Kraft Heinz Stock

The Kraft Heinz Company (Kraft Heinz) operates as a global food and beverage company. The company leverages its scale and agility to unleash the full power of Kraft Heinz across a portfolio of six consumer-driven product platforms. The company operates through two segments defined by geographic region: North America and International.

Trademarks and Intellectual Property

North America: This segment’s majority owned and licensed trademarks are Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Capri Sun*, Maxwell House, Kool-Aid, and Jell-O.

International: This segment’s majority owned and licensed trademarks are Heinz, ABC, Master, Quero, Kraft, Golden Circle, Wattie’s, Pudliszki, and Plasmon

The company sells certain products under brands it licenses from third parties. In 2023, brands used under licenses from third parties included Capri Sun packaged drink pouches for sale in the company’s North America segment. The company also grants certain licenses to third parties to use its intellectual property rights in select jurisdictions. In 2021, in the company’s agreements with an affiliate of Groupe Lactalis (Lactalis), related to the sale of certain assets in its global cheese business, it each granted the other party various licenses to use certain of its and their respective intellectual property rights in perpetuity, including perpetual licenses for the Kraft and Velveeta brands for certain cheese products.

The company also owns numerous patents worldwide. The company considers its portfolio of patents, patent applications, patent licenses under patents owned by third parties, proprietary trade secrets, technology, know-how processes, and related intellectual property rights to be material to its operations. Patents, issued or applied for, cover inventions ranging from packaging techniques to processes relating to specific products and to the products themselves. While the company’s patent portfolio is material to its business, the loss of one patent or a group of related patents would not have a material adverse effect on its business.

Research and Development Expense

The company’s research and development expenses were approximately $147 million in 2023.

Sales and Customers

The company’s products are sold through its own sales organizations and through independent brokers, agents, and distributors to chain, wholesale, cooperative, and independent grocery accounts; convenience, value, and club stores; pharmacies and drug stores; mass merchants; foodservice distributors; and institutions, including hotels, restaurants, bakeries, hospitals, health care facilities, and government agencies. The company’s products are also sold online through various e-commerce platforms and retailers.

The company has key customers in different regions around the world. In 2023, the five largest customers in the company’s North America segment accounted for approximately 46% of North America segment net sales and the five largest customers in its International segment accounted for approximately 14% of International segment net sales. The company’s largest customer, Walmart Inc., represented approximately 21% of its net sales in 2023. Both of the company’s segments have sales to Walmart Inc.

As of December 30, 2023, the company managed its sales portfolio through six consumer-driven product platforms. A platform is a lens created for the portfolio based on a grouping of real consumer needs and includes the following for Kraft Heinz: Taste Elevation, Fast Fresh Meals, Easy Meals Made Better, Real Food Snacking, Flavorful Hydration, and Easy Indulgent Desserts. The platforms are modular and configurable by reportable segment and market and help the company to manage and organize the company’s business effectively by providing insight into its various product categories and brands. Further, each platform is assigned a role within the company’s business to help inform its resource allocation and investment decisions, which are made at the reportable segment level. These roles include Grow, Energize, and Stabilize. The company is evaluating its existing platforms and roles and anticipate changes to align with its future growth strategy.

Seasonality

Although crops constituting certain of its raw food ingredients are harvested on a seasonal basis, the majority of the company’s products are produced throughout the year (year ended December 30, 2023).

Seasonal factors inherent in the company’s business change the demand for products, including holidays, changes in seasons, or other annual events. While these factors influence the company’s quarterly net sales, operating income/(loss), and cash flows at the product level, unless the timing of such events shift period-over-period (e.g., a shift in Easter timing), this seasonality does not typically have a significant effect on its consolidated results of operations or segment results.

Government Regulation

In the United States, the company’s activities are subject to regulation by various federal government agencies, including the Food and Drug Administration, Department of Agriculture, Federal Trade Commission, Department of Labor, Department of Commerce, and Environmental Protection Agency, as well as various state and local agencies.

In the company’s business dealings, it is also required to comply with the U.S. Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act, the U.S. Trade Sanctions Reform and Export Enhancement Act, and various other anti-corruption regulations in the regions in which it operates.

In the United States, where a significant portion of the company’s business operates, these laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). CERCLA imposes joint and several liability on each potentially responsible party. The company is involved in a number of active proceedings in the United States under CERCLA (and other state actions under similar legislation) related to certain closed, inactive, or divested operations for which the company retains liability.

History

The company was founded in 1869. It was incorporated in 2013. The company was formerly known as Hawk Acquisition Intermediate Corporation II and changed its name to H. J. Heinz Corporation II in 2014 and to The Kraft Heinz Company in 2015.