Kraft Heinz: We Upgrade Moat to Narrow as Revamped Strategic Course Yields Gains; Shares Appetizing

We believe Kraft Heinz has finally broken the shackles of its past, and we now assign the firm a narrow moat based on its brand intangible assets and cost edge. Since abandoning past management's directive to prioritize near-term profitability and cash flows, Kraft Heinz has, over the past five years, prudently pursued durable efficiencies, elevated brand spending (behind marketing and product innovation to a mid-single-digit level of sales that is more commensurate with peers), enhanced its capabilities (related to category management and ecommerce), and leveraged its scale to respond more nimbly to changing market conditions.