3G understood the importance of sales and marketing with Burger King, so don't understand why they thought cutting the expense line was beneficial in the long term. Apart from distribution networks, these CPGs spend a lot on marketing which maintains their moat. Surprised Berkshire and 3G missed this
Thanks, I think you make a fair point. My guess is that they saw how much Heinz was printing money but underestimated the innovation needed in the Kraft portfolio, because inherently sauces are more straightforward while packaged food is more innovative. So when they merge the two they tried to apply the Heinz formula (no pun intended) which did not work so well
3G understood the importance of sales and marketing with Burger King, so don't understand why they thought cutting the expense line was beneficial in the long term. Apart from distribution networks, these CPGs spend a lot on marketing which maintains their moat. Surprised Berkshire and 3G missed this
Thanks, I think you make a fair point. My guess is that they saw how much Heinz was printing money but underestimated the innovation needed in the Kraft portfolio, because inherently sauces are more straightforward while packaged food is more innovative. So when they merge the two they tried to apply the Heinz formula (no pun intended) which did not work so well
Great take!