McDonald's Ketchup Drama: Heinz CEO's From Burger King, So Bye-Bye

Image: McDonald's Ketchup Drama: Heinz CEO's From Burger King, So Bye-Bye

Tuesday, 29 Oct 2013 08:03 AM

By Clyde Hughes

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Fast food giant McDonald's announced last week it is ending its relationship with H.J. Heinz because the ketchup company's new CEO is a former top executive at Burger King Worldwide Inc.,  a longtime bitter rival of McDonald's.

Bernardo Hess, the new chief executive officer of Heinz, is in the middle of the controversy. Berkshire Hathaway and an investment fund affiliated with 3G Capital purchased Heinz for $28 billion in June and soon after chose Hees to lead it, according to Reuters.

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The management change is the reason McDonald's will be using a different ketchup vendor.

"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 Friday. "We have spoken to Heinz and plan to work together to ensure a smooth and orderly transition," said McDonald's, which has more than 34,000 restaurants around the globe."

The Washington Post reported that the majority of U.S. customers won't see a difference since McDonald's used Heinz in only two markets — Minneapolis and Pittsburgh. 

But Heinz will feel the impact overseas. Heinz does 60 percent of his business with the company outside of the United States, and the majority of McDonald's sales — 66 percent — occurs outside of the U.S.

According to Heinz's 2012 annual report, Heinz is looking to seize more of the foreign market.

"This category represents the past and future of Heinz and we possess numerous competitive advantages, including rapidly growing businesses in Emerging Markets, upside potential in Developed Markets and our unique, proprietary HeinzSeed capabilities, which deliver superior, great-tasting tomatoes for Heinz Ketchup & Sauces," reads the company's annual report.

While Heinz became famous with its ketchup, the company has long diversified and now owns product food lines like Ore-Ida potatoes, Smart Ones diet food items, along with the TGI Friday restaurant chain.

Even though McDonald's has not named a new ketchup vendor, the decision could be Heinz's rivals Hunt or Del Monte.

Burger King uses Heinz in roughly 80 percent of its markets globally, the brand's spokesman told Reuters last week.

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