Macaroni & Ketchup: The HeinzKraft Merger
The recent merger of Heinz and Kraft will create a force to be reckoned with in US and international food markets. Every American who shops at grocery stores knows that these companies are two of the most prominent businesses in the packaged food industry. The iconic Heinz ketchup bottle can be found on restaurant tables across the nation. Likewise, Kraft macaroni and cheese is the cherished dish of families in every state. Kraft and Heinz are now merged with a cost-cutting effectiveness that reflects on current trends in the food industry.
This newly combined company has been christened the Kraft Heinz company. It will be the third largest food and beverage company in North America and the fifth largest in the world. Kraft shareholders are receiving a 49 percent stake in the company, and Heinz shareholders are receiving the remaining 51 percent.
Many of your most beloved brands are now owned by the same company. Jell-O, Kool-Aid, Lunchables, Smart Ones and Weight Watchers are some of the brands that are collectively owned by the Kraft Heinz company. Shoppers will not be seeing any significant changes in their favorite products, but the merging of these two superpowers might signify big changes for other packaged food companies.
Packaged food companies such as Campbell and General Mills have been experiencing a steady sales decline for years. America as a whole is shifting dietary preferences towards unprocessed foods that are advertised as healthier. As a result, canned chicken noodle soup, fruit loop cereal and similar items are on their way out of the American diet.
3G Capital and Berkshire Hathaway own the Kraft Heinz Company, and financial analysts are predicting that these entities are not quite finished with making new acquisitions. Warren Buffet, the man at the top of Berkshire Hathaway, has said that he is on the lookout for companies that want to cut costs by joining up. The Kraft Heinz Company has made this deal look attractive with its announcement that the company’s annual cost savings are expected to rise to $1.5 billion by 2017.
The Kraft Heinz Company may continue to rise in profit and power, and new acquisitions might even make this business the single largest food and beverage company in the world. Only time will tell for curious financial analysts and voracious eaters. One thing is certain; countless Americans love adding ketchup to macaroni and cheese more than anything else, so the HeinzKraft merger might simply reflect customer taste buds in a cost-cutting world.
Jonah Engler is a New York based entrepreneur, investor and coffee lover.