Hatch Weekly: Things have bean better

Ketchup shares don’t cut the mustard

Shares in Kraft Heinz (KHC) fell nearly 25% in last Friday’s trading just a day after the company announced a decline in value of $15.4bn for its Kraft and Oscar Mayer brands. Analysts are saying it’s because people don’t want the company’s famous products like Heinz Tomato Ketchup, Baked Beanz, Jell-O and Kraft Macaroni & Cheese.

The people have spoken
Kraft Heinz admits they were “overly optimistic on delivering savings that did not materialize.” Ya think? Warren Buffett might take a break from his hamburger addiction considering Berkshire Hathaway has been particularly hard hit, with a loss of more than $4bn in a day. Kraft Heinz is one of Buffett’s largest positions – he had 325 million shares at the end of 2018.

The Oracle of Omaha didn’t see this coming
Time to polish that crystal ball, Warren, because last May you were saying the company was doing well. Kraft Heinz is apparently considering selling off some of the brands that are no longer welcome in the market (Hi Jell-O) and might merge with a trendier, healthier food-maker, though the window for any future mergers might be sealed shut. Last Friday, Kraft shares were trading at about $36.30, and shares have fallen roughly 29% over the past year. In 2017, they made a bid for Unilever, but Unilever walked away from the negotiating table.

Moral of the story: know your customer
People are speculating that Kraft Heinz was too focused on cutting costs and forgot to make tasty things that people actually want to eat. Analysts are now questioning the company's strategy and are worried that it’s game over in the highly competitive food business. The company just hasn't adapted to changing consumer interest in healthier and organic food. Kraft Heinz' competitors saw what was coming and latched onto the organic trend with General Mills (GIS) buying Annie's in 2014 and Hershey (HSY) acquired Amplify Snack Brands in 2017. Even ConAgra (CAG) bought Pinnacle, owner of Smart Balance and the Udi's gluten-free food last year.

What is Hatch?

With Hatch, you can now buy and sell shares in over 2,900 companies & 500 exchange-traded funds, all listed on the US share markets. Invest dollar amounts to buy as much or as little of a company or ETF as you like, even if it’s a fraction of a share. Powered by Kiwi Wealth. See how it works

Start investing now

What’s on the menu? Bugs. Bon appetit.

Does your mouth start watering when you hear Vogeltown cicadas? Okay, maybe not, but French startup, Ÿnsect (cute - we see what you did there, France!), raised $125m to breed bugs on a global scale. Sacre bleu!

Not fit for human consumption...yet
Ÿnsect is a Paris-based startup that breeds insects to be used as ingredients for pet food, fish food, and plant fertilisers. It’s the largest-ever round for an agricultural technology startup outside the US, and the impending cash flow will allow it to build the world’s largest insect farm – run by bots! Ÿnsect began promoting sustainability in the food system in 2011 and has over 25 patents on its automation and sensation technologies that grow and harvest mealworms thanks to their high protein density.

Stop breeding, humans!
By the year 2050, there will be 2 billion more people on the planet. Here’s where the bugs come in. While their goal is to put insects back in their natural place – in the food chain, Ÿnsect raises a type of beetle that goes into feeding fish, pets and fertilising plants – not humans. Sorry! You’ll have to get your bugs elsewhere. The new farm is said to produce over 20,000 tons of protein annually from insects and will be run by machines that will feed the bugs, monitor their health and harvest them as one-inch larvae. Who’s hungry?!

Put your money where that grasshopper is
The edible insects market is expected to reach $1.18 billion by 2023. Thanks to a growing population, decreasing food resources, increasing demand for protein-rich food, and the high nutritional value of insects, this might be an industry worth researching. Sure, it’s no Beyond Meat, but people are swarming like locusts (lol) to this healthier and more earth-conscious alternative. Considering we eat a bunch of spiders while we sleep over our lifetimes, we say bon appetit. And pass the ketchup (or tomato sauce, as long as it’s not Heinz KHC).

Apple (AAPL) credit

Apple Pay is continuing to grow, more than doubling its transaction volumes in the fourth quarter to over 1.8 billion USD. And now they’re planning on making an Apple Pay credit card with Goldman Sachs (GS) to corner the hot payments market.

Fantastic plastic!
The Apple Pay credit card is expected to feature integrations with iPhones, tying into the Apple Wallet app so users can better manage their finances. Just like they helped its customers manage their health and fitness with Apple Watch and the Activity app, Apple wants to help people manage their financial health. Features are intended to help monitor spending and include gentle nudges to help people pay down their balances.

Putting the Gold in Goldman Sachs
The card collab would be Goldman Sachs' first credit card ever and is reportedly costing $200 million to create. Clearly, there must be a large pay-off in the end. Well, yes. Apple Pay is already a revenue generator for Apple (the company takes fees from transactions put through the mobile payment platform), and with the card, they’ll get a larger slice of payment transaction fees. The card and its connection to Apple could also help boost the use of Apple Pay, both by users and by merchants as only 24 percent of US-based iPhone users have tried out Apple Pay, with the number increasing to 47 percent internationally. Withphone sales falling across the world, the Apply Pay card is another way for Apple to stay “sticky” and become further embedded in the consumer ecosystem.

Other interesting stuff

'We won't be war profiteers': Microsoft workers protest $480m army contract
Apple needed a kick in the pants. Samsung just delivered it
Tesla's Model 3 Dominated the Global Electric-Car Market in 2018
Why the U.K. Condemned Facebook for Fuelling Fake News
Why Aren’t Women Advancing More in Corporate America?

Get our latest stories straight to your inbox