Analyst Note
| Erin Lash, CFA |No-moat Kraft Heinz disclosed in a SEC filing on Sept. 3 that the nearly three-year investigation into its procurement practices (specifically the timing of previously recognized vendor agreements, incentive payments, and pricing arrangements) had concluded, resulting in a $62 million civil penalty. We never anticipated that the financial implications of the alleged infractions would prove significant, given Kraft Heinz’s own internal review in 2019 amounted to just around $200 million in adjustments in aggregate (resulting in a less than 1% change to annual earnings per share each of the prior three years), relative to its cost base of $12 billion spent annually excluding key commodities.