What happens when two giants of the food and beverages industry join hands to form a company? Magic happens! And we can all see it happening in the form of Kraft Heinz.
Kraft Heinz is one of the largest manufacturers in the food and beverage industry. The company was established as a result of a merger of two giants of the food and beverages industry, Kraft and Heinz.
Both these brands have a rich history and a vast product line, due to which Kraft Heinz has a large customer base. Today we will conduct a Kraft Heinz SWOT Analysis to see the brand’s strengths, weaknesses, opportunities, and threats.
Before we start with the SWOT analysis, we need to look at both brands’ histories first.
Heinz was established way before Kraft in 1869 in Pennsylvania. The first product manufactured by Heinz was its all-time famous Tomato Ketchup.
The company grew and started manufacturing other products, such as frozen food, sauces, soups, processed beans, and pasta meals. Such a variety of products increased the customer base of the brand.
In the 1930s, the brand started manufacturing in the UK. In the first year of production in the UK, Heinz manufactured 10,000 tonnes of products. This was a significant milestone achieved by the brand.
Soon the brand felt the need to market its products better. As a result, Heinz advertised itself on TV and through posters in the 1950s. By the 1990s, the brand was operating in more than 60 countries and kept growing each year.
Before merging with Kraft in 2014, Heinz generated revenue of $10.9 billion.
Now that we are done with Heinz’s history let’s look at the history of Kraft.
It can be traced back to National Dairy Products Corporation, a relative newbie compared to Heinz. The foundation of the National Dairy Products Corporation was laid in 1923.
The brand initially entered the ice cream industry in the US. Soon it developed a wide range of dairy products through acquisitions, and by 1930 National Dairy Products Corporation was the largest dairy company in the US. It then acquired a company named Kraft which was the manufacturer of cheese.
Later the company changed its name to Kraft and continued its operations. Kraft kept on acquiring more brands, due to which the company’s product portfolio and customer base kept increasing.
Kraft was now selling everything from cheese to ice creams. In 2009, the brand also acquired Cadbury. Due to such a vast operation, Kraft generated revenue of $18.2 billion in 2014 before it shook hands with Heinz to form Kraft Heinz.
In 2015, Kraft Heinz emerged due to a merger between the two famous brands. Together Kraft and Heinz are selling products of more than 20 brands in almost 200 countries under the banner of Kraft Heinz.
Recently, Kraft Heinz managed to generate revenue of $25.8 billion in 2022. This was only possible because the market share of both brands, Kraft and Heinz, are joined together. Moreover, the brand acquired more brands to increase its market share.
Kraft Heinz expanded its operations worldwide. Currently, the brand has more than 79 manufacturing plants all over the globe. The brand also has a large workforce. Currently, more than 36,000 employees are working for the company.
Now that we have discussed the operations and history of Kraft Heinz in detail let’s proceed further and carry out the Kraft Heinz SWOT analysis.
Before we proceed, we must make you guys aware of what SWOT analysis is. SWOT analysis is a business tool used to identify the strengths, weaknesses, opportunities, and threats that a company has to face.
A SWOT template states the internal and external factors that impact the operations of a brand. We hope you now know the purpose of the SWOT analysis, so let’s proceed and conduct the Kraft Heinz SWOT analysis.
Strengths of Kraft Heinz
Strengths are the strong points that make a brand competitive in the market. Every organization possesses some strengths. Let’s have a look at what strengths Kraft Heinz possesses.
Successful Track Record of Both The Companies
It may not seem important, but the history of a brand really matters. Consumers judge brands by their records. In the case of mergers, it is essential to have a good history of both companies or else consumers might boycott the newly formed brand.
Kraft and Heinz both have excellent track records individually. Both have several products on their portfolio and plenty of experience in running a successful business. Such a rich history of both brands attracts customers to buy the products of Kraft Heinz.
All the brands look forward to expanding their operations internationally to increase their customer base. Kraft Heinz is one of the brands that have a significant global presence.
The brand sells its products in more than 200 countries and has more than 79 manufacturing plants all over the globe. Such a vast global presence gives Kraft Heinz an edge in the market.
Strong Product Portfolio
Brands are always looking for ways to strengthen their product portfolio. For example, Kraft Heinz has a robust portfolio. The brand sells several products through 26 big brands under its umbrella.
Out of these 26 brands, eight of the brands generate more than $1 billion annually. Having such diverse and successful brands under the banner of Kraft Heinz provides an advantage to the brand. Each brand has a different customer base that collectively contributes to Kraft Heinz’s revenue.
Weaknesses of Kraft Heinz
Weaknesses are a brand’s drawbacks that hinder its growth in the market. Although all brands have a few weaknesses, to grow, it is essential to overcome their weaknesses. In this section, we will look at the weaknesses of Kraft Heinz.
Businesses are often positioned under the spotlight due to their financial transactions. Recently, an inquiry was made on the financial transactions, and Kraft Heinz was fined $62 million for accounting fraud.
This news took the market by storm, and the brand gained bad popularity. The imposition of this fine damaged the brand’s image and impacted Kraft Heinz financially.
High Frequency of Product Recall
Operating in the food industry is like walking on a double-edged sword. Where brands make considerable profits in this industry, they also suffer significant losses due to the high frequency of product recall.
It is estimated that around $10 million worth of food is recalled annually. Since Kraft Heinz is one of the largest food manufacturing companies, it has to deal with a product recall. Products from Kraft Heinz are often sent back to the company because they expire on the shelves. Such incidents of product recall cause financial damage to the brand.
Brands often desire to expand their operations. However, to operate at multiple locations, a large workforce is needed. For example, as we have discussed earlier, Kraft Heinz is a brand that has vast operations overseas. To manage these operations, the brand has to employ a large workforce.
Currently, Kraft Heinz has a workforce that comprises more than 36,000 workers. Such a large workforce increases the brand’s operational costs, lowering the profits. Moreover, it is tough for Kraft Heinz to manage such a large workforce in different parts of the world.
Opportunities Present For Kraft Heinz
Every brand gets the opportunity for growth. However, to actually grow, businesses need to identify the opportunities timely. This section of the SWOT analysis will identify the opportunities for Kraft Heinz.
Acquisition of Brands
Brands often penetrate and expand their market share by forming mergers with big companies and acquiring smaller ones. For example, although Kraft Heinz was created due to a union and has acquired several brands to date, it still has the opportunity to acquire more brands to increase its market share.
Acquiring more companies will increase the demand for products offered by Kraft Heinz, increasing the brand’s sales.
Growing Market For Baby Food
Businesses often diversify their operations by looking at the changing trends and identifying the growth potential in different markets. For example, Kraft Heinz currently manufactures products for children and adults. However, it doesn’t cater to the needs of babies yet.
The market for baby food is expected to grow more than 5.3% in the coming decade. Therefore, Kraft Heinz has an opportunity to enter the baby food market. By doing so, the brand can benefit from the growing market for baby food.
Social Media Marketing
Marketing is essential for any business. It makes the products look attractive to consumers. As a result, consumers tend to buy those products. Initially, only a few mediums were used for marketing, such as TV, radio, and newspapers.
However, after the emergence of social media, businesses can market their products on different social media platforms. For example, Kraft Heinz can increase its customer base by using social media as a marketing tool.
Threats Faced By Kraft Heinz
Businesses face several threats from the external environment. However, to succeed, it is essential to counter these threats. In this section, we will highlight some of the threats that Kraft Heinz faces.
Increased Health Awareness
Over the years, health awareness has increased among the masses. As a result, people have started to pay attention to their lifestyle and diet. Moreover, other research has proved sugar’s negative impact on our diets.
Such health awareness acts as a threat to Kraft Heinz because the majority of the products of Kraft Heinz have a lot of sugar. Therefore, increasing health awareness will push the customers away from the brand’s product which could be disastrous for Kraft Heinz.
A recession is one of the most significant external factors that can make a business go bankrupt because it lowers consumers’ purchasing power. Hence, the sales of brands hit rock bottom.
Due to the post-math of COVID-19 and now the Russia-Ukraine war, the World Bank has predicted that 2023 will be the year of recession. This news threatens Kraft Heinz because the recession will damage the brand financially.
Brands secretly want to operate as a monopoly to make abnormal profits. As the number of players in the market increases, the brands’ profits start decreasing. Kraft Heinz is already operating in a saturated industry with many competitors such as Nestle, Kellogg’s, and Mondelez.
Kraft Heinz feels threatened by new entrants in the market because they would further saturate the industry and lower the brand’s profit. Moreover, the buyer’s power will increase as the number of suppliers in the industry increases. This can result in buyers dictating the prices to sellers, which will be very damaging for Kraft Heinz.
Kraft Heinz SWOT Analysis: Final Word
Kraft Heinz is considered among the largest food and beverage manufacturers. The brand came into existence in 2015 when Kraft and Heinz formed a strategic merger.
Before the merger, both companies were operating successfully individually. As a result, both had a large variety of products to offer. Due to this, both companies had a large customer base.
After the merger, Kraft Heinz acquired some smaller companies to increase its market share and diversify its portfolio. Currently, the brand has 26 brands under its umbrella.
After looking at this successful merger, we conducted a Kraft Heinz SWOT analysis. In this SWOT analysis, we identified some of the strengths and weaknesses of the brand. After that, we also shed light on the opportunities present for the brand to grow and the threats from the external environment that Kraft Heinz has to counter.
Now that we have come to the end of this article, we assume that this article must have taught you how to conduct a SWOT analysis. The external and internal factors mentioned in this article can be represented through a SWOT matrix in an efficient manner or a SWOT table. If you want to know more about this amazing business tool, here are some more SWOT analysis examples.