Sector News

Kraft Heinz to offload Canadian natural cheese unit to Parmalat

November 7, 2018
Food & Drink

Kraft Heinz has entered into an agreement to sell its Canadian natural cheese business to Lactalis-owned dairy company Parmalat for CAD $1.62 billion ($1.23 billion).

The deal, which is expected to close in the first half of 2019, includes brands such as Cracker Barrel, P’tit Quebec and Amooza.

Under terms of the agreement, Kraft Heinz will sell its production facility in Ingleside, Ontario, and transfer approximately 400 employees from the site to Parmalat.

The natural cheese business being sold contributed approximately $427 million to Kraft Heinz’s net sales in 2017. The company expects to use transaction proceeds primarily to pay down debt.

Chicago-headquartered Kraft Heinz stressed it remains “steadfast in its commitment to the Canadian market”, illustrated by its recent acquisition of the Vancouver-based Ethical Bean coffee brand. It will continue to own and market its other cheese products, including Philadelphia, Cheez Whiz and Kraft Singles, which are processed in Mount Royal, Quebec, where the firm employs approximately 900 people.

Bernardo Hees, Kraft Heinz CEO, said: “We’re excited about what this transaction means for our future growth and business in Canada. We also believe Parmalat is uniquely positioned to advance the natural cheese business given their experience and focus on the dairy industry.

“At the same time, we can focus on the segments and categories where we have stronger brand equity, competitive advantage and greater growth prospects.”

Parmalat, which was acquired by Lactalis in 2011, said the Ingleside plant fits well into its current network and helps expand its operations in Eastern Canada. It believes the brands being acquired have wide brand recognition and offer channels for business expansion.

Parmalat CEO Mark Taylor said: “Today’s announcement speaks volumes about our drive to support dairy farmers, help the local economy and continue to build on our family tradition of cheese making.

“We are excited to work closely with the community and our stakeholders to ensure we can grow sustainably and help Canada’s natural cheese business thrive. Parmalat’s brands in Canada date back as far as 1881 (Balderson). This deep‐rooted heritage in Canada makes the proposed transaction a logical step for us as we seek to make an even more significant economic and social contribution in Canada.”

In Canada, Parmalat has 3,000 employees, 16 dairy processing plants and a dedicated research and development facility.

Source: FoodBev

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