Mergers are the pits–ask a Kraft employee. After Kraft merged with Heinz earlier in July, the new company, Kraft Heinz Co., has set out to shave $1.5 billion dollars from annual costs by 2017.
Those cost-cuttings are beginning to take shape, according to Bloomberg. The refrigerators holding free Kraft-brand snacks at headquarters have been carted away. Office printers have been set to default at double-sided in black ink. Traveling employees will only be allowed to spend a maximum of $50 on food each day. And employees who love their Lean Cuisine lunches and Oreo snacks will have to find comfort elsewhere. Since those brands are made by competitor companies (Nestle S.A. and Mondelez International, respectively), they won’t be welcome in the office. Meanwhile, sources told Bloomberg that the company is beginning to lay off employees.
These cost-cutting measures should come as no surprise. The merger was orchestrated by 3G Capital and Warren Buffet’s Berkshire Hathaway, which have owned Heinz since 2013. Now, they own Kraft, too. In March, Kraft Heinz Co. CEO Bernardo Hees, who is a partner at 3G Capital and was appointed CEO of Heinz in 2013, warned Kraft employees that “similarities will create synergies and our differences will open up opportunities.” That’s code for cost-cutting. 3G, which also took over Burger King in 2010, is known for being ruthlessly profit-driven.
When Hees took over Heinz in 2013, he instituted a wave of cost-cutting measures, including the loss of more than 7,000 jobs. 11 of 12 executives were fired; factories were closed. Even mini-fridges, determined to be electricity guzzlers, where shunned. The same is probably in store for Kraft as it is brought into the lean, uber-efficient 3G family.