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Kraft Heinz’s purchase of Cerebos will not include fresh coffee business

Kraft Heinz’s acquisition of the food and instant coffee business of Cerebos Gregg’s has been conditionally approved by the New Zealand competition authority. The Commerce Commission ruled that Kraft Heinz should sell the licenses for the Gregg’s brand of tomato ketchup, steak sauce, barbecue sauce and the F. Whitlock Worcestershire sauce brand over competition concerns.

Cerebos Gregg’s is owned by Suntory Beverage & Food, a food and beverage firm operating throughout Australasia.

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Heinz Wattie’s, a subsidiary of Kraft Heinz, had applied to New Zealand, Australian and Singaporean competition authorities in last November to buy Cerebos Gregg’s as part of a global transaction.

The Commerce Commission of New Zealand said that its decision was arrived at after mainly considering competition problems in the New Zealand market for the manufacture, import and wholesale supply of several table sauces to retailers and the food service industry.

The deal would not include Cerebos fresh coffee known as Suntory Coffee, a relatively new business unit, targeting the fast growing global fresh coffee market.

Commerce Commission chair Mark Berry said: “We believe the merger of the number one and two wholesale suppliers to supermarkets of red sauce, barbecue sauce, steak sauce and Worcestershire sauce would be likely to result in a substantial lessening of competition in each of these markets.

“However, we consider the divestment offered by Heinz Wattie’s is sufficient to remedy the competitive harm the merger would cause and we have given clearance to the merger subject to the divestment undertaking.”

The Commission also revealed that it is satisfied that are no competition issues in the national markets for Asian sauces, condiments, chilli sauce, soy sauce gravies and powdered beverages caused by the proposed transaction.

It said that this was because of various factors like insignificant levels of overlap and the existence of competitive constraint from other suppliers.