Business & Finance

Kraft and Heinz Merge; Profits Increase, Jobs Decrease

In late March, Kraft and Heinz merged, making them the third-largest food company in America. Typically, when food mergers occur, they are overlooked due to the obscureness of these companies. However, Kraft and Heinz are common household names, making this headline news for stockholders and consumers alike.

After this merger, the Kraft Heinz Company became the fifth-largest food company in the world with an expected market value of over $80 billion, according to an article written by Leah Douglas of Time Magazine. Kraft’s stock increased 34% according to The Toronto Star. This lucrative move has made investors confident, but many employees fear for their jobs.

This merger was financed through Warren Buffet’s Berkshire Hathaway and 3G Capital, a Brazilian investment firm. This fact alone makes employees worry about their job security. In recent history, the result of a 3G Capital merger has created a significant loss in jobs.

“I know people are saying it’s too early to say there will be job losses, but it seems inevitable given the history of these two companies,” said David Dunne, a professor from the University of Toronto’s Rotman School of Management.

3G’s history of cutting jobs to appease shareholders is quite evident especially after the Anheuser-Busch merger where 1,400 jobs were cut, primarily in St. Louis. Even after 3G Capital acquired Heinz, the global investment firm excised 600 jobs across North America. These cuts are all due to a recent budget cut of $1.5 billion.

Many consumers are worried that supermarkets are stocked by many of the same corporate players. “Kraft alone controls 80% of packaged macaroni and cheese sales, and Heinz controls 60% of ketchup sales.” This domination in markets make small business owners concerned about huge mergers.

Kraft’s stock has skyrocketed since the merger, closing at $61.33 a share on Wednesday. Making the stockholders happy seems to be at the forefront of this conjoined effort. Kraft and Heinz consumers will expect savings around 2017.

After the movie “Food Inc,” people are concerned that food products come from the same food processing  plants. Kraft and Heinz intend on making healthier options for their customers; however, Kraft is slowly lagging behind its competitors. In mid-March, Kraft had to recall 2.5 million boxes of Macaroni due to the possible presence of metal pieces.

Food companies, like Campbell’s Soup, currently use social media to promote its healthy and organic line of food. Many companies attempt to progress their image through acquisitions of other, healthier companies. General Mills bought the organic mac and cheese brand Annie’s last year, commonly known for it’s rabbit logo, while Coca-Cola acquired Honest Tea four years ago.

Categories: Business & Finance