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Kraft Heinz (KHC) Buys Assan Foods to Grow Taste Elevation Platform

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The Kraft Heinz Company KHC is focused on accelerating its international growth strategy based around the Taste Elevation and foodservice platforms. In this regard, the company completed the previously-announced (on Jun 11, 2021) acquisition of sauces-focused business — Assan Foods — from privately-held Turkish conglomerate, Kibar Holding.

Assan Foods, which sells a variety of offerings including ketchup, pasta and meat sauces, tomato paste as well as mayonnaise under brands like Colorado, Kingtom and Oba, has local production units in Balikesir and Izmir. Assan Foods has been a certified manufacturing partner for the company since 2019. This partnership has been aiding Kraft Heinz’s foodservice and retail business in Europe, the Middle East and Africa.

All said, management believes that Assan Foods’ buyout will add another leaf to Kraft Heinz’s international zone’s growth strategy and expand its brand presence across important growth markets.

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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 comprise a portfolio of six consumer-driven platforms — Taste Elevation, Easy Meals Made Better as well as Real Food Snacking among others. Kraft Heinz is leaving no stones unturned to accelerate its international growth strategy. Recently, 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.

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. The Partner Program element is designed to create solid customer partnerships and develop new strategies. The Fuel Our Growth strategy is aimed toward investing in growth opportunities; solidifying its long-term market position as well as staying committed to boost shareholders’ 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. Keeping this in mind, Kraft Heinz sold its nuts business to Hormel Foods Corporation HRL in June 2021. Management believes that the sale of the nuts portfolio is a step closer to achieving its objectives laid out in the transformation plan.

The Zacks Rank #3 (Hold) company’s shares have increased 6.4% so far this year compared with the industry’s 1% growth.

2 Food Picks

Darling Ingredients Inc. DAR, currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 39.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sysco Corporation SYY, currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 13.3%, on average.

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