When it comes to the top line, H.J. Heinz Company (NYSE:HNZ) looks for geographical expansion. During the past ten years, sales outside of America climbed from 50% of total sales to nearly 70%. Despite Europe’s importance, the company is focusing on emerging markets, especially China, India, Indonesia, Eastern Europe, and Brazil. Management aims to double the turnover in these markets during the next three to five years, obtaining $5 billion in sales. H.J. Heinz Company (NYSE:HNZ) confirmed its strong interest in Brazil and China by adding local businesses Coniexpress and Foodstar Holding to the group.
A significant buyout and a larger presence abroad
The company reported earnings per share of only $0.99 for the first quarter of 2013, a 8.3% decline year-over-year. Revenue growth was also modest, growing 2.2% to $3.86 billion.
A key factor for Kellogg Company (NYSE:K) was the Pringles acquisition. This diversification should be extremely beneficial for the company as it turned Kellogg Company (NYSE:K) into a global snack player. The $1.5 billion buyout of Pringles will help lose dependency on its mainstay cereal business. Considering how solid Pringles is, it is an important decision and should help the company’s global position.
Since the cereal market in America has reached saturation levels and sales perspectives for Western Europe are not encouraging, the emerging markets became a key factor. Sales have tripled to $2 billion in Asia,
Central and Eastern Europe, Middle East, and Africa over the last decade and should keep on growing.
Kellogg Company (NYSE:K) has also been making investments in its supply chain infrastructure in order to cut costs. Since these initiatives finalized in 2011, we should now expect improvements in productivity in the range 3% or 4% per year.
Bottom line
General Mills, Inc. (NYSE:GIS) is showing a very special interest in the most important emerging markets, manifested by key acquisitions. The company is growing and if it manages to keep expenses down and continues to innovate it will certainly be worth investing in.
H.J. Heinz Company (NYSE:HNZ) past efforts to reduce costs and its new growth perspectives under Warren Buffet’s supervision makes me want to invest in the company.
The buyout of the Pringles brand makes a positive difference for Kellogg Company (NYSE:K)’s, diversifying away from the highly-competitive cereal category. We must understand that snacks are very competitive as well, however, so I would stay on the sidelines for this company’s stock for now.
The article 3 Food Champions to Analyze originally appeared on Fool.com and is written by Louie Grint.
Louie Grint has no position in any stocks mentioned. The Motley Fool recommends H.J. Heinz Company. Louie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
