Kraft-Heinz Slashes Intangible Assets and Goodwill


Kraft-Heinz reported a net loss of $10.23 billion on sales of $26.25 billion for fiscal year 2018.  In comparison, the company earned $11.00 billion on sales of $26.09 billion for the previous fiscal year.  The $20.2 billion reversal in earnings was attributed to a $7.3 billion charge reflecting a production in goodwill associated with company brands and an $8.7 billion charge against intangible assets.  Notwithstanding the approximately $15 billion write down, intangibles and goodwill still represent 83 percent of company assets.


Kraft-Heinz is controlled by 3G an investment group based in Brazil coupled with equity participation by Berkshire Hathaway. Restaurant Brands International owner of Burger King, Popeye’s and Tim Hortons 3G is also controlled by 3G that has made extensive investments in the brewing industry. 


In 2018, Kraft-Heinz launched Just Crack an Egg under the Ore Ida brand.  This innovative product has the potential to increase demand for eggs since it offers consumers the option of quickly producing a breakfast or snack meal. As launched in 2018, the product was offered in four flavors including Rustic, Denver, Ultimate and All-American scrambles sold at a suggested retail price of $2.50.


Despite severe cost cutting, Kraft-Heinz under the direction of 3G, the company managed to develop and launch Just Crack an Egg, Heinz Mayochup and other products which are intended to contribute to sustainable and profitable growth according to outgoing CEO Bernardo Hees.  It will be unfortunate if the financial problems at Kraft-Heinz arising from the policy of 3G will stifle promotion and sales of Just Crack an Egg.  At least the concept is now on the shelf and if acceptable to consumers will stimulate competing branded and private label alternative products.