More results...

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
Heinz Kraft merger

Kraft and Heinz merger to create food giant

First it was Budweiser beer. Then came Burger King Whoppers. Next up was Heinz ketchup. Now 3G Capital, a Brazilian private investment group that already owns a suite of America’s most prominent food and beverage brands, has struck a deal to take control of Kraft Foods, the maker of macaroni and cheese, Oscar Mayer meats, Planters nuts and Jell-O.

Working with the billionaire investor Warren Buffett’s Berkshire Hathaway, 3G said on Wednesday that it would merge Kraft with Heinz, the condiment and canned foods giant it acquired with Buffett in 2013.

Once combined, the Kraft Heinz Company will be one of the largest food and beverage conglomerates in the world, with nearly $28-billion in annual sales, and is expected to have a market value of more than $80-billion.

The mega-deal — by far the largest merger of the year — is a big bet on conventional staples of the American cupboard, even as consumers are shifting away from processed foods. Millennials and affluent consumers are seeking more local, fresh and organic products. Lower-income consumers are spending less on name brands.
“This is a doubling-down on processed, packaged, sugary foods at a time when people are moving away from them,” said Marlene Morris Towns, a professor of marketing at Georgetown University. “We’re becoming much more conscious about what we eat.”

But by uniting Kraft with Heinz, 3G intends to follow a familiar playbook: Take ownership of iconic brands, aggressively cut costs and expand internationally. The model has succeeded at Anheuser-Busch InBev, the world’s largest brewer, which 3G created by taking over Anheuser-Busch in 2008.

The group then acquired Burger King in 2010 and last year merged it with the Canadian doughnut chain Tim Hortons to form a new company, Restaurant Brands International. And in 2013, 3G and Buffett teamed up to buy Heinz, taking the ketchup maker private. Since then, its sales have grown steadily.

Now, by combining Kraft and Heinz, 3G and Buffett are betting that this recipe will work with some of the biggest names in packaged and processed foods, including Kool-Aid, Velveeta and Lunchables.

“Combining our two businesses, we’ll create the third-largest food and beverage company in North America and the fifth-largest food and beverage company in the world,” said Alex Behring, the managing partner of 3G, who will be chairman of Kraft Heinz. “The company will enjoy significantly enhanced scale in its key North American market, not only at retail but also in the food service channel.”

In particular, the new owners intend to use Heinz, which generates most of its sales abroad, to expand the global appetite for Kraft, which sells almost all of its products in the United States.

“Heinz currently benefits from a truly global platform, which we will leverage to expand the reach of Kraft’s brands to consumers across the globe,” Behring said.
The merger is a return to mega-deals for Buffett, who has maintained that he is hunting for “elephants”, large companies he can incorporate into the growing Berkshire conglomerate. Just last month, in his annual letter to shareholders, Buffett hinted that he would like to do a deal like this with 3G.

As a combined company, Kraft Heinz will have revenue of about $28-billion, with eight individual brands each reporting sales of at least $-billion a year, and five brands with $500-million to $1-billion in sales.

Heinz will control 51 percent of the combined company, while Kraft shareholders, who have yet to vote on the deal, will own 49 percent….

New York Times: Read the full article

Heinz Kraft merger2Heinz and Kraft merge after struggle to sell old favorites to ‘trendy Californians’

Rapidly expanding demand for fresher, more convenient food forged the $40-bn merger of Heinz and Kraft that reconfigured the world’s supermarkets on Wednesday. Now, financial analysts and food industry experts say, those changing appetites are expected to set off a wave of industry consolidation as global food giants grapple to adapt.

“This is a very difficult time to be in the food business as consumers change the way they eat,” said Harry Balzer, the chief food industry analyst at market research firm NPD. “It seems we will see a number of these mergers as a way to create efficiencies.”

Balzer, who has followed American eating habits for the the past 29 years, said Heinz and Kraft are two big brands that have been brought together by the same challenge: keeping up with the rapid changes in what Americans want to eat – and how they want to eat it.

“People are not storing food as much as our parents did, as they seek fresher food,” he said. “If you’re no longer storing as much, the people providing the inventory [generally large food conglomerates] will suffer. The de-inventorying of the American larder is not good for food companies.”

In his annual report of American’s eating patterns, Balzer said the US consumer has entered into a third phase of the “healthy food revolution”.

“In this latest evolution, consumers appear to be avoiding foods and beverages that were made to be better for them,” he said. “Instead, consumers are going for products that are real and not altered.”
David Hayes, an analyst at investment bank Nomura, said the Kraft/Heinz deal – orchestrated by billionaire investor Warren Buffett – was “part of an ongoing, and long overdue, process of consolidation in the US food sector”.

David Turner, global food and drink analyst at market research firm Mintel, said the whole of the global food industry remains decades behind consumer desire for healthier, fresher food…..

The Guardian: Read the full article
No Comments

Sorry, the comment form is closed at this time.