- After announcing his $5.5 billion stake in Mondelez International Inc. last week, activist investor William Ackman joined a circle of billionaire food industry investors, including Nelson Peltz, Warren Buffet with Berkshire Hathaway Inc., and Jorge Paulo Lemann with 3G Capital Partners LP.
- Besides having money to give and strong opinions about how business should be done to maximize revenue and profits, these investors all agree that the food industry "is ripe for making money," The Wall Street Journal reported.
- These investors could all come together in a deal concerning Mondelez, specifically that Kraft Heinz Co. is being speculated to have interest in acquiring it. However, some experts close to the matter say that it is too soon for 3G Capital to make that kind of move for Kraft Heinz as such a new company, according to The Wall Street Journal sources. Additionally, Buffett himself said Monday a Mondelez deal is not likely to happen anytime soon, nor one with any large food company.
Peltz was taken with 3G Capital's zero-based budgeting cost-cutting strategy, which 3G implemented at H.J. Heinz Co. and other companies to drive profit margins. In Heinz's case, margins increased from 18% to 25%. Not long after Peltz took a seat on the board of Mondelez last year, the company announced it would begin implementing its own zero-based budgeting policy.
Though 3G Capital is famous for its successes with cutting costs and boosting margins at the companies it acquires, its history of boosting sales and market share is not as notable. "Since 3G bought Heinz two years ago, for example, the ketchup maker lost market share in 65% of the food categories in which it has brands, maintained share in 16%, and gained in less than 20%, according to a February report by McKinsey & Co.," The Wall Street Journal reported.
Ackman has been involved with major food industry dealings in the past, including encouraging the Mondelez spinoff from Kraft Foods Group that eventually occurred in 2012.