Lactalis completes $3.3 billion acquisition of Kraft Heinz natural cheese business, launches new Chicago office
There’s a new big cheese in Chicago.
Delayed by a federal antitrust lawsuit, French-based Lactalis Group completed its $3.3 billion acquisition of Kraft Heinz’s natural cheese business Monday and launched a Chicago office to run it.
The acquisition puts iconic cheese brands including Cracker Barrel, Breakstone, Knudsen and the entire line of Kraft brand natural and grated cheeses under the corporate umbrella of the newly formed Lactalis Heritage Dairy, which launched Monday with 100 former Kraft Heinz employees at its West Loop headquarters.
“With this acquisition, we are advancing our growth strategy across North America and strengthening our position in the attractive U.S. cheese market,” Lactalis North America CEO Gilles Meziere said in a news release Monday.
The acquisition includes 750 former Kraft Heinz employees and three production facilities located in California, New York and Wausau, Wisconsin. As part of an agreement with the Justice Department, Lactalis is divesting of Kraft Heinz’s Athenos and Polly-O businesses.
Kraft Heinz, which is co-headquartered in Chicago and Pittsburgh, retains its KraftSingles, Velveeta and Cheez Whiz businesses in the U.S. and Canada, and its Philadelphia cream cheese businesses worldwide. Lactalis gets the international license for Velveeta and Cheez Whiz.
“The sale of our natural cheese portfolio is another milestone in our rapid transformation,” Kraft Heinz CEO Miguel Patricio said in a separate news release. “The divestiture is a great example of our agile portfolio management, and we believe it will help Kraft Heinz enhance our overall growth profile, our strategic focus, and financial flexibility.”
The agreement to sell Kraft Heinz’s natural cheese business to Lactalis was reached in September 2020, but the Justice Department intervened, primarily over concerns that the combined portfolio would corner the market on feta cheese in the U.S. Kraft Heinz’s Athenos brand and the President brand by Lactalis account for nearly two-thirds of feta cheese sales nationwide, the Justice Department alleged in its antitrust lawsuit.
In addition, the combined portfolio would have controlled 70% of all retail ricotta sales in metropolitan New York, the lawsuit alleged.
Under the terms of the antitrust settlement reached earlier this month, Lactalis will sell the Athenos brand to Emmi Roth USA and the Polly-O brand to BelGioioso Cheese, both based in Wisconsin. Those sales are set to close Tuesday for undisclosed amounts.
Founded in 1933, privately held Lactalis bills itself as the world’s leading dairy group, with a retail presence in 52 countries. In addition to President, its portfolio includes the Galbani, Stonyfield Organic and Siggi’s brands.
For consumers, the Kraft Heinz natural cheese brands will live on under new ownership.
“Our goal is to develop and grow the category,” said Christopher Bona, a spokesman for Lactalis Heritage Dairy. “We’re going to be investing in the category, investing in innovation to improve the quality and the value of the great brands that we acquired.”
