Home / Advertisers / How would a Kraft Heinz takeover of Unilever affect the marketing world?

How would a Kraft Heinz takeover of Unilever affect the marketing world?

If you combined Kraft Heinz with Unilever you’d arrive at a company with around the same market capitalisation as Procter & Gamble (although P&G is hardly a food company any more). Or Nestle, which still is more or less. All at around $230bn.

So the news today that Kraft Heinz has made a merger approach to Unilever (for merger read takeover, Kraft Heinz is an American company after all – mostly) isn’t so unexpected. Unilever has rebuffed the approach, Kraft Heinz, controlled by Warren Buffet and funded largely through Brazil’s go-go 3G Capital, says it’s not giving up and will come back. It even paid lip service to “sustainable living” in a statement although it will probably have to go a bit further to woo the likes of Paul Polman and Keith Weed.

One thing you can guarantee is that jobs won’t be on the sustainable list, just as they won’t be if General Motors sells Opel/Vauxhall to France’s PSA, which owns Peugeot and Citroen.

Opel/Vauxhall is different though, it’s a basket case. GM hasn’t made money from it for decades. Kraft Heinz and Unilever are not, although Kraft seems to get by mainly on cost-cutting these days.

Does such a “merger” actually spell the end of big, profitable food brands with their (once) big margins and massive marketing budgets? There are a few seemingly invulnerable brands across the two companies: Heinz Ketchup and Beans, Mac and Cheese in the US maybe. Hellman’s, Ben & Jerry’s (an acquisition) and Knorr for Unilever. But supermarkets can now source this stuff themselves or you can get it, as many people prefer to, from smaller producers. There aren’t always these options in so-called emerging markets (where Unilever’s growth is coming from) but there will be soon.

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The effect of such moves on adland barely bears thinking about unless agencies and their peers can convince the new generation of global corporate aristocrats (for which read US-owned tech companies Apple, Google and Facebook) to spend similar amounts. Sometimes they do, sometimes they don’t but they can do most things agencies can from their own resources, should they choose to.

It’s certainly a new world (Apple’s market cap is more than $700bn, Google’s is $574bn and Facebook’s is $385bn). A Kraft and Unilever merger would accelerate the process although it would probably lead to an almighty mess.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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