Friday, February 22, 2019

Dare to Dream. Imagine This.

Imagine if you were so rich, you could lose four billion dollars in one day on ketchup. That's Warren Buffett rich.

The bulti-billionaire ("multi" just doesn't do it justice) suffered - oh, the humanity - the loss when his shares in Kraft Heinz fell 25 per cent in a trice. (I threw in "trice" because I fear the word is falling into desuetude. Don't even get me started on "disquietude, assuetude" or "insuetude.")
“We were overly optimistic on delivering savings that did not materialize,” Kraft Heinz chief executive Bernardo Hees conceded on a conference call with investors, after the company announced it would slash its dividend. 
Investor Warren Buffett’s Berkshire Hathaway has been particularly hard hit, losing more than $4bn in a day as shares in Kraft Heinz plunged. Kraft Heinz is one of Buffett’s largest positions, with 325 million shares at the end of 2018.
So, Mr. Buffett, would you like fries with that?


Anonymous said...

Including today's decline, Kraft-Heinz shares are down 48% over the past year.

(Kraft-Heinz not particularly popular here in SW Ontario.)


The Mound of Sound said...

I know what you mean, UU. My mother's family grew tomatoes for Heinz. One of my uncles worked in quality control. Another ran the transport division. That was during Leamington's heyday. I remember the 'giant tomato' tourist booth where summer visitors were always offered a free glass of tomato juice. It was a "company town" back then. And, yes, I now buy French's ketchup.

John B. said...

I've been buying French's too. I think it has more tomato and less starch and syrup. I don't know whether they've followed through on their commitment.

The Mound of Sound said...

While the French's product comes from a US factory they're still using Leamington tomatoes and they're sticking to the Canadian Heinz recipe.

As you might expect my family were expert at distinguishing the American recipe Heinz ketchup from the Canadian version which, not surprisingly, they considered quite superior. And, you're right, the American stuff is sweeter and less tangy.

Anonymous said...

Warren changed the Heinz baked beans recipe as well. More sauce, fewer beans. I was so annoyed at the Heinz takeover I bought some beans, a half dozen cans and an extra bottle of our orange-coloured ketchup. Down to two cans of those original beans - full to the brim they are, while the present day slop is beans floating in sauce.

3G Capital of Brazil, the real boss being one Jorge Paulo Lemann, is the real force behind cheapness in consumer processed food including Kraft Heinz. They started only 20 years ago by buying beer companies like Stella Artois, then took over Anheuser Busch, then most of the other big brewer brands and now have 50% or more of the global market.

Joining up with Warren the Buffett, they had a feast on Kraft Heinz.

Assuming yet another subsidiary name, Restaurant Brands International 3G Capital took over Burger King and TIM bloody HORTONs; at the latter they fired over 400 HO types in Tee-O and made staff fill out requisition forms for paper clips. Cheap, cheap, cheap characterizes 3G Capital. That and making more pennies on the constant expansion of execrable Timmies' soups and sandwiches - good for people who like piping warm, not hot, recycled cardboard. Why waste money on quality and heat when mediocre sells just as well for the same price?

In fact it was 3G Capital dumping Kraft Heinz shares last summer in early August that precipitated the first major decline in share price. Obviously Warren doesn't know how to slash costs properly and Jorge Lemann let him know in no uncertain fashion by selling 21 million shares.

If ever there was an archetypal predatory capitalist outfit, 3G epitomizes it. Ruthless.

I was watching 3G as it swallowed beer companies around the world after the Busch takeover in 2008, and when I first heard they they had joined up with Buffett to take over Heinz and Kraft, I knew disaster was on the way. As it indeed was for Heinz Canada.

Knowing that Canadians scarcely ever bleat, buying Timmies and slashing costs was a forgone conclusion, It's their Restaurant Brands Intl unit which has cheesed off Tim's franchisees for allegedly spending franchise fees on advertising or something - the details don't matter, 3G Capital's attitude is the common thread.

When Warren tied up with 3G, he'd finally met his match, and it was no contest. The nasty ones win easily all the time. Go on, google 3G Capital. You know you want to.