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Kraft Heinz (KHC) Forms Joint Venture with Oprah Winfrey

Consumer packaged food and beverage giant, The Kraft Heinz CompanyKHC formed a joint venture with Oprah Winfrey, named Mealtime Stories, LLC.

Under the venture, both the companies will initially manufacture a new line of real nutritious food products only in the United States. Also, only "ready to eat refrigerated products" would be offered across multiple categories, in the beginning. Notably, 10% of profits generated from the venture, will be donated to charities in order to eradicate hunger.

Kraft Heinz plans to take advantage of Oprah's stature and marketing prowess. In 2015 the talk-show host bought a 10% stake in Weight Watchers company and thereafter shares of the company rallied.

Kraft Heinz remains focused on innovation and marketing efforts. Successful innovation in the past includes Lunchables, P3, Heinz Yellow Mustard sauces in Europe and Mayo in Brazil. The growing demand for organic and nutritional food led Kraft Heinz to launch organic Capri-Sun juices and Mac & Cheese dinner (under its Cracker Barrel brand) without artificial ingredients in 2016.

With the growing awareness of nutritional value of food products, responsible and sustainable sourcing of raw materials has become an important issue for food companies. The importance of using organic ingredients and minimal processing in packaged food products is also being emphasized on by the companies.

Earlier, the company revealed its plans to focus on shifting advertising spend from non-working (like production costs, advertising agency costs) to working media (digital, print advertisements) and eliminate inefficient trade promotion spending.

Notably, soft spending by U.S. shoppers along with rapid changes in consumer preferences and behavior are hurting the company's categories. In US adjusted net sales of $4.39 billion in the third quarter of 2016 declined 1.2% (reported and organic) year over year owing to lower volumes. Volume/mix decreased 0.7% in the quarter in comparison to a 3.1% decline in the last quarter.

Thus, we believe that this new venture should certainly aid in reviving the US business to some extent and increase profitability.

The Kraft Heinz Company Price

The Kraft Heinz Company Price | The Kraft Heinz Company Quote

Zacks Rank & Other Key Picks

Kraft Heinz carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same industry include B&G Foods, Inc. BGS , ConAgra Foods Inc. CAG and Ingredion Incorporated INGR . All the three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .

B&G Foods' earnings are expected to increase 42.2% in 2016.

ConAgra's surpassed estimates in three of the past four quarters with an average beat of 13.3%.

Ingredion is expected to witness 20% earnings growth in 2016.

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The Kraft Heinz Company (KHC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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