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Kraft Heinz said Tuesday that it is selling its natural cheese business — including its Cracker Barrel and Breakstone’s brands — to French dairy company Lactalis Group as part of a larger restructuring.

The $3.2 billion sale includes the Kraft Heinz production facility adjacent to Highway 99 in Tulare, as well as those in Walton, New York and Wausau, Wisconsin. About 750 employees at those plants will transfer to Lactalis Group.

Included in the sale are Kraft Heinz’s natural, grated, cultured and specialty cheese businesses in the U.S., its grated cheese business in Canada and its entire international cheese business. Kraft Heinz already sold its natural cheese business in Canada last year for $1.2 billion.

Sale Expected to be Completed Next Year

The sale is expected to close in the first half of next year, the companies said.

Industry analyst Alexia Howard praised the sale. In a note to investors, Howard said Kraft Heinz’s natural cheese business was the company’s Achilles’ heel because the brands had trouble differentiating themselves from store brands. Kraft Heinz — formed in a 2015 merger — has been struggling as consumers increasingly seek fresh, minimally processed foods.

“The transaction will enable us to build sustainable competitive advantage in businesses where we have stronger brand equity, greater growth prospects and can use our manufacturing scale and consumer-based platforms approach,” CEO Miguel Patricio said in a statement.

Lactalis Group — whose brands include President specialty cheese and Stonyfield Organic yogurt — said the Kraft Heinz brands are a good strategic fit.

The French company, which has U.S. headquarters in Buffalo, New York, has eight U.S. plants with 2,600 employees.

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