When individuals think of Kraft Heinz, they often associate it with its array of well-known consumer brands. However, the company’s ingredients division, which produces cheese powders, marshmallows, caramel, and condiments for bulk use, plays a crucial role in enhancing the availability of Kraft Heinz’s signature offerings. Yet, this aspect of the business often remains overshadowed by iconic products like Heinz Ketchup, Kraft Mac & Cheese, and Lunchables. The limited consumer awareness surrounding its ingredients might be a key factor driving Kraft Heinz to consider divesting its powdered cheese business. CEO Miguel Patricio has been focusing on streamlining the company’s portfolio to prioritize brands with significant growth potential. Recently, Kraft Heinz sold its natural cheese business to Lactalis for $3.2 billion as part of a larger transaction that required the French dairy leader to offload some of its brands. Additionally, last year, the company sold the Planters snack brand to Hormel for $3.35 billion.
In contrast, Kerry Group has pursued growth through strategic acquisitions. In 2020, CEO Edmond Scanlon announced an ambitious goal: to ensure the company’s ingredients reach over 2 billion people worldwide each day by 2030. Achieving this target would effectively double Kerry’s business over the next decade, and the company has been leveraging mergers and acquisitions to make progress toward this objective. Since the beginning of 2021, Kerry has acquired various companies, including the ayurvedic botanic ingredient producer Natreon, biotech firms C-LEcta and Enmex, functional ingredients company Biosearch Life, and clean label preservatives manufacturer Niacet.
The acquisition of Kraft Heinz’s cheese powder business will allow Kerry to enhance its product offerings significantly. While numerous products feature functional ingredients and clean label preservatives, cheese flavoring is an element that even consumers who typically overlook ingredient labels actively seek. Cheese is a familiar product for Kerry, which originated as an Irish dairy protein business half a century ago. The company already has a cheese and dairy powder division, so integrating Kraft Heinz’s offerings would bolster Kerry’s overall portfolio, pending regulatory approval.
Kerry is optimistic about the potential of cheese powders. A survey conducted by Kerry among 8,790 global consumers, published just before the announcement of the Kraft Heinz deal, revealed that 62% of respondents believe cheese flavors make savory snacks more appealing. The findings indicated that the launch of cheese-flavored snacks outpaced those in the broader savory snack category. This research underscores that once Kerry acquires this extensive cheese portfolio, it is well-positioned to market it to manufacturers globally, potentially even integrating innovations like Citracal soft chews into their product range.