Heinz-Kraft merger is a new M&A touchstone
On this blog, we generally discuss mergers in the tech space, but we'd be remiss to overlook the announcement of a new mega-merger between Heinz and Kraft, two colossal food manufacturers. The deal stands as an effective model for mergers in any industry, particularly when two thoroughly established brands come together.
Here are the effects of the merger, by the numbers:
- Upon closing the merger, Heinz-Kraft will become the third largest food manufacturer in North America.
- It will also be the fifth largest food producer in the world.
- Together, the companies are projected to net $28 billion in revenue annually.
- Between them, the companies boast 8 billion-dollar brands.
- In North American households, Kraft boasts 98 percent penetration, leaving few homes where their products can't be found.
- Heinz claims first or second place market share in 50 companies around the world.
Additionally, the merger of Heinz and Kraft stands to save $1.5 billion annually in operating costs.
"The merger comes as well-established food producers struggle to keep up with shifting appetites," explains the Associated Press. "Consumers are seeking more unprocessed foods, and have migrated away from one-time staples of the American diet."
Like the tech market, the food marketplace has seen rapid growth of diversity over the last decade. As established brands attempt to make an impression in the industry, sometimes company mergers are the most prudent way to optimize the operations of both companies involved. When businesses grow as large as they can on their own, the next logical step is often to combine forces with a peer in the industry. With tremendous stature in the food space, Heinz and Kraft stand to make an even greater impact in supermarkets.