On February 22, 2019, Kraft Heinz declined by 27% as a result of an SEC subpoena into its accounting, a $15.4 billion writedown, lower than expected earnings, a 36% cut in its dividend, and a weak outlook. Berkshire Hathaway owns 26.7% of Kraft Heinz.
I was quoted in The New York Times and Bloomberg on this issue.
From The New York Times:
“They did not anticipate this major change in consumer tastes, and they really focused their efforts instead on cost-cutting and doing acquisitions,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business.
Over the coming quarters, Kraft will have to show that it can compete in a market in which consumers want products they think are healthy and do not appear to be mass-produced. Other companies have had some success on this front, Mr. Kass, the business professor said, pointing to some of PepsiCo’s food products. “Pepsi has been realizing that growth is going to come from new products that are perceived to be healthier and nutritious,” he said.
This is something that is more of a long-term problem, a major shift in consumer taste and sentiment,” David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business, said in an interview. “Very few people saw this coming, including Warren Buffett and including 3G Capital.”