Newly Formed Kraft Heinz Company Subject to Cost Efficiencies
26 Mar 2015 --- The announcement by 3G Capital Partners that it is to buy the US food company Kraft for a deal now thought to be worth over $45bn creates the world’s fifth largest food company, bringing together iconic brands such as Heinz Ketchup and Kraft Cheese Slices. Its name will be The Kraft Heinz Company.
Shares in Kraft rocketed 36% on the announcement of the news.
The existing partnership between 3G and Berkshire Hathaway, who together bought Heinz in 2013, means that integrating Kraft into the Heinz framework should be relatively easy. The radical cost-savings announced to streamline Heinz and make it more profitable will be projected on to the Kraft strategy, with annual cost savings hoping to reach $1.5bn.
3G is said to be ruthless when it comes to cost cutting, with rules across all areas of the business, right down to asking permission to use a colour photocopier. The savings however, expect to bring the business efficiencies that will boost the bottom line.
Companies such as Kraft and Heinz have suffered in recent years as a result of a changing food and retail environment, where the so-called Big Food companies no longer have the influence they once did over consumer habits. This is apparent in sales and profits results.
In recent years companies such as natural foods firm White Wave and its peers have posted huge profit increases, some by up to 25%, while Big Food companies have all posted losses. The profit increases have been based largely on increased sales, while Big Food has seen decreased sales and less interest in their traditional processed products.
By bringing Kraft and Heinz together, 3G and Berkshire Hathaway will create a company with eight brands worth over $1bn and estimated sales of around $29bn. Heinz will also springboard Kraft back on to the international scene, which it lost when it spun off its international division and rebranded it Mondelez. Mondelez took with it brands such as Cadbury, which has global reach and appeal and has gone from strength to strength.
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COMPANY DETAILS
801 Waukegan Road
Glenview
60025
United States
www.kraftheinzingredients...
kfirfi@kraftheinzcompany....
Kraft Heinz Ingredients (KHI) is a standalone, fully autonomous affiliate of The Kraft Heinz Company, chartered to provide the highest quality food ingredients and innovative solutions to food manufacturers across the globe.
