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Kraft Heinz (KHC) Announces Structural Changes to Drive Growth

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The Kraft Heinz Company (KHC - Free Report) is committed to accelerating its long-term growth plans by bringing more agility to its innovations, operations and go-to-market approach. In this regard, the company plans to combine its U.S. and Canada businesses to form the North America Zone. Management anticipates the move to come into effect in second-quarter fiscal2022.

Kraft Heinz’s U.S. and Canada businesses made up nearly 80% of 2020 consolidated net sales. Management believes the creation of the North America Zone will accelerate Kraft Heinz’s motive to leverage its scale via better agility for competitive advantage. The move will support the strategic plan,which is aimed at streamlining and synergizing the U.S. and Canada businesses. Through the evolved structure, management anticipates supporting the North America Zone pilot high-value products, processes and service innovations.

In the past year, this global food and beverage leader undertook several steps to transform its growth profile. The company divested certain assets in its global cheese and nuts businesses in the past year. The Zacks Rank #3 (Hold) company centered its business on the consumer-first approach while investing significantly in its portfolio, digital solutions, customer relationships and people. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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What Else Should You Know?

Kraft Heinz is committed to expanding its footprint across emerging markets as part of its focus on the operating model. To this end, management acquired a sauces-focused business — Assan Foods — from privately-held Turkish conglomerate Kibar Holding in October 2021. Through this buyout, the company is accelerating its retail and foodservice growth across Europe, the Middle East and Africa. In September 2021, Kraft Heinz 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.

Other Food Players Gaining on Buyouts

Several other companies in the food space like Post Holdings, Inc. (POST - Free Report) , Hormel Foods Corporation (HRL - Free Report) and McCormick & Company, Incorporated (MKC - Free Report) are benefiting from acquisitions.

In fourth-quarter fiscal 2021, Post Holdings’ top line included $99.8 million in net sales from acquisitions made throughout fiscal 2021. The buyouts include Private label ready-to-eat cereal business Egg Beaters liquid egg brand, Almark Foods business and related assets and Peter Pan nut butter brand.

Hormel Foods is strengthening its business through strategic acquisitions. In June, HRL acquired the Planters snacking portfolio from The Kraft Heinz Company. Prior to this, the company acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout is in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.

McCormick strategically increased its presence through acquisitions, which have been strengthening its portfolio. In December 2020, McCormick bought a 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick acquired the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand.

Shares of KHC have dropped 2.8% in the past year compared with the industry’s fall of 1.1%. HRL and MKC have declined 8.2% and 4.8%, respectively, in the past year. POST has moved up 8% during this time.