’t spend on advertising. Specific stores can pull this, negotiate low price because they are large buyers , and can transfer some of their savings to consumers. The original brand still produces the generic alternative while continue selling the original product in other retail stores for full price
Their problem is an attempt to engineer 'growth' be it profit growth, per share growth, revenue growth, etc. They are in a no growth industry and need to own it. Management in mature companies often make this mistake and the result is never good.
The falling price of the stock is highly similar with Unilever's
Perhaps I do not understand capitalism, but it seems wrong that a company needs to have a crazy growth in order to be considered a successful company. I mean, if they have flat revenue, which is very high, they should be happy and thats it. But the problem are the investors who seek to get money doing nothing, by speculating with price rise/falls
Kraft miracle whip just went from $4 dollars a jar to $7 damn near overnight, if they think I’m gonna pay that they’re crazy. I’ll buy the generic instead, and most people I know feel the same way.
Hey agreed with most your points. However, in your healthy trends section you didn’t mention their acquisition of primal kitchen. PK’s (founded by Mark Sisson father of the paleo movement) products are made with whole foods and are quite good. There were other smaller acquisitions too that were pointed in the direction of being healthy and innovative. But too little, too late even if they came out with a super healthy 100 million dollar product, it’s a drop in the bucket compared to the rest of their portfolio. Or in other words no matter how much they pivot, they will still get majority sales from unhealthy products. Good video but because you left out some of these points, it felt a little dated.
Please make a video on Patanjali's growth in India, how they trumped over foreign FMCG brands like Unilever, Heinz, P&G, Colgate etc
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Did they tho?
Thanks for the suggestion Arkajit!
I’m sorry for a company that big to have that low profit and stock decline there’s really something wrong within the company idea separate both company’s and bring new product and figure out which one is the one that’s declining the sales cause I don’t believe it’s both second maybe Kraft should bring old recipe of the Mac and chesse and cheeses
I always love listening to logically answered while I'm working. Thanks for another banger video!
Thank you antman!
This is a management problem.
I think they need to stream line their products portfolio and not try to compete with lower margins and focus on limited best products they can produce and give them better margins.
*I used to be a Fan of ''Warren Buffet'' but after watching this MASTERPIECE I turned into an Air Conditioner* 🌬❄
Hahaha 🥶
@Logic Bath its shit
@Logic Bath It was so bad that it was actually pretty good.. I loved the randomness and swapping of topics. Where are you from? You sound a bit African but also a bit something else. I´m not sure if the video was meant to make people laugh but i laughed quite a few times.
The market is trending healthier, Heinz could ride that wave but Kraft is permanently locked out of it with their main brands. I think this is why Warren Buffet said he overpaid for Kraft but not for Heinz. Kraft has an easily fallible market... "American" cheese and grotesquely cheap processed foods. The vast majority of the world can't stomach Kraft items, it was only a matter of time before Americans started turning their nose up at them too.
It isn't the 1900s anymore and other countries are showing Americans what their laziness with demanding quality has caused, when you go to Europe, Japan, Korea, etc. and see the quality of foods there for the same price we pay for things like Kraft you'll never buy their products again and the internet is making it easier to see this stark difference.
Kraft can't recover from this in my opinion, they'd have to focus on finding some successful subsidiaries to put all their power behind instead and effectively put 'Kraft' on the chopping block.
Heinz can weather the storm, condiments aren't going anywhere, they are also not nearly as associated with low quality as Kraft is so they have more freedom to spread their own wings and not risk it on subsidiaries. But now they are tied at the hip and Kraft is going to drag Heinz down with them I feel.
American cheese yeah it's kinda lame but kraft mac n cheese is pretty good an i guess the ketchup isn't bad.
If you think Kraft and Heinz are bad, can't wait for you to try the "alternatives" we have in the Philippines.
We have the worst of the worse. Our cheese is less "cheese" and more flavoring than American cheese. Our "mayo" is a cheap version of salad dressing and taste dry. Our Ketchup is made of Banana and Red Food coloring.
Kraft heinz profit is dwarfed by the write down in intangibles. Not all of the write down in intangibles relates to things that happened in this accounting period, a lot of it is historic. This explains why Kraft can maintain a dividend, despite low reported profit and profit and therefore pe ratios are a bit misleading for Kraft
Lunchables business is a blooming business, store have reported nationwide shortages.. I work in one of the production plants an we're running 24/7 trying to keep with demand. Problem is lack of pple wanna work
In thailand we used to be able to get Kraft Mac and Cheese in the main grocery stores about every 6 months. The expats would buy it all and have to wait 6 months again. For the last 5 years it has been available only at the most expensive foreign food store at an eye watering 3 dollars a box. I would love to have more Kraft-Heinz products here regularly.
I am European and I have never heard about Kraft Heinz before. I would never invest in them since they have already pretty much reached their peak and dont really have chances to expand their business significantly
If you've never heard from them it would mean they have an option to expand to your country, but I asume you do know their subbrands. Some major ones are CapriSun, Heinz Ketchup and Philadelphia (cheese I think?). They currently run 200 different brands in total and it's likely at least half a dozen are active in your home country.
So it's likely their expansion globally is limited.
Fair enough
@@user-hv6wb5gk8p Philadelphia does exist in my country, but how would I know what company it belongs to?
Europe is basically a native cheese countries. Kraft's cheese wannabe products would never work there.
In Indonesia they use to advertise their slice cheese as equal to a glass of milk. Not anymore, god knows what they put on their 'cheese'
Bruv is underrated is an understatement.
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There is a saying in the food industry. "a product that costs less than the package it is put in is the best product." Unfortunately, both Kraft and Heinz taste as they cost less than the package.
Huh I guess he didn’t like Mac and cheese!! Also, love your videos as always!!
Thank you Daniel!
I only had their ketchup and a few other sauces
They make really nice mayonnaise too but no store sells it only restaurants
Their burger sauce is also really good
I’m sorry maybe they should hire some of us cause I loved a few comments and ideas that lots of u had
I love the heinz ketchup. :P Its the only one I use. I thought they are in a good position, but apparently I was wrong.
They’re not in risk of going bankrupt or anything, but they’ve definitely had better days haha
If Heinz ketchup didn't exist, I wouldn't eat any ketchup. Every other brand I've tried is genuinely gross.
Heinz is a amazing brand it is maintaining it for almost 200 years, and it is bad to see the downfall of Heinz
Great video 👍🏻
Do you like Heinz sauce and pasta 🍝?
Heinz ketchup is the bomb hahaha
Someone in the future is going to comment: This didn’t age well
Hahaha for real
Why didn't you report Buffett's investment in the company accurately?
Am I the only one who watched informational videos like these while working out or playing games? 🤣
Nah hahaha, I think a lot of us do that
The company priced products out of the markets. Like many American products in Asia, super expensive compared to alternatives. The quality hype only works in USA, elsewhere people are more sensible. Tesla is so expensive compared to many China EVs, no wonder they are sold only to die hard fans
Do reliance industries brah and tata steel
Here it is simply 3g capitol who partnered with buffett to invest in khc cut costs but didnt promote brands properly.
A person that was born in Canada and moved to the US is and isn't an immigrant at the same time. Canad and the US are so similar that often a tourist in Canada forgets where they are an tries to pay in US dollars
Hahaha, fair enough
Another of Buffet's worst picks? Tesco (UK supermarket-TSCDY on US stock markets).
Buffet bought on the strength of their international growth, solid scaled grocery ecommerce capability, good loyalty skills, good net profit margin, and forthcoming launch in the US (Fresh & Easy Neighborhood Market).
Fresh & Easy Failed, International divisions in most countries became unprofitable, and a financial scandal about how commercial income was handled was brewing, so Buffet got out at a loss.
His worst investment was Berkshire Hathaway and not being aggressive enough on Apple earlier.
he just bought the dips and cost averaged down, and now probably in profit, good to have unlimited funds I guess
I'm not so sure about the conclusions you stated. I got KHC just a few months ago during a double dip at 34.81; today while the market is freaking out over the FED and bond rate increases nearly everything is doing the bear. Yet, KHC so far is up. My thinking is wait till summer comes. Millions can't wait to BBQ and you think people would invite others over to put generic brands on the picnic table; I don't.
What? You think most people are so vain that they won't buy generic ketchup if their friends are coming over?
@@TheGerm24 There are a whole lot of people that are so driven to impress others that they would never serve generic brands when they invite those they want to impress over for BBQ. In addition according to research KH always sales better in the late spring through early autumn. With inflation that means higher earnings.
KHC is the sleeper in food stocks. It has been under
40/share over 4 years. There's going to be food shortages soon. Look at what happened to OXY, oxidendal Petroleum. I bought it at 35 about a year ago and now its doubled. Too bad I sold at 50 and didn't buy enough. KHC is the same thing.
As food shortages hit this stock is going up to at least 60 which it was and higher from2014 to 2018.
I hate all the of the new packaging especially Heinz ketchup and purchase alternative products if they are in glass containers....
Warren buffets bad investment is like me getting unlucky with a used car. You never know if it's work investing in over time, except Warren buffet will always be a millionaire
I always see those two companies in my kitchen every day haha
😂
Isn't better for him to sell the company??or let's say if somebody buy it and make chamges even with the brandname might be successful deal
i work for Kraft Heinz, its because of the truck drivers they want paid more so were getting less product than normal.
Don't understand estimate kraft heinz. They are a great company.
I wouldn't mind being like buffet right now,
In terms of investment, would be an baffling feat for me or anyone
I haven't comment in such a long time, oh man
Thanks for commenting:)
Do you want to know what happened. I’ll tell you , they the company Heinz, abandoned Canada and left people bewildered because they the people were left with no employment in the biggest tomato producer Lemington. So Frenches decided to help, they brought back the tomato industry in Lemington, and now the only Ketchup our household buys is now Frenches. And there mustard is amazing. We boycotted the company and so did my friends.
Oreo there is no substitute. The other brands do not taste the same.
Heinz ketchup I do buy however I have bought the Walmart brand ketchup before.
I had never heard of kraft before ngl
nobady wanne by the exit lequidity of heinz XD, so i dont tink it will go up, people just know he down, so when he dump will by dramatic
I'm wanting some Mac & Cheese, please!
I'm sad for them, that Ketchup bottle was a part of my life
Are u obese?
Hey I work at Kraft Heinz
I love Kraft cheese slices and Kraft dinner
Smash tomatoes. Add sugar. Put in bottle. Write ketchup on bottle with Sharpie. Seems like Buffet misjudged the barriers to entry.
Buffet bought in while Protoss were still upgrading bottle tech
KHC has been wonderful the past year and a half
0:34 Wtf am I looking at?
Ketchup doesn't go well with coffee I guess.
People are spending too much on coffee?
People buys Kraft but consuming them in less portions..rest my case
I never even heard of Kraft.. I´m from Europe.. I know Heinz ketchup well. But it´s not a very good ketchup either. I prefer Meira ketchup it has a better taste and less shit in it. Contents of Meira ketchup are just Tomato sugar, vinegar, salt, pepper, white pepper and ginger.
I almost forgot this video was about warren buffet
Hahaha
food is great, but not doing so well in terms of **hell**
Heinz has great ketchup. it tastes too good.
2:57 🤢🤮
Please do McDonald's next as well as yum company
Thanks for the suggestion man!
@@LogicallyAnswered you're welcome, I already saw your video on domino's, I liked it as well
People are gettin smarter and dont eat processed crap as much anymore
Yep
Lol when inflation hit and specialty brand charges $8 for a bag of cheese, we will see how ppl turn back to Kraft
"I want to eat less processed foods..."
-eats processed plant based meats
WHY
Meat is almost raw
What's a couple hundred million in fraud between friends?
Meanwhile I prefer McDonalds - since BK went with the quite sour Heinz...
Oreo are the knockoff version of Hydrox cookies.
Buffets worst investment was Berkshire Hathaway
You have to be down bad to buy bootleg Oreo's, it's not something small.
I'm not down bad. I just bought the generic Oreo because they were a lot cheaper. They taste pretty good to me. I actually bought the ones he showed the great value one.
Funny how oreo is a bootleg hydrox
@@elvism684 To each their own I guess.
Velveeta, anyone?
Don’t worry warren sir we all love ketchup and we can live without it. 😅
I think Kraft-Heinz is a great investment when the inflation is high.
you see eh
Kraft cheese or velveeta cheese
Even rich people cry
8.00 for a bottle of Heinz ketchup that is insane hunts is much cheaper and I have switched to hunts good bye Heinz stick your high prices where the sun don't shine warren buffet
But their ketchup is very good.
I am a European, and my lifestyle over the years got more healthy. If i eat ketchup is like 2-3 times a year. I think healthy/protein foods will be the future. Perhaps 2y a go i saw the swedish yougort and pudin on the shelf. Now i see tones and tones of this type of brands. And i reccon i spend a lot more in protein foods than in heinz types of food. I do understand it might working in america were people enjoy more fat foods, but for example in my country ( Portugal) we have a lot of types cheese and cheap i dont see myself buying that crappy cheese can or anyone to be honest. The brand needs inovation. Study the new market
Agree totally Europeans are to be admired and emulated for their food culture - no processed/fast foods gobbled down in a 15 min lunch break while sitting at one's desk in the middle of the workday.
worst than his airline stock losses? i think not.
i thought this is about Paytm
Of course Henry was 33
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Yes
looks good on him working at Heinz was once a great job til that goof bought it out and canned all the good paying jobs
Can't catch your words try to be more clear