Just shy of a year after its creation, the Kraft Heinz Company is already making waves in the food industry. The company is working with a new advertising budget for its updated, natural product formulations. In addition, it's playing a small part in a major fast food promotion, and it could even be gearing up for additional mergers in 2016.
This year, the company plans to boost its advertising budget by as much as $50 million, according to a report in Crain's Chicago Business. The additional funds will likely be used to tout its major brands that now feature a cleaned-up ingredient list. Major advertising campaigns are expected for its new formulation of Mac & Cheese, along with an organic version of its Capri Sun beverages and improved versions of its frozen meal offerings.
Perhaps not to be categorized as "better for you," the company is also involved in one of the bigger fast-food product launches in recent history. When Burger King announced it would start selling hot dogs at all of its American locations, it was also unveiled that Kraft's Oscar Mayer brand would be the sourcing partner for the hot dogs. Both companies are owned by 36 Capital, making the connection between the two companies less complicated and easier to manage.
Last March, the H.J. Heinz Company and Kraft Foods Group Inc. entered into a definitive merger agreement to the create the Kraft Heinz Company. Analysts at the time noted that the increased scale of the organization could lead to $1.5 billion in annual cost savings by the end of 2017, but also saw the potential for Kraft's brands to expand to other countries, specifically Europe. In addition, analysts were also talking about potential merger and acquisition activity for the new entity.
Well, fast-forward a year, and analysts are still talking. They say Kraft Heinz may be ready for another major food acquisition, with RBC Capital Markets claiming that the combined entity is stronger than either company was individually. Potential targets include companies with a major presence outside the U.S., such as Mondelez International. They note that Kraft Heinz could be in a position to make an acquisition by late 2016 or 2017.
Speaking of Mondelez, reports indicate that the company is looking to sell its cheese and grocery division, including its beloved Philadelphia Cream Cheese. Guess who the early favorite is to purchase the brand? Kraft Heinz. Because Mondelez split from Kraft in 2012, the recently merged Kraft-Heinz owns the American rights to Philadelphia Cream Cheese and has the option to buy back the European rights.
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Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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