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Kraft Heinz's (KHC) Hemmer Buyout to Grow Taste Elevation Platform

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The Kraft Heinz Company (KHC - Free Report) is committed toward expanding the International Taste Elevation product platform and its footprint across emerging markets. Moving along these lines, the company signed an agreement to buy the Brazil-based condiments and sauces company — Companhia Hemmer Indústria e Comércio ("Hemmer").

The move will widen consumers’ taste options in Brazil and diversify Kraft Heinz’s product portfolio. The buyout will further accelerate growth in the company’s condiments and sauces category. Hemmer will gain from Kraft Heinz’s distribution channel and go-to-market model, which includes its impressive foodservice channel in Brazil.

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Focused Growth Efforts

In September 2020, Kraft Heinz laid out a new operating model that incorporates five key elements — People with Purpose, Consumer Platforms, Ops Center, Partner Program and Fuel Our Growth. The Consumer Platforms comprises a portfolio of six consumer-driven platforms like Taste Elevation, Easy Meals Made Better as well as Real Food Snacking among others. In its last earnings call, management highlighted that it is realizing solid mix improvement in the higher margin Grow platforms, primarily the global Taste Elevation platform. Net sales in the company’s International Taste Elevation platform increased 16% in second-quarter 2021 from 2019 levels, on the back of distribution expansion, better marketing investments and solid innovations.

Kraft Heinz is focused on accelerating its international growth strategy based around Taste Elevation and foodservice platform. In this regard, the company signed an agreement to buy sauces-focused business — Assan Foods — from the privately-held Turkish conglomerate, Kibar Holding in June 2021. Through this buyout, the company expects to accelerate its retail and foodservice growth across Europe, Middle East and Africa.

Ops Center element will enable Kraft Heinz to establish an efficient, fast and integrated supply chain network. Management is on track to achieve $2 billion of gross productivity efficiencies through 2024. Partner Program element is designed to create solid customer partnerships and develop new strategic partnerships. The Fuel Our Growth strategy is aimed at investing in growth opportunities; solidifying its long-term market position as well as staying committed to boost shareholder returns. Also, this strategy will help the company manage its portfolio and accelerate its strategic plan, augment geographic presence, increase focus on growth areas as well as undertake sustainable pricing actions.

The Zacks Rank #3 (Hold) company’s shares have increased 4.8% so far this year compared with the industry’s 0.6% growth.

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