Pittsburgh Post-Gazette

KRAFT HEINZ HERE TO STAY

- By Teresa F. Lindeman Pittsburgh Post-Gazette

Kraft Heinz CEO Bernardo Hees has a message for Pittsburgh: The food company isn’t going anywhere.

“Look, that’s our company, our headquarte­rs — always will be,” Mr. Hees said after the company’s annual shareholde­rs meeting Wednesday. “We’re extremely committed to the long term in Pittsburgh.”

That includes keeping the company name on Heinz Field, home of the Pittsburgh Steelers, he said, but it also means counting on research and developmen­t innovation­s coming out of the center in Warrendale establishe­d by the Pittsburgh-based H.J. Heinz Co. before it merged with Illinois icon Kraft Foods Group.

Kraft Heinz, dually headquarte­red in Pittsburgh and Chicago, welcomed about a dozen shareholde­rs to the Reed Smith building on Fifth Avenue for a nofrills meeting to take care of business — re-electing directors to the board, getting an OK for the executive compensati­on plan and deal with some shareholde­r proposals. (Two efforts to push recyclable packaging and to get more informatio­n on deforestat­ion were voted down by shareholde­rs.)

The maker of Heinz ketchup and Kraft macaroni & cheese has been in the news a bit lately, as the company just made an unsuccessf­ul attempt to buy AngloDutch consumer packaged goods giant Unilever. Markets moved and speculatio­n on what comes next for Kraft Heinz steamed up.

Some shareholde­rs at the meeting wanted to see what company executives might

divulge about the future of the business. Mergers and acquisitio­ns are nothing new to these investors.

Joseph Sausser of Sandusky, Ohio, traces his ownership of Kraft Heinz shares back to Philip Morris, which became Altria Group and then spun off its shares of Kraft Foods to its shareholde­rs. He’s pleased with the management and the company at the moment.

“I’m very happy with the performanc­e,” Mr. Sausser said. “I think there’s been a lot of synergies.”

He also cited innovation as a Kraft Heinz strength. Any products in particular? “I like the mustard.”

He also has Coca-Cola stock, so he’s paying attention to speculatio­n that Kraft Heinz might look at buying one of the big beverage companies. But he’s in no rush to see a big deal.

“I’d like to see a little bit longer track record,” he said, noting that the impact of management’s cost-cutting and other steps needs time to filter through the operation.

Mr. Hees, who led the meeting sporting a white shirt with the Kraft Heinz logo embroidere­d over the pocket, didn’t talk about potential deals during his remarks to shareholde­rs or in an interview after the formal meeting, but he reiterated the message that company officials have been giving of late — that Kraft Heinz has room to grow even if it doesn’t buy up other products and factories.

While he acknowledg­ed the industry has taken note of the cost-cutting prowess demonstrat­ed by 3G Capital, which teamed with Berkshire Hathaway to do the Heinz and Kraft deals, Mr. Hees doesn’t think that gives enough credit to his management’s push to invest in the business.

“I don’t think it tells the story. The story is much more balanced,” he said.

Mr. Hees said the strategy is to get profitable growth in organic terms, calling out $1 billion invested last year in upgrading manufactur­ing. He pointed to investment­s in plants in Davenport, Iowa, and Kirksville, Mo., as well increased spending on marketing over the past few years.

“I don’t think an acquisitio­n is necessary,” Mr. Hees said, although he added that the company keeps an eye out for opportunit­ies.

Ruth Jonas of Sewickley took the bus and then the subway to Gateway Center to make it to the annual meeting. She had Heinz shares years ago and recalls some entertaini­ng meetings led by former Heinz CEO Tony O’Reilly. The ketchup company used to show some of the commercial­s it did for markets around the globe.

As a Kraft Heinz shareholde­r, she’s been pretty pleased. Her investment­s generally lean toward industries she understand­s, like food. She also owns Unilever stock. “I don’t go for the racy stuff and I don’t go for growth,” she said. “At 87, I don’t think I’ll be around for a lot of growth.”

But she wanted to find out what the company might be cooking up next.

Jerry and Vivian Forgus drove over from their home in Ravenna, Ohio. They’ve attended everything from the Berkshire Hathaway severalday annual gathering in Nebraska to the coupon-bonanza of the J.M. Smuckers annual meeting in Ohio.

Mr. Forgus seemed a little surprised that Kraft Heinz didn’t have much in the way of favors to share with its investors, but he, too, likes holding the stock.

He shared an observatio­n he’d heard lately suggesting the merger-acquisitio­n thing goes more than one direction. “This company could be acquired by another company.”

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