WBEZ | Kraft http://www.wbez.org/tags/kraft Latest from WBEZ Chicago Public Radio en Heinz buying Northfield-based Kraft and building a $28 billion food giant http://www.wbez.org/news/heinz-buying-northfield-based-kraft-and-building-28-billion-food-giant-111765 <img typeof="foaf:Image" src="http://llnw.wbez.org//main-images/kraftsign.jpg" alt="" /><p><p>NEW YORK &mdash; Some of the most familiar names in ketchup, pickles, cheese and hot dogs are set to come under the same roof after H.J. Heinz Co. announced plans Wednesday to buy Kraft and create one of the world&#39;s largest food and beverage companies.</p><p>The deal would bring together an array of longtime staples in American kitchens, including Oscar Mayer lunchmeats, Jell-O desserts, Miracle Whip spreads, Ore-Ida potatoes and Smart Ones diet foods.</p><p>The combination of the two companies &mdash; each more than a century old &mdash; was engineered by Warren Buffett&#39;s Berkshire Hathaway and Brazilian investment firm 3G Capital, which teamed up just two years ago to buy Heinz. While shoppers are not expected to see any major changes, the creation of The Kraft Heinz Co. reflects the pressures facing some of the biggest packaged food makers in the U.S.</p><p>As consumers increasingly migrate away from popular packaged foods in favor of options they consider less processed, companies including Campbell Soup, General Mills and Kellogg have been slashing costs or striking deals to update their products offerings. The Heinz-Kraft deal is in many ways just the latest example of that, although Buffett noted that the two companies still have a strong base of customers.</p><p>&quot;I think the tastes Kraft and Heinz appeal to are pretty enduring,&quot; he said in a telephone call to the business news channel CNBC.</p><p>Still, the early plans outlined by Kraft and Heinz executives in a conference call Wednesday focused largely on the savings that would be achieved through the deal, rather than the potential for sales growth in North America. They said they expect to save $1.5 billion through moves such as combining manufacturing and distribution networks.</p><p>James Angel, an associate professor of finance at Georgetown University&#39;s McDonough School of Business, said that will probably result in job losses.</p><p>&quot;Even though it is painful for the people involved, those resources will be freed up for other, potentially more productive, uses,&quot; he said.</p><p>The boards of both companies unanimously approved the deal, which still needs a nod from federal regulators and shareholders of Kraft Foods Group Inc. The companies say they expect the deal to close in the second half of the year.</p><p>If the agreement goes through, Kraft is expected to undergo cost-cutting under the management of 3G Capital, which is known for running tight ships.</p><p>The president of the United Food and Commercial Workers International Union, which says it represents 3,250 Kraft and Heinz workers in North America, said the union will work with the companies to make sure they &quot;do what is right and responsible&quot; and don&#39;t let cost-cutting measures hurt workers.</p><p>John Cahill, who took over as CEO of Kraft late last year, noted that the new management would drive a &quot;much leaner organization,&quot; as was the case when 3G took over Heinz. He said 3G can &quot;make this happen deeper and faster.&quot;</p><p>&quot;What we have not been thrilled about is some of our execution,&quot; Cahill said.</p><p>The two companies also see potential in pushing their products more aggressively overseas. Since splitting from Mondelez in 2012, Kraft&#39;s business has been primarily concentrated in North America. But executives noted that Kraft&#39;s brands are well known in major markets around the world, including the United Kingdom, Mexico, China and Brazil.</p><p>Already, Heinz gets 61 percent of sales from outside North America, said Bernardo Hees, the CEO of Heinz and a partner at 3G Capital who will become head of the newly created company.</p><p>The deal came together rapidly, Buffett said, having been in the works for only about four weeks. The new company will be co-headquartered in Pittsburgh, where Heinz is based, and the Chicago area, home of Kraft, and will have annual revenue of about $28 billion.</p><p>Eight of its brands have annual sales of $1 billion or more and five others log sales between $500 million and $1 billon every year.</p><p>Shares of Kraft jumped 36 percent Wednesday to close at $83.17.</p><p>The total value of the deal is difficult to gauge because Heinz is privately held. But Kraft shareholders will receive stock in the combined company and a special cash dividend of approximately $10 billion, or $16.50 per share. Each share of Kraft will be converted into one share of Kraft Heinz.</p><p>Current Heinz shareholders will own 51 percent of the combined company, with Kraft shareholders owning a 49 percent stake.</p><p>The Kraft Heinz board will include six directors from the current Heinz board. Those six directors will include three members from Berkshire Hathaway and three members from 3G Capital. The current Kraft board will appoint five directors to the combined company&#39;s board.</p><p>Kraft Heinz plans to keep Kraft&#39;s current dividend once the transaction closes. Kraft has no plans to change its dividend before the deal is complete.</p></p> Wed, 25 Mar 2015 08:01:00 -0500 http://www.wbez.org/news/heinz-buying-northfield-based-kraft-and-building-28-billion-food-giant-111765 Kraft, Sara Lee settle hot dog legal battle http://www.wbez.org/story/kraft-sara-lee-settle-hot-dog-legal-battle-91694 <img typeof="foaf:Image" src="http://llnw.wbez.org//story/photo/2011-August/2011-08-12/kraft-saralee.jpg" alt="" /><p><p>The legal battle over which Chicago company has the right to say it makes the best hot dogs in the country has ended quietly.</p><p>The lawsuits ended with a settlement between Kraft and Sara Lee. The two suburban Chicago-based food makers are parent companies to Oscar Mayer and Ballpark, which are major hot dog brands. Each company sued the other over claims of false advertising.</p><p>Sidley Lindner, a spokeswoman for Kraft, said the terms of the settlement are confidential, but the parties agreed not to exchange any money and neither party will have to change marketing strategy.</p><p>In a written statement from Sara Lee, the company said it's pleased with the settlement and it's looking forward to marketing its Ball Park hot dogs.</p></p> Thu, 08 Sep 2011 18:35:00 -0500 http://www.wbez.org/story/kraft-sara-lee-settle-hot-dog-legal-battle-91694 Testimony to begin in 'wiener wars' trial http://www.wbez.org/story/testimony-begin-wiener-wars-trial-90639 <img typeof="foaf:Image" src="http://llnw.wbez.org//story/photo/2011-August/2011-08-16/chicago hot dog_flickr_Jen Waller.jpg" alt="" /><p><p>Expert witnesses are testifying Tuesday in the case of two prominent hot dog manufacturers suing each other for false advertising.</p><p>During Monday's opening statements, federal Judge Morton Denlow had some fun with the attorneys about the topic at hand, calling the trial 'wiener wars.' But Tuesday, things took a more serious tone as testimony began. Kraft and Sara Lee, the owners of Oscar Mayer and Ball Park respectively, are suing each other for claims made in ads.</p><p>The first witness, Gerald Ford - not that Gerald Ford - testified for Sara Lee. Ford had surveyed a few hundred people, showing them an Oscar Mayer ad claiming it makes the best-tasting beef hot dogs.</p><p>Sara Lee says Kraft ran a faulty taste test and lied in those ads. Kraft has filed a similar lawsuit about Sara Lee's ads. An attorney for Sara Lee says he also plans to call taste test experts to the stand.</p><p>The trial will also address the age old question of just what's in a hot dog, anyway.</p><p>Monday, federal Judge Morton Denlow joked during opening arguments Monday, saying his favorite hot dog brand wasn't represented in this case. But if there's any indication how seriously Kraft and Sara Lee are taking the issues, look no further than the thousands of pages of documents they've filed over the last two years leading up to the trial. Judge Denlow joked Monday he had to stop reading the novel 'Anna Karenina' because the court filings in this case were longer than that book.</p><p>The trial is expected to last about two weeks.</p></p> Tue, 16 Aug 2011 12:17:00 -0500 http://www.wbez.org/story/testimony-begin-wiener-wars-trial-90639 Hot dog wars: Kraft, Sara Lee battle over claims in ads http://www.wbez.org/story/hot-dog-wars-kraft-sara-lee-battle-over-claims-ads-90549 <img typeof="foaf:Image" src="http://llnw.wbez.org//story/photo/2011-August/2011-08-15/chicago hot dog_flickr_Jen Waller.jpg" alt="" /><p><p><strong>Updated at 1:40 p.m. on 8/15/11</strong></p><p>A legal beef between the nation's two largest hot dog makers is under way in federal court in Chicago, where a judge will determine whether Oscar Mayer or Ball Park franks broke false-advertising laws in their efforts to become top dog.&nbsp;</p><p>At issue?&nbsp; Which Chicago-based brand can say it makes the country's greatest hot dog.</p><p>Judge Morton Denlow said "let the weiner wars begin" as he invited lawyers to begin opening remarks Monday.</p><p>West suburban-based Sara Lee is suing north suburban-based Kraft over claims made on its hot dog packaging and ads. Kraft owns Oscar Mayer while Sara Lee runs Ball Park.</p><p>Sara Lee argued a Kraft ad campaign falsely claimed it won a national taste test, when there were alleged flaws in the way those tests were conducted. An attorney for Sara Lee said taste testers weren't given the option to put condiments on the hot dogs. When he suggested consumer should've been allowed to put on ketchup, the judge jokingly said that's an area of great dispute.</p><p>Sara Lee's attorney also focused on Oscar Mayer's claims that it has a brand of hot dogs that are 100% pure beef. Sara Lee argues those dogs also contain other ingredients, like water and spices, and therefore aren't 100% pure. Kraft contends the beef is pure; there's no mystery meat. The lawsuit dates back to 2009.</p><p>Erin Lash, an analyst for Morningstar who follows both companies, said there's good reason the brands find it worth suing each other over ads: the sales.</p><p>"We're dealing with a very competitive space and retail meats, in particular, can be a category where consumers tend to consider price rather than brand when making purchase decisions," Lash said.</p><p>In court filings, neither company disclosed a specific dollar amount lost because of the others' ads.&nbsp;</p><p>But the food-industry giants underscored how high the stakes are by filing thousands of pages of legal documents over three years of litigation. Judge Denlow also joked with attorneys that the court filings were longer than "Anna Karenina."</p><p>The case could clarify how far companies nationwide can go when boasting that their product is better than a competitor.</p><p>Judge Denlow will determine the verdict, rather than a jury.</p></p> Mon, 15 Aug 2011 10:00:00 -0500 http://www.wbez.org/story/hot-dog-wars-kraft-sara-lee-battle-over-claims-ads-90549 Chicago and Illinois firms take hit as broader market retreats on economy worries http://www.wbez.org/content/chicago-and-illinois-firms-take-hit-broader-market-retreats-economy-worries <img typeof="foaf:Image" src="http://llnw.wbez.org//story/photo/2011-August/2011-08-04/unsharp.jpg" alt="" /><p><p><img alt="(Clockwise from top left: Getty Images, Flickr, AP, Flickr/dcsale, AP, Wikicommo" class="caption" src="http://llnw.wbez.org/story/insert-image/2011-August/2011-08-04/chicagofirms600.jpg" title="(Clockwise from top left: Getty Images, Flickr, AP, Flickr/dcsale, AP, Wikicommons/MilitaryAce)" width="600" height="338"></p><p>Investors dumped shares in major Chicago companies on Thursday, amid increasing concern the economy has lost steam. Boeing Inc. shares fell 6.3 percent. Walgreen Co. dropped 2.8 percent and OfficeMax Inc. plunged 10 percent.</p><p>The Dow closed with a loss of 513 points, or 4.3 percent, to 11,384. It was the worst day for the Dow since October 22, 2008.&nbsp; The S&amp;P 500 is down 60, or 4.8 percent, to 1,200. The Nasdaq is down 137, or 5.1 percent, to 2,556.</p><p>Investors are worried the economic recovery has now evaporated and that tomorrow’s jobs report will be bleak. Concern also increased about the ability of Spain and Italy to handle their debt loads.</p><p>The Chicago Board Options Exchange's Volatility Index - dubbed the "Fear Index" - jumped 36 percent. The index tracks how much investors are willing to pay to protect themselves against a decline in the S&amp;P 500 Index.</p><p>Mesirow Financial economist Adolfo Laurenti says investors are seeking security.</p><p>"We have seen a disappointing number from GDP, we are seeing a job market that is not shifting to higher gears and I think people are really revising down their expectations for the second half of the year," Laurenti said.</p><p>Drug maker Abbott Laboratories was down 3 percent. Oak Brook, IL-based McDonalds Corp. was down 1.4 percent.</p><p>Even Kraft, which had risen earlier in the day on news that it will split into two companies, fell more than a percentage point. But at least one Chicago company bucked the trend – cellphone maker Motorola Mobility Solutions climbed 3.5 percent.</p><p><em>--The Associated Press contributed to this report.</em></p><p>&nbsp;</p></p> Thu, 04 Aug 2011 19:55:00 -0500 http://www.wbez.org/content/chicago-and-illinois-firms-take-hit-broader-market-retreats-economy-worries