Public investors crave growth, but America's oldest brands are not growing. They are fighting for eaters whose tastes change constantly and new brands that pop up by the minute.
Those brands, though, are still valuable. They could be even more valuable if out of the public spotlight.
Iconic names like Heinz ketchup and Special K cereal are always going to have a place in the Americans' cupboards and refrigerators. The trouble is these brands still require investment — like simpler labeling and cleaner ingredients — to compete as upstart brands offer health and transparency. It's hard to make these investments while held hostage to quarterly earnings targets.
So far, consumer companies have largely been able to manage their challenges by cutting costs to grow earnings, in lieu of growing sales. Kraft Heinz and its 3G-led zero-based budgeting approach to company management helped usher in a new era of cost-slashing for consumer companies.
That process has largely worked. Public investors value consumer companies today by 40 percent more than they did five years ago. Those valuations are also boosted by the fact investors often view these stocks as safe investments with steady dividends.