Coca-Cola and Kraft Heinz highlight challenge of changing consumer preferences
Even Warren Buffett, the largest shareholder of the struggling companies, failed to see that customers might want different products
New York — Warren Buffett has warned investors to stay in their circle of competence when it comes to bets. But now, more than 30 years after Buffett started ploughing money into Coca-Cola, the rules of the consumer-product game have changed. Coca-Cola and Kraft Heinz, companies that claim Buffett’s Berkshire Hathaway as their largest shareholder, have shown in the past two weeks just how hard it is to navigate shifting consumer tastes. Coca-Cola shares slumped last week amid a lacklustre profit forecast. On Friday, Kraft Heinz fell to a record low after announcing a $15.4bn writedown of the goodwill value of assets including the Kraft and Oscar Mayer trademarks. “This is something that is more of a long-term problem, a major shift in consumer taste and sentiment,” David Kass, a professor of finance at the University of Maryland’s Robert H Smith School of Business, said in an interview. “Very few people saw this coming, including Warren Buffett and including 3G Capital.” Buffett’s K...
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