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Kraft Heinz (KHC) to Buy 85% Stake in Just Spices to Boost Growth

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The Kraft Heinz Company (KHC - Free Report) is committed to accelerating its international growth strategy focused on the Taste Elevation platform. In this regard, the company entered into an agreement to buy 85% stake in Germany-based Just Spices GmbH (“Just Spices”). The other 15% stake will be retained by Just Spices’ founders. Kraft Heinz expects to conclude the deal by the first quarter of 2022.

Just Spices supplies various spice blends, pure spices and quick-fix meal kits. Just Spices’ data-driven product innovation is designed to meet the needs of Gen Y and Gen Z consumers. The company’s modern analytics knowledge helps it recognize early consumer trend signals, promote product innovation, grasp customer sentiment along with optimizing customer targeting. Through this deal, Kraft Heinz expects to accelerate its growth strategy by ramping up its innovations and better-understanding consumers’ tastes and preferences. The buyout will enhance its direct-to-consumer operations and go-to-market expansion. Certainly, the combination of Just Spices’ innovation and brand power with Kraft Heinz’s team and scale bodes well.

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What Else Should You Know?

In September 2020, Kraft Heinz laid out a new operating model that incorporates five key elements, which include People with Purpose, Consumer Platforms, Ops Center, Partner Program and Fuel Our Growth. The Consumer Platforms represents a portfolio of six consumer-driven platforms like Taste Elevation, Easy Meals Made Better as well as Real Food Snacking among others.

The Zacks Rank #3 (Hold) company is committed to expanding the International Taste Elevation product platform and its footprint across emerging markets. Management acquired sauces-focused business — Assan Foods — from privately-held Turkish conglomerate Kibar Holding in October 2021. The buyout is accelerating the company’s retail and foodservice growth across Europe, Middle East and Africa. In September 2021, 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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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 the acquisitions made in 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 has 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 Kraft Heinz have dropped 0.8% in the past year, while the industry is 0%. HRL and MKC have declined 2.6% and 3%, respectively, in the past year. POST has moved up 5.2% during this time.