It was as if a million Warren Buffetts cried out in terror and were suddenly silenced. That is an artist’s impression of what happened overnight following news that McDonalds would, after 40 years of serving the red tomato paste in its global restaurants, drop the use of Heinz ketchup from its stores. The reason: executive bad blood due to the appointment of Bernardo Hees, the former CEO of biggest rival Burger King, as the current head of Heinz following the Berkshire purchase of the company in February, in the process making the John Kerry estate even richer. “As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time,” McDonald’s said in a statement. The Oak Brook, Illinois-based restaurant chain did not disclose the value of their business relationship.
From BBC News:
The world’s biggest fast-food chain said it would drop the ketchup after Bernardo Hees, the former head of rival Burger King, took over as Heinz’s chief executive. “We have decided to transition our business to other suppliers over time,” McDonald’s said.
In February, Heinz was purchased in a $28bn (£17.3bn) takeover.
McDonald’s said that it would work with Heinz “to ensure a smooth and orderly transition of the McDonald’s restaurant business”, which has 34,000 restaurants around the world.
Mr Hees took over after Heinz was bought by Warren Buffett’s Berkshire Hathaway and Brazilian investment fund 3G Capital. Burger King is controlled by 3G Capital.
McDonald’s uses the ketchup at many stores around the world, though only in Pittsburgh and Minneapolis inside the US.
“As a matter of policy, Heinz does not comment on relationships with customers,” the ketchup-maker said.
“As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time,” McDonald’s said in a statement. The Oak Brook, Illinois-based restaurant chain did not disclose the value of their business relationship.
The Pittsburgh company, which also makes baked beans, vinegar and other foods, is now led by Bernardo Hees. He still serves as vice chairman of Burger King’s board and is also a partner at 3G Capital.
The 43-year-old Brazilian had become CEO of Burger King after 3G bought the struggling hamburger chain in 2010. He subsequently slashed costs, revamped the chain’s menu and launched a major marketing campaign to help make it a more formidable threat to long-time rival McDonald’s.
Coincidentally, it is all those international McDonalds restaurants which have the unpleasant habit of charging extra for ketchup portions. It remains to be seen just what the cash flow impact to Heinz (and benefit to alternatives) will be as a result.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/bB7i20ano5g/story01.htm Tyler Durden