Kraft Heinz Co. Partners with Oprah Winfrey
The media magnate is starting a joint venture with Kraft called Mealtime Stories, aiming to make nutritious food more widely available, according to a statement Wednesday. Kraft will develop and sell the new line, which will initially focus on ready-to-eat refrigerated dishes.
Winfrey is known for having far-reaching influence when she lends her imprimatur to a business or touts a book. After she joined Weight Watchers’ board and bought a 10 percent stake in 2015, shares of the long-suffering company rallied.
With the new product line, Kraft is clearly trying to capitalize on the talk-show veteran’s marketing prowess, according to Ken Shea, an analyst at Bloomberg Intelligence
“She’s shown that she lends credibility to a brand,” Shea said. “This is a logical way to invest in that category.”
The news gave the stocks of both companies a short-lived bump in late trading Wednesday. As of 9:43 a.m. Thursday in New York, Kraft shares were little changed at $88.99 and Weight Watchers was up 2 percent to $12.26.
Weight Watchers has no connection to the Mealtime effort, though the companies have a long history: In an earlier incarnation, Heinz owned the weight-loss program. Investors may be betting that Winfrey expanding her presence in the food industry will benefit Weight Watchers.
The joint venture plans to donate 10 percent of profits to anti-hunger charities. Kraft didn’t provide further details, though it said it would give more specifics later this year.
Heinz owned Weight Watchers for several years before selling the business to Artal, a private investment company, for $735 million in 1999. Heinz then merged with Kraft Foods in a 2015 deal orchestrated by Warren Buffett and the private equity firm 3G Capital. That transaction created the third-largest food and beverage company in North America. The combined company continues to make a line of frozen meals and desserts called Weight Watchers Smart Ones under a licensing agreement.
In December, Weight Watchers shares jumped as much as 19 percent after Winfrey said she’d lost 40 pounds (18 kilograms) using the program. It was the latest example of her goosing the shares of a debt-saddled company that was losing subscribers before she got involved.
With the new partnership, Kraft is hoping that Winfrey’s sway will lift a category of products -- refrigerated meals -- that are out of step with current consumer trends.
“It requires creativity like this to drive sales in that category,” Shea said.
Original article: www.bloomberg.com
Written by: Craig Giammona