Dive Brief:
- Kraft Heinz is investing $100 million to expand a plant in New Ulm, MN, that processes cheese for Kraft Deli Deluxe slices and other products, such as Handi Snacks. The plant will also return to producing retail Velveeta products after losing that line to an Illinois plant in 2012, which led to significant job cuts.
- The expansion is expected to add about 50 jobs and save about 90 others that would have been cut due to the loss of a large contract for Kraft Heinz. Currently, the plant employs about 400 workers.
- Kraft Heinz announced another $17 million expansion investment for its Grey Poupon plant in Holland, MI. The plant anticipates the addition of about 50 jobs thanks to the expansion.
Dive Insight:
The expansions fit into 3G's plan for the combined Kraft Heinz. The company has announced the closure of seven North American factories to the tune of 2,600 job cuts. But Kraft Heinz still needs to find areas for growth to appease shareholders.
With the money saved over time from the closure of those plants (after Kraft Heinz absorbs the costs), these one-time plant expansion investments could offer significant returns.
These expansions also offer clues about brands that will continue with Kraft Heinz, as speculation looms about which brands the combined company will oust post-merger. Any future plant expansions could provide additional insight into the future of Kraft Heinz and its finalized brands portfolio.
Such announcements also let manufacturers or investment companies know which brands they may have the opportunity to acquire, should Kraft Heinz divest.
That being said, the plants' futures could go beyond current products. This is especially true if the brands underperform, given 3G's strategies and intolerance for inefficiency.