Heinz Kraft merger is top headline of the week

By Laurence Gibbons contact

- Last updated on GMT

Related tags: Tesco

The Heinz Kraft $100bn mega merger leads our Good week, bad week selection of top food and drink industry headlines of the past seven days.

The merger created a new food group with revenues of $28bn, eight $1bn brands and nearly 50,000 employees worldwide.

Unite the union asked for urgent meetings with Heinz managers regarding the security of their members’ jobs​. Heinz employees in the UK and Republic of Ireland total 2,500. But analysts predicted that it would be US jobs, not UK roles, that were likey to be the firing line. 

Food Strategy analyst Robert Lawson said: “The jobs at risk are all in the USA for now, where there is both an opportunity for Kraft to normalise its SG&A costs [Selling, General and Administrative Expenses], as Heinz has done”

Euromonitor agreed that the priority for the new top team was to cut costs​ rather than exploit synergies between the two businesses.

Record high of £1.4bn

It was also a good week for dairy sales overseas, as the Food and Drink Federation confirmed exports reached a record high of £1.4bn, up by nearly 9% last year, powered by a surge in cheese exports. Cheese exports rose by 5.6% to make up one third of all dairy exports.

Overall exports have doubled in the past 10 years to reach £12.8bn. The EU remained the biggest export market for UK food and non alcoholic drinks, while sales to the US and China both recorded double digit growth​.

But it was a bad week for five Morrisons board members, as new ceo David Potts revealed their express check out from the business on Wednesday March 25. New man at the helm Potts said: “I will now be constructing a leaner management board, with the aim of simplifying and speeding up the business."

Good week

• Mergers, as Heinz and Kraft team up

• Dairy exports

The retailer declined to confirm whether the five former senior executive​s were fired or if their positions had been made redundant. It even refused to tell us if they had left by mutual consent.

72-hour strike

Arla Foods also experienced a worrying week, with prospect of disruption to its milk supplies moving a step closer. Two unions, the GMB and Unite, issued a joint statement warning of the prospect of a 72-hour strike​ over Easter. Milk supplies to northern branches of Tesco, Aldi, Morrisons and Asda were said to be a risk.

The row focuses on the the transfer of drivers' employment from Arla to Moran Logistics, bringing an alleged erosion of pension and holiday rights.

Arla said it had worked with Moran Logistics to ensure the fair treatment of its former workers.

Bad week

  • Five Morrisons board members exited
  • Arla milk supplies, as strike threat looms
  • Peter Boddy fined £8k: the UK's first horsemeat penalty

Also Peter Boddy was fined £8,000 for failing to comply with food tracebility regulations. He admitted selling horses for meat but failed to keep proper records on who had bought them. This was the first penalty in connection with the horsemeat scandal that cost the UK food industry billions of pounds and untold reputational damage.

Meanwhile, the jury is still out on whether it was a good week or a bad week for Jeremy Clarkson. While the controversial star​ was fired from the BBC's global smash hit TV show Top Gear, ​he was offered a job on the shop floor at a new Aldi store opening soon in Oxfordshire.

So far, FoodManufacture.co.uk has been unable to establish Clarkson's response to the job offer delivered, by Twitter, shortly after the BBC dispensed with his services on Tuesday March 24.

Good news, bad news will take a break over Easter before returning in April, with more sideways coverage of the fast-moving world of UK food and drink.

Related topics: Dairy, Fresh produce

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