InvestNow News 11th Oct – Pie Funds – How tech revolution toppled tomato sauce giant
7th October, 2019 – Article by Liam Dann, originally published by NZ Herald
It’s easy to see how the tech revolution has disrupted industries like media, transport and tourism – just think Facebook, Uber or Airbnb.
But if you want an example of the depth to which tech is shaking the foundations of the corporate world, take a look at ketchup giant Kraft Heinz, says Pie Funds chief investment officer Mark Devcich.
Less than three years ago its shares were trading close to US$100 apiece. This week they were at just US$27.
Against the backdrop of a surging Wall Street bull market, that represents an astounding fall for a giant in the consumer food space.
Basically, boutique hipster food brands – trading on organic, transparent, holier than thou branding – now have an opportunity to grab market share that did not exist for them just a few years ago.
Twenty years ago Kraft Heinz was one of the few companies that could spend millions and millions of dollars to have national advertising on TV, Devcich says.
“Whereas a start-up brand these days can spend a relatively small amount on targeted advertising through Facebook and Google.
“It can outsource its distribution to Amazon, it can rent factory space by the hour and all this is reducing the barriers to entry.”
It’s made previously fixed costs much more variable, he says.