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Kraft Executive Summary

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Consumers shift their tastes away from high fat, high sugar and non-nutritive foods toward healthier, organic and nutrient products. Hence, market needs to offer a number of high quality, healthier, and organic foods with better pricing because price matters most to consumers due to low switch cost in CGP segments. Kraft has struggled with its decreasing sales since The Mondelez International split off in 2012. It is also facing low operating margins due to inefficient factories and numbers of waste materials during manufacturing process. Compare to its 2014 and 2013 fourth quarter reports, it shows that 2014 grow profit decreased 75.6% since cost of sales increased 58.6% from 2013. These inefficient operations caused $ 398 million net loss in the 2014 fourth quarter. For Kraft, merging with Heinz whose operation is effective and efficiency is a good strategy to improve its inefficiency, strengthen sales, and cut unnecessary costs. 3G Capital acquired Heinz in 2013 as a footprint in CPG industry. Also, 3G Capital is good at cutting costs as much as possible and adding back resources only when and where necessary. After acquisition, Heinz’s EBITDA margins increased to 26% in fiscal 2014 from 18% pre-deal in mid-2013. Additionally, Kraft is unable to satisfy consumers’ trends which are premium quality and organic foods. …show more content…

Kraft and Heinz, as two iconic brands, are famous for packaged cheese, and high quality packaged ketchup and baby foods respectively. Additionally, Kraft is facing some low quality issues now. However, Kraft needs to innovate into more natural and organic products which are different from its supply chains to meet consumer demands. Thus, it is a challenge for the new company to make consumers accept these innovated products, especially the iconic brand, Kraft, is facing is “healthy and safe” problem as

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