--- title: Why You Should Pay Attention to the Heinz/Kraft Merger description: The recent merger between Heinz and Kraft foods could have serious ramifications for consumers and producers canonical: https://time.com/3770785/heinz-kraft-merger/ author: New America article:opinion: true article:content_tier: free article:published_time: 2015-04-03T20:14:13.000Z article:modified_time: 2023-12-13T13:43:34.000Z article:section: Ideas og:title: Why You Should Pay Attention to the Heinz/Kraft Merger og:description: The recent merger between Heinz and Kraft foods could have serious ramifications for consumers and producers og:url: https://time.com/3770785/heinz-kraft-merger/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt57ad85731166bed0/698786940b72e368e56de7e7/467499798-copy.jpg?branch=production&width=594&quality=75&auto=webp&crop=16:9 og:image:width: 594 og:image:height: 334 og:image:alt: Kraft and Heinz products og:type: article twitter:card: summary_large_image twitter:title: Why You Should Pay Attention to the Heinz/Kraft Merger twitter:description: The recent merger between Heinz and Kraft foods could have serious ramifications for consumers and producers twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt57ad85731166bed0/698786940b72e368e56de7e7/467499798-copy.jpg?branch=production&width=594&quality=75&auto=webp&crop=16:9 ---  # Why You Should Pay Attention to the Heinz/Kraft Merger > Sponsored content. 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Scott Olson—Getty Images by [Leah Douglas / New America](https://time.com/author/new-america-foundation/) ## Leah Douglas / New America Updated: Dec 13, 2023 1:43 PM UTCPublished: Apr 3, 2015 8:14 PM UTC Mergers and acquisitions in the food sector rarely draw the eye of supermarket shoppers. The companies involved are sometimes too obscure for customers to care – take for example the ongoing litigation surrounding the attempt to merge America’s two largest food service companies, Sysco and US Foods. But name recognition has brought last week’s [announced merger](http://www.nytimes.com/2015/03/26/business/dealbook/kraft-and-heinz-to-merge.html?%5Fr=1) of H.J. Heinz Co. and Kraft Foods Group Inc. to the fore of business news. After all, these companies’ products are household staples — most readers of this article probably have a Heinz or Kraft product in their refrigerator right now. While this merger may seem innocuous — who cares that the mac and cheese company owns the ketchup company? — there could be serious ramifications for consumers and producers. The new Kraft Heinz Company would be the third-largest food company in America and the fifth-largest worldwide, with an expected market value of over $80 billion. The merger was coordinated by Heinz owner 3G Capital—a Brazilian private investment group with its fingers already deep in the food and beverage sector—and Warren Buffett’s Berkshire Hathaway. This is the second time in as many years that these two firms have worked together on a major food company acquisition. In 2013, 3G and Berkshire orchestrated a hostile takeover of Heinz in a $28 billion deal. Independently, 3G is deeply invested in the fast food sector. In 2010, the group acquired Burger King, which it then merged with Tim Horton’s in 2014 to create Restaurant Brands International, now a $23 billion international quick-service restaurant company. 3G also has close ties with Anheuser-Busch InBev, the largest beer brewer in the world and also a Brazilian-owned company. Four founding partners of 3G sit on ABI’s board. Deal-makers say that one of the benefits of this merger is huge savings in cost-cutting — “synergy potential,” in industry jargon — to the tune of $1.5 billion. But where will this money come from? Analysts point to economies of scale, but there’s also 3G’s looming history of slicing jobs in the name of greater shareholder profits. After 3G led InBev’s takeover of Anheuser-Busch, it cut 1,400 jobs, mostly in St. Louis. And after its acquisition of Heinz, it slashed 600 jobs around North America. As for Tim Hortons, 350 Canadian workers lost their jobs in January. And job cuts aren’t the only reason 3G has come under fire for its merger activity. Just last year, the group found itself [embroiled in conflict](http://www.theguardian.com/business/2014/aug/26/burger-king-tim-hortons-11bn-deal) after critics wondered whether its relocation of Restaurant Brands International to Canada was an attempt to evade U.S. corporate taxes. The alliance of these two giant companies means even further consolidation in a market that is already dominated by a small number of corporate players. We commonly associate these brands with their anchor sectors, over which they have impressive market power: Kraft alone controls 80% of packaged macaroni and cheese sales, and Heinz controls 60% of ketchup sales. But according to [a report from Food & Water Watch](http://time.com/wp-content/uploads/2015/04/grocery%5Fgoliaths%5F12-19-13.pdf#%5Fga=1.223209371.1288828859.1422986110), these companies’ influence is felt in many other supermarket aisles. Kraft is among the top 4 companies producing mayonnaise, salad dressing, pickles, cottage cheese, sour cream, “natural cheese,” bacon, and lunch meat. Heinz is among the top 4 companies producing meat sauces, pasta sauces, frozen appetizers, and “frozen handheld food.” United, the Kraft Heinz Company would bring in $22.2 billion annually in sales. The Kraft/Heinz deal makes it “even more difficult for us to envision a world where we \[have\] a competitive market for food,” according to Patrick Woodall, Research Director and Senior Policy Advocate at Food & Water Watch. For consumers, this will likely mean less competition to lower prices. In recent years, giant retailers [like Walmart](http://www.wsj.com/articles/wal-mart-ratchets-up-pressure-on-suppliers-to-cut-prices-1427845404) have learned how to place enormous pressure on distributors and producers to meet a low price point. Smaller, independent producers usually have to meet those demands. But giants like Heinz and Kraft are far better able to protect their profit margins. “When a company as big as Kraft joins a company as big as Heinz, they have a bigger footprint in the supermarket,” Woodall explains. This can sometimes result in higher prices overall as the food processors “work closely with the supermarket to extract money from consumers.” For shoppers, this merger will also further narrow our options as we wander down the supermarket aisles. “Consumers think they’re making choices,” Woodall says. “But oftentimes, these ‘choices’ are sold by the same company, manufactured by the same plant and just bear different labels.” It is already difficult for new small companies to get their products in front of supermarket customers, Woodall says. “Really, the supermarket is about real estate.” Given that Kraft and Heinz don’t compete head-to-head on many products, most antitrust experts believe that this merger will be approved by the Federal Trade Commission. Not that the agency has given them much reason to think otherwise in recent years. “The FTC has rubber-stamped a tidal wave of mergers,” Woodall says. In the food sector alone, Shuanghui LLC’s (now WH Group) acquisition of Smithfield Foods and the Sysco/US Foods merger have raised eyebrows among both antitrust analysts and food advocates. And so monopoly finds a seat at the dinner table. This summer’s barbecues will feature Oscar Meyer hot dogs, Boca burgers, A1 steak sauce, and Heinz ketchup — except now, the buffet of products will all be owned by the same company. _Leah Douglas is a reporter an analyst with the Open Markets Program._ _This piece was originally published in New America’s digital magazine,_ [_The Weekly Wonk_](http://weeklywonk.newamerica.org/)_._ _Sign up to get it delivered to your inbox each Thursday_ [_here_](http://weeklywonk.newamerica.net/subscribe-email/)_, and_ [_follow @New America_](https://twitter.com/NewAmerica) _on Twitter._ _More from New America:_ * [How the modern cartel-like system of chicken production is strangling farmers](http://weeklywonk.newamerica.net/articles/meat-racket/) * [Inside the beginnings of Koch industries](http://weeklywonk.newamerica.net/articles/keeping-kochs/) * [Here is how Kentucky rallied around Obamacare](http://weeklywonk.newamerica.net/articles/kentucky-style-obamacare/) ```json [{"@context":"https://schema.org","@type":"OpinionNewsArticle","@id":"https://time.com/3770785/heinz-kraft-merger/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/3770785/heinz-kraft-merger/"},"headline":"Why You Should Pay Attention to the Heinz/Kraft Merger","datePublished":"2015-04-03T20:14:13.000Z","dateModified":"2023-12-13T13:43:34.000Z","description":"The recent merger between Heinz and Kraft foods could have serious ramifications for consumers and producers","url":"https://time.com/3770785/heinz-kraft-merger/","keywords":["Food & Drink","Business topic"],"thumbnailUrl":"https://static.time.com/v3/assets/bltea6093859af6183b/blt57ad85731166bed0/698786940b72e368e56de7e7/467499798-copy.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","author":[{"@type":"Person","name":"Leah Douglas / New America"}],"articleSection":"Ideas","image":[{"@type":"ImageObject","url":"https://static.time.com/v3/assets/bltea6093859af6183b/blt57ad85731166bed0/698786940b72e368e56de7e7/467499798-copy.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","width":1200,"height":675,"headline":"Kraft and Heinz products","caption":"Kraft and Heinz products","creditText":"Scott Olson—Getty Images","representativeOfPage":true}],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"/section/ideas/","name":"Ideas"}},{"@type":"ListItem","position":2,"item":{"@id":"https://time.com/3770785/heinz-kraft-merger/","name":"Why You Should Pay Attention to the Heinz/Kraft Merger"}}]}] ```