Thursday, March 26, 2015

Will there be any competition in American foods? I guess not. A new merger of companies has happened yet again making these groups of food products the fifth-largest food and drink giant.  I am talking about anything with Kraft on it also owned by anything with Heinz on it and when they decide to make smaller packages for higher prices there will be little much we can do   about it. All the stuff on the grocery shelves will be owned by the same company. You can’t buy something different even if you wanted to.  What is worse is that most of it is too salty or too sweet to ever be considered healthy American food.

We are talking about Lunchables, Lea & Perrins, Velveeta, JELL-O, Oscar Mayer, Bagel Bites, MAYO, Smart Ones, PLANTERS, Kool-Aid, PHILADELPHIA, Maxwell House, Ore Ida, CLASSICO and HP. The numbers go through the roof. The merger between Kraft and Heinz they are already the 3rd largest North American food and beverage company.  They are the 5th largest food and beverage  company globally.  Let’s put that into numbers.  They get $28 billion dollars in revenue. They are worth $8 billion dollars in brands.  Essentially they can squash any start up similar brand company of food or beverage off the drawing board forget about giving anything new shelf space in your supermarket. Yes slather your fake Kraft VELVETA food with some Heinz relish. Ugh!

It is an important merger because each company is huge and comes to the table with their own successes.  Kraft has 98% penetration in all North American households. Heinz has 50or more countries where its products have a Number 1 or Number 2 market share.  Kraft has a 80% awareness in 14 key international markets. It sounds like they are already doing pretty well but together they hope to cut costs, grow more internationally (like we didn’t ruin the world enough when we shoved McDonalds down their throats) and evolve into a more consumer –focused company. Yes, don’t stop till there are Lunchables in every refrigerator globally. Ugh!

The stock to have was Kraft. The news propelled the stock price 36% from $21.83 a share to close yesterday at $83.15 a share. A great pay day.  It just proves that when you don’t know what to buy or sell in the stock market, just follow Warren Buffet and you will be alright. His influence was essential in sealing this deal.  My problem is how these two old school companies full of processed and preserved and packaged foods be popular with consumers demand for   healthier natural   fresh food products?
As with any big bully merger jobs always suffer. They expect to cut costs and to be able to eliminate 7,400 jobs by 2017. How sad that you could possibly be out of a job being forced out by a condiment like Ketchup. Not just any ketchup.  Heinz Ketchup, the one preferred by most folks. Sigh. Then with no job in sight be forced to eat Kraft macaroni and cheese with Heinz Ketchup on it because you can’t afford anything else to eat. For some, the merger will be a nightmare.

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