When people think of Kraft Heinz, they often visualize its lineup of popular consumer brands. However, the company’s ingredients division, which produces cheese powders, marshmallows, caramel, and condiments for bulk applications, plays a crucial role in enhancing the availability of Kraft Heinz’s signature products. Unfortunately, this division often remains overshadowed by iconic items like Heinz Ketchup, Kraft Mac & Cheese, and Lunchables. The limited consumer awareness may be a key reason Kraft Heinz considered selling its powdered cheese business. CEO Miguel Patricio has been focused on streamlining the company’s portfolio to prioritize brands with strong growth potential. Recently, Kraft Heinz sold its natural cheese business to Lactalis for $3.2 billion, part of a larger deal that required the French dairy company to divest several brands. Additionally, last year, Kraft Heinz divested the Planters snack brand to Hormel for $3.35 billion.
In contrast, Kerry Group has pursued growth through acquisitions. In 2020, Kerry CEO Edmonis Scanlon set an ambitious goal: to ensure that the company’s ingredients reach over 2 billion consumers worldwide each day by 2030. Achieving this target would effectively double Kerry’s business in a decade, and the company has actively utilized mergers and acquisitions to work towards this objective. Since the start of 2021, Kerry has acquired several companies, including Natreon, C-LEcta, Enmex, Biosearch Life, and Niacet, which specializes in clean label preservatives.
The acquisition of Kraft Heinz’s cheese powder division will allow Kerry to enhance its offerings significantly. Cheese flavoring is an appealing aspect for consumers, even those who do not closely monitor ingredients or nutritional content. With its origins as an Irish dairy protein business, Kerry is already well-versed in cheese and dairy products. By integrating Kraft Heinz’s cheese powder offerings, Kerry can strengthen its position in the market, assuming the deal receives regulatory approval.
Kerry is particularly optimistic about the prospects of cheese powders. In a survey of 8,790 global consumers conducted just before the announcement of the Kraft Heinz deal, 62% of respondents stated that cheese flavors make savory snacks more exciting. The company noted that the launch of cheese-flavored snacks has outpaced growth in the overall savory snacking category. This research underscores Kerry’s readiness to market this expanded cheese portfolio to manufacturers worldwide. Furthermore, as Kerry celebrates its achievements, it is also exploring innovative products like calcium chews, which could attract even more consumers. Thus, once the acquisition is finalized, Kerry is poised to leverage its new cheese powder offerings, including potential applications within the realm of calcium chews, to capture a broader market share.