Kraft Heinz Co. is parting with a big chunk of its cheese business, a sign of the challenges facing food companies whose scale complicated operations as the coronavirus pandemic drove unprecedented demand.
Kraft Heinz said Tuesday that it had reached a deal to sell its U.S. natural-cheese business and a mix of other cheese brands in North America and internationally to France’s Groupe Lactalis SA for $3.2 billion.
The Wall Street Journal first reported that the sale was imminent earlier Tuesday. The maker of Heinz ketchup and Oscar Mayer deli meats, among many other foods, said the sale is part of its plan to simplify its business and focus on brands that have the best potential to resonate with contemporary consumers.
“We wandered away from the consumer,” Kraft Heinz Chief Growth Officer Nina Barton said Tuesday at a virtual meeting with investors. “We are rebuilding the connection.”
Sales of groceries including packaged foods have surged during the coronavirus pandemic as consumers have stocked their pantries and shifted to eating mostly at home. But some established companies have lost market share even as their sales have risen because they can’t keep up with the unexpected demand. And the sudden need for more cleaning supplies, protective equipment and delivery trucks cut into their profit margins.