written by alastair barlow [blog]
Have you ever heard of 3G Capital? Maybe not, but I’m assuming you have heard of Budweiser, Burger King and Heinz (or Kraft Heinz as it’s now known). 3G Capital is an investment fund that controls these and some of the world’s best-known brands.
A brief overview
The 3G strategy is very focused around hard-hitting cost-cutting measures and zero-based budgeting strategies to boost financial returns. This strategy has seemingly worked successfully for them a number of times, but it’s not quite had the same effect at Heinz. Heinz has been through a barrage of embarrassing stories recently with SEC investigations, asset write-downs and its share price dropping off a cliff.
Here’s some relevant background…
- Oct 2017: Heinz names 29-year-old David Knopf its youngest-ever CFO
- At the same time, experienced CFO who was in role since 2013, Paulo Basilio moves internally
- Oct 2018: the SEC issues a subpoena relating to “accounting policies, procedures, and internal controls in procurement”
- Feb 2019: a $15.4bn write-down in assets leads to an immediate 28% fall in share price
- The above fall in share price lost major investor Warren Buffet $4bn in one day!
- Q4 2018: the company posts a loss of $12.6bn and cuts its dividend by 36%
- Miguel Patricio replaces Bernardo Hees as CEO in July 2019
- The new CEO immediately replaces Knopf with former CFO Basilio.
One thing that’s interesting to know is that both Bernardo Hees (former CEO) and David Knopf (former CFO) are from the same school of cost-cutting practice, and both are partners at 3G Capital.
Read the full article below