Sunday, July 19, 2015

Kraft Heinz Co. – A coherent company?

The recent Kraft – Heinz merger raised my curiosity on how the food giant Heinz will take this acquisition/merger and pull it off as a success. I followed the Heinz Company acquisition by the Berkshire Hathaway and 3G Capital Group in 2013 with skepticism.  My focus was on the massive layoffs and global plant closures, and not on the possible strategy behind such decisions. But emotions aside, the Heinz Company did very well in their restructuring of the company under the new ownership. So well in fact, that going from a privately owned company to the biggest publicly owned food manufacturing company within 2 years takes admiration in my view. After reading The Coherence Premium, I took what I know of the Heinz Company and ran it through the Coherence Test to see whether the new Kraft Heinz Co. is on the right track. Here are my thoughts:

Way to Play: It appears Kraft Heinz Co. is clear about how the choose to create value in the marketplace because through the merger, these two companies are poised to integrate their product portfolios to become an even greater presence in the global market.

Capabilities System: Heinz and Kraft combined can very likely articulate three to six capabilities they do uniquely. One of them is Heinz’s global marketing and distribution capabilities that may leverage the Kraft brands in need of more global exposure and increase sales. Their well known brands do not compete for a place on our plates only with our budget. But that can be a matter of preference over cost.

Product and Service Fit: The merger between these two companies brings together a portfolio of products that can easily go together in a menu: Ketchup, fries, hot dogs, and macaroni and cheese. The coming together of these two companies with different teams, distribution systems and politics may present its challenges. The products are there for now with a chance they’ll be “sliced” from the portfolio in the coming months. The know-how’s, services and success remain to be seen.

Why Oscar Mayer May Be on the Slicer at Heinz After Kraft Merger

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