Blogs & Comment

Winners & Losers: Buffett is Krafty, Crull loses his cool

As if Warren Buffet didn’t have enough cheddar already

▲ Warren Buffett

And with a Coke habit, too

Warren Buffett

Food giants Heinz and Kraft are merging to create one of the world’s largest food companies, and making investing rainmaker Warren Buffett even richer in the process. The deal itself is a natural, and the two firms go together like Heinz ketchup and Kraft Velveeta cheese. (Don’t judge.) The deal is valued at US$49-billion, and comes with backing of Buffett’s Berkshire Hathaway and Brazilian firm 3G Capital. The two firms previously teamed up to buy Heinz for $23 billion in 2013. Buffett will now end up with a $9.5 billion stake in what will be the fifth-largest food and beverage company in the world. Buffett likes to bet on dominant consumer brands that people know, love, and consume, such as Coca-Cola and Procter & Gamble. Buffett himself consumes five 12-ounce servings of Coke a day, and somehow the acidic carbonated beverage has not yet corroded his insides (we presume). But not everybody eats like Buffett, which helps to explain why the two companies are joining forces. Both are trying to adapt to changing consumer tastes, as people become skeptical of packaged goods in favour of more natural and healthier foods. Kraft’s revenue was flat last year at $18 billion, for example. The company has tried removing artificial colours from some of its cheeses, and it’s marketing new products like the P3 Protein Pack, which combines tiny cubes of meat, cheese, and nuts in a plastic container—apparently aimed at adults who crave Lunchables but are too ashamed to eat it without more mature branding. Now if the newly merged Kraft Heinz Co. could throw some Hot and Spicy Heinz Ketchup in the mix, it might be a winner.

▼ Bell Media

Blais of glory

Kevin Crull

We don’t have hard numbers on this, but we suspect the grown-men-in-positions-of-power demographic is the most likely to act like petulant children. Last week, the Canadian Radio-Television and Telecommuncations Commission decided to start unbundling cable packages, the annoying practice of packaging channels you do watch with those that you don’t, like BookTelevision and the Rural Channel. (Though we’ve heard good things about Prairie Farm Report.) Cable bundling is lucrative for telecoms, though, and Bell Media president Kevin Crull was so peeved at the CRTC’s decision that he phoned CTV News president Wendy Freeman and told her that CRTC chair Jean-Pierre Blais was not to appear on the network at all that day. Fearing for her job, Freeman complied, though defied the order for a later newscast. After Crull’s outburst was reported in the Globe and Mail, Blais released a statement saying the allegation that “the largest communication company in Canada is manipulating news coverage is disturbing.” He added, “An informed citizenry cannot be sacrificed for a company’s commercial interests.” Crull eventually released an apology of sorts. “It was wrong of me to be anything but absolutely clear that editorial control always rests with the news team,” he said. The incident is not only a public embarrassment for Bell, but also exacerbates tensions between it and the CRTC that have been brewing since the regulator originally rejected parent company BCE’s purchase of Astral Media in 2012. Good relations with regulators are crucial for corporations in order to advocate for their interests, and the latest dust-up probably won’t help Bell in the near future. Of course Bell could always try to redeem itself by requiring CTV spend an entire day reporting why Blais is the Hottest Regulator Alive.