Detailed SWOT Analysis of Kraft foods

About Kraft

Kraft Heinz Company (KHC), commonly known as Kraft Heinz. It is an American food company formed by the merger of two brands which are Kraft Foods and Heinz on July 2, 2015. It is Co-headquartered in Chicago, Illinois, and Pittsburgh, Pennsylvania.

It has over $26.0 billion in annual sales as of 2020. Kraft Heinz manufactures and markets food and beverage products like meals, meats, condiments and sauces, cheese and dairy, refreshment beverages, coffee, and other grocery products. 

Kraft Heinz Company has various brands under it, such as Kraft, Oscar Mayer, Philadelphia, Heinz, Lunchables, Maxwell House, Velveeta, Planters, Kool-Aid, Ore-Ida, Jell-O, Master, Quero, Golden Circle, and Wattie’s.

The company sold its product through its own sales organization, independent agents, brokers, and distributors chain. Kraft Heinz has a vision ‘To sustainably grow by delighting more consumers globally.

Now that we have known about Kraft Heinz as a company, let us see the swot analysis of Kraft Heinz and know its positive and negative factors which affect the company.

SWOT Analysis of Kraft Heinz:-

SWOT represents the Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis is a technique for evaluating these four aspects of your business. 

It is used to make the most of what you’ve got, to your organization’s best advantage and you can reduce the chances of failure, by understanding what you’re lacking, and eliminating risks that would otherwise catch you unaware. 

Better still, you can start to craft a strategy that distinguishes you from your competitors, and so compete successfully in your market.

It helps the organization to build on what they do well, to address what they are lacking, to minimize risks, and to take the greatest possible advantage of chances for success.

Now that we know how SWOT analysis works and how it can be helpful for a company,

Let us first start by looking at the strengths of Kraft that have helped it prosper in the market.

1. Strength:

Strengths are the areas where the company has excelled. This factor makes the company unique from its competitors. Let us begin exploring the strengths of Kraft Heinz:

• Variety in product portfolio:

Kraft has a wide range of product portfolios due to the different brands under it. This gives it an edge in the market to supply a variety of products to the customers. 

• Strong financials

Kraft Heinz had a net sale of $6,157 million as of 2020 and had total revenue of $26.12 billion as of 2020. This shows that the company had a strong financial position even in the covid crisis.

• Social Media & Website:

Kraft Heinz has a well-operational and interactive website that draws the attention of new customers. They have a strong network with more than millions of followers on Instagram, Facebook, and Twitter which leads to high customers engagement with less customer response period.

• Entering Global Market:

In today’s world of globalization, it is important to reach every single part of the world,  Kraft Heinz reaches 40+ countries in the world. Also, it comes up with innovative products and enters a new market successfully.

Let us now check out the weaknesses of Kraft Heinz that it needs to work on.

2. Weakness:

Every business has its weak points knowing them and working on improving them is the key to success.

Weakness must be minimized and eliminated also they are controllable. 

Below are some points which will help you to understand the weakness of Kraft Heinz:

• Often Product Recall:

In July 2015, Kraft Heinz had to recall Original Flavour of Macaroni & Cheese Dinner because of the risk of little pieces of metal in a box that damaged the brand image in customers’ eyes. In August 2015, the USDA’s  (US Department of Agriculture) food safety and inspection service reported products might go off before their marked date. In April 2015, Kraft was forced to recall Oscar Meyer wieners of 43,500kg worth $385,000.  

• Reduction in profitability:

Kraft Heinz Net contribution% and profitability ratio is under the industry average. Decreasing profit margin due high price of products than competitors. As compared to competitors Kraft possesses a higher employee turnover rate which affects the profitability of the company.

• Limited Shelf life:

Kraft Heinz comes under the food processing industry. There are so many products that are delivered by Kraft Heinz which comes under the category of perishable goods so the expiry date of the products is not of a longer period. Due to this kraft faced a problem as many times goods are delivered to customers after their shelf life is over.

Opportunities are the factors that help you improve your business make more profit and enter different markets.

Let us now look at the opportunities for Kart Heinz in the market.

3. Opportunity:

There are some beneficial factors in the external environment, the company should recognize and grasp such factors and accordingly plan the strategies and execute them that may result in more profitability. 

The opportunity of Kraft Heinz are given below let us understand them in detail:

• Demand for Nutritional Products:

Nowadays health is more important than anything as a result customers have started demanding nutritional products.

 Kraft is doing awareness about taking care of health by advertising their nutritional foods for adults as well as for babies. The company also expects to increase the nutritional product in the product portfolio.

• Acquisition of Other company:

Acquiring some small companies Kraft can enter other industries like catering, pet food, etc. as well as reach more customers. Emerging or acquiring with competitors company can reduce competition and increase profitability. 

Challenges often come and being ready to face them and how you handle them is what matters to keep your business growing.

Let us now see the threats to Kraft Heinz which they may face.

4. Threats:

Threats means external factors that could cause trouble for the company. There is no control over threats but it is still important to be aware of them so that the company can develop contingency plans. 

So let’s go through the threats for Kraft Heinz:

• Strict Safety Policies::

In recent years, food safety policies in the world have become more strict. Due to this reason the compliance cost and regulatory risk of food companies increase. The food companies have to go through so many rules and norms of the regulatory authority of every country.

• Increase in the Cost of Raw Material and Labour Wages:

The cost of raw materials is increasing in every part of the world also in developed countries like the US, Europe, Canada labor wages are increasing every year, as a result, there is a rise in the overall expenditure of the company.

• Competition:

There are so many food and beverage companies in the world. Kraft Heinz is the fifth-largest company in the world but their companies like Dean Foods, Keurig Dr. Pepper, Land O’ Lakes, Mars are the largest competitors of Kraft Heinz. Also to capture the whole international market Kraft Heinz has the competitors like Amazon.

Conclusion:-

Kraft Heinz has strengths that can make the company the first largest food and beverage company in the world but the company has to identify how it can maximize its strength. Kraft Heinz has a big brand name but they have to focus on their weakness as some of the weaknesses like a product recall can damages the brand name, the customers will also question themselves before trusting the brand. 

There are different opportunities in the market like demand for nutritional products and the acquisition of other small companies that can help it grow in the market.

It also has some threats of which it needs to be aware of which are strict safety policies, an increase in the cost of raw material/labor, and its competitors. 

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