Kraft-Heinz-Assignment #1 V 3.0 Final - JRE300H1F Foundations of Accounting and Finance Project Part I FIRST NAME LAST NAME STUDENT SECTION Grant Sales

Kraft-Heinz-Assignment #1 V 3.0 Final - JRE300H1F...

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JRE300H1F– Foundations of Accounting and Finance –Project Part I FIRST NAME Grant LAST NAME Sales STUDENT # 1000377861 SECTION: 2 FIRST NAME Dora LAST NAME Ranilovic STUDENT # 1000291695 SECTION: 1 FIRST NAME Anne LAST NAME Nasato STUDENT # 1000314313 SECTION: 2 FIRST NAME Nicole LAST NAME Parkes STUDENT # 1000449847 SECTION: 2 Project part 1: Page 0 of 12
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Part 1: Kraft Heinz Background and Business Environment Industry Background Kraft Heinz is a multinational food manufacturing conglomerate that was formed as a result of the merger between Kraft Foods Group, Inc. and The H. J. Heinz Company (Heinz). Kraft Foods Group, Inc. was founded in 2012 as a spinoff of Kraft Foods Inc. which was restructured to focus on confectionery and snack brands (Wikipediaorg, 2015). Prior to this, Kraft Foods Group, Inc. was one of North America's largest consumer packaged food and beverage companies, with annual revenues of more than $18 billion (Heinzcom, 2015). Kraft Foods Group Inc.’s main business is producing grocery products for the North American market with their core business in beverage, cheese, dairy foods, snack foods, and convenience foods (Wikipediaorg, 2015). The Heinz Company is another food processing company renowned for its substantial share of the U.S. ketchup market, in excess of 50% (Wikipediaorg, 2015). Heinz is one of the world’s leading food producers specializing in ketchup, sauces, prepared meals, soups, snacks and infant nutrition (Heinzcom, 2015). While the Kraft Food Group Inc.’s main focus is the North American market, Heinz also operates in international markets catering different products to different customer bases. Both companies operate in the same market and have the same Global Industry Classification Standard (GICS) as Consumer staples, however, there was little head-on competition as their products are generally considered as complementary products rather than substitutes (Douglas, 2015). Kraft Heinz Operative Industry Similar to Kraft Heinz’s pre-merger predecessors, Kraft Heinz operates in the food manufacturing industry, classified in the Consumer Staples sector under the GICS sub industry Packaged Foods & Meats. Kraft Heinz has positioned itself as a low cost provider of a variety of food products servicing a broad market, focusing mainly on North American consumers but also on some specialized market specific products. Before the merger, Kraft Foods Group, Inc. had identified the North American Food & Beverage market as a their long term target market as it was felt there was clear sustainable long-term growth potential as a result of their in house algorithm metrics (Kraftfoodsgroupcom, 2015). Opportunities were also identified in secondary markets including North American Hispanics, Millennials, and “Economically Strapped consumers” and marketing efforts have been initiated to tap these markets (Kraftfoodsgroupcom, 2015). In contrast, Heinz’s target market is less North American focused, despite their large U.S. ketchup market share. While its products are available in over 200 countries, the North American market only provides 40% of its sales (in
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