$28bn Heinz buyout may land agencies in the soup

It’s always a nervous time for agencies when a big client changes hands and they don’t come much bigger than Heinz with its iconic brands, $12bn of global sales and $370m ad budget.

The key to what happens next at the Pittsburgh-based food giant is not avuncular investor Warren Buffett, the Cherry Coke-swigging 82-year old head of investment firm Berkshire Hathaway, but his partner in the deal 3G Capital, controlled by Brazilian billionaire Jorge Lemann.

The two parties are stumping up a total of $28bn for Heinz (including $5bn in debt) and, according to Buffett, 3G will be running the show. Two years ago 3G bought Burger King and promptly dispensed with the services of longstanding agency Crispin Porter and its contentious ‘King’ campaign to move to Mcgarrybowen – although its most recent work was a rather dire celeb-laden campaign from Mother New York.

None of which will reassure Heinz’s hotchpotch of agencies who include Chicago indie Cramer-Krasselt with the lion’s share in New York and various Omnicom shops including AMV/BBDO in the UK and TBWA in Germany. Media too is likely to be on the cost-cutting agenda with Starcom handling in the US and Aegis agencies Vizeum and Mitchell on the case in Europe and Asia.

The conclusion one comes to is 3G may know a lot about wringing cost savings out of a business but it’s not so good at advertising.

Its likeliest route is to ape the likes of Coca-Cola and Mondelez (the spun-off former Kraft business that includes Cadbury) and cherry-pick creative agencies as the mood takes it. This has worked in the past for Kraft/Mondelez in the US and certainly works for Coke.

But, in other hands, it can be a recipe for disaster.

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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.

2 comments

  1. It’ll be interesting to see what comes of this, a review in the next few months is I’d imagine almost inevitable.

  2. Havng worked at AB-InBev and having sat in meetings with Jorge Lemann I can promise you that he keeps himself well away from marketing decision regarding agency assignments. Does he have an opinion? Absolutely. Does he call the shots? Absolutely not.

    If there are questionable decisions being made regarding agencies by businesses owned by 3G, then these should be attributed to the management of those companies. And by the way, AB-InBev has not done so badly in this regard… Note: I write this as a personal observation.

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