- Large consumer products companies may be better off going private, writes CNBC's Lauren Hirsch.
- Hirsch reasons that the consumer standbys could reinvest the cash their businesses throw off into their iconic brands, rather than spending money on risky M&A deals in search of growth at all costs.
- Kraft Heinz (NASDAQ:KHC): "While iconic products like Heinz ketchup continue to grow, it's not enough to counteract the decline of its smaller brands...The company slashed $1.7 billion in costs after the 2015 merger of Kraft and Heinz. But now, public investors want growth."
- Kellogg (NYSE:K): "Kellogg needs to reduce capacity to account for declining demand, but doing so isn't easy with the fixed costs of its mass-producing equipment."
- General Mills (NYSE:GIS): "General Mills' core business has been struggling and efforts to secure growth have put it on thin ice... General Mills reported modest organic sales growth for its latest quarter, but cash provided by operating activities was up 3 percent."
- ConAgra Brands (NYSE:CAG): "The 3 percent growth it clocked last year is still modest for public investors' demands. Meantime, the Conagra's older brands like Orville Redenbacher popcorn and Chef Boyardee canned pasta are far from on trend with today's consumers' tastes."
- Clorox (NYSE:CLX): "Clorox expects free cash flow for 2019 of about 11 to 13 percent of sales, it recently told analysts. But the company, like other consumer brands, faces competition from upstarts like Seventh Generation cleaners, which Unilever (LON:ULVR) bought two years ago, as well as from cheaper private-label products like Costco (NASDAQ:COST)'s Kirkland brand. That competition comes as Clorox is forced to hike prices to counteract rising commodity costs."
- Now read: General Mills' Path Back To Fair Value
Original article