Kraft Heinz sells several cheese brands to Lactalis

Boxes of Kraft Macaroni & Cheese Dinner are seen in a pop-up store of Kraft Heinz January 17, 2019 in Washington, DC. (Photo by Alex Wong/Getty Images)

French dairy company Lactalis reached a deal to acquire several leading cheese brands from US food giant Kraft Heinz for $3.2 billion (£2.48bn), the companies announced Tuesday.

Lactalis, which sells cheese under the President brand, will acquire Kraft Heinz’s Natural, Grated, Cultured and Specialty cheese businesses in the US, Grated cheese business in Canada, and the entire international cheese business outside these two countries, including the following brands: Breakstone’s, Knudsen, Polly-O, Athenos, Hoffman’s, Cracker Barrel in the US, and Cheez Whiz outside the US and Canada markets.

The two companies will also partner to develop the license for some products under the Kraft and Velveeta brands. But Kraft will retain Philadelphia Cream Cheese and Velveeta Processed Cheese, among other products, it said in a press release.

“Our company has been in the US for more than 40 years and this transaction takes it to a whole new level,” said Lactalis Chief Executive Emmanuel Besnier.

“The Kraft brand has been synonomous with cheese in America,” Besnier said. “But this deal will also allow us to grow the brand internationally along with our products.”

Kraft Heinz unveiled the deal in connection with a new corporate strategy that includes a 30 percent increase in marketing spending.

The deal “will enable us to build sustainable competitive advantage in businesses where we have strong brand equity, greater growth prospects and can use our manufacturing scale and consumer-based platforms approach,” said Kraift Heinz Chief Executive Miguel Patricio.

“This is a great example of agile portfolio management at work.”

The deal will shift production facilities in California and Wisconsin to Lactalis, as well as a distribution center in Wisconsin. About 750 workers will transfer from Kraft to Lactalis.