Heinz Purchases Primal Kitchen – Are we winning or losing?

Paulo Basilio, U.S. zone president for Kraft Heinz, said,

The proposed partnership with Primal Kitchen is consistent with Kraft Heinz’s vision to be the best food company, growing a better world. Primal Kitchen is an authentic, premium and growing brand that fits perfectly with our core Condiments and Sauces categories, and we are excited to partner with the company’s strong existing team to drive growth across multiple categories going forward.

Mark Sisson, co-founder of Primal Kitchen, said,

My mission has always been to change the way the world eats. Our partnership with an industry leader like Kraft Heinz now offers an unrivaled opportunity to reach millions more of the consumers who have been seeking products like ours for years. Kraft Heinz and I share a common vision regarding the future of food and the importance of consumer choices. I look forward to working with them to grow this amazing brand.

Here is Mark’s blog post announcing this development to his thriving community. In his post, Mark says some things that are important to consider in regards to this deal:

Primal Kitchen will continue to operate autonomously, the entire team will stay on (with our headquarters based in Oxnard), and Morgan and I oversee the explosive growth of our brand. The products you have come to know and love will continue to be available (and now at more locations), made using the same awesome ingredients, curated as always by yours truly. And I get to spend even more time on my favorite part of the business—developing new sauces and dressings.

Kraft Heinz understands where the consumer is headed: better-for-you products with high-quality ingredients; which is why I’ll continue to man the helm. Primal Kitchen will continue our vision of offering real food products with nothing processed or artificial. So, rest assured—and I say this with certainty—the integrity of our ingredients won’t change. You’ll find the same high quality food products you’ve come to enjoy and trust from Primal Kitchen.

The bottom line:  I think there are both good things and bad things about Heinz purchasing Primal Kitchen, but I think the good stuff far outweighs the bad.

THE BAD

There’s really not a lot that is bad about this purchase, in my opinion.  Well, at least there aren’t things that will for sure be bad, but there are some things that have the potential to turn out bad and one thing that I think highlights a system that is already bad.

1 – The Ceiling – First off, some feel that this acquisition highlights the stranglehold that the food giants have on the distribution of food in America.  This may or may not be part of the reason that Primal Kitchen decided to sell to Kraft Heinz, but you do often see a sort of “ceiling” for smaller companies like Primal Kitchen.  They reach a certain distribution level through outlets like Thrive Market, Amazon, and Whole Foods and then they hit that ceiling and they can’t grow anymore.  Often, the only way to break through that ceiling is to grab the attention of a nationwide food giant and take a deal.

Several thoughts are raised regarding this ceiling concept.  First, do companies like Primal Kitchen need to break through this ceiling?  What’s wrong with being a $50 million dollar per year brand that has limited distribution?  Will that not still encourage another brand to do the same thing and make similar products and create competition within that market?  Does food need to go back to being more local and regional with smaller producers anyway?  In general, I tend to want to say “yes”, but I don’t know in this case.

Secondly, regarding the ceiling concept, are we just perpetuating the stranglehold that the food giants have on distribution by selling to them once they take notice rather than bucking the system and refusing to sell?  This question makes me think quite a bit.  I hate the idea that we must partner with a food giant in order to get distribution on a product that people are asking for.

2 – Brand Quality – Of course, besides the ceiling concept, the second main concern when Heinz purchases Primal Kitchen is the possibility for decline in quality of the products.  At this time, Mark says he will remain in charge and the company will operate autonomously, so this isn’t an eminent concern.  It could possibly be in the future, but I am not personally worried about this.

3 – Over distribution – The third and final overall concern I’ll bring up, which goes along with the ceiling concept, is the potential for the country not being ready for the kind of widespread distribution that Kraft Heinz is capable of.  Mark started this brand in California and I would venture a guess that it sells very well to very specific areas of the country and other areas don’t even know it exists.  However, the idea that Heinz can make the rest of the country aware of it through their distribution doesn’t necessarily translate to good sales across the nation.  There are most certainly areas of the country that are essentially a great place to take your organic, paleo food items if you want them to sit on a shelf past their expiration date.  So, while I imagine that someone like Heinz is at least somewhat aware of such things, I’m a bit concerned that there is potential for the increased distribution to result in lower sales than projected.  If that happens, will they abandon the brand, give it less distribution, and cut their losses because it “didn’t work”?  It would be incredibly sad to see the brand destroyed because it was pushed to places that didn’t want it and then counted as a failure.

In general, what I want you to get from this opinion piece is this:  WE’RE WINNING

We’re making change with our dollars.  We’re voting with our wallets and we’re taking market share away from companies that make foods that compromise health.  They’re responding by making foods, or acquiring companies that make foods, that are healthier.  We’re doing that.  You and me.  We’re doing it despite the higher cost and the difficulty of going to a few different stores to find what we want.

That effort by you and me has already paid off in terms of pricing and availability of healthier items and this acquisition is just another sign of that progress.  Congratulations and THANK YOU for helping us make this difference.

Now, what do we do about the food giants and the problems that they create (and there are some I didn’t mention such as they’re ability to wield their power to get lower prices from farmers to increase their profit)?  Honestly, I don’t know for sure, but I think we buy local and small when we can.  We try new products from small companies when we can.  We support farmers in our area when we can.

I’m not thrilled about the “big food” part of this for many reasons, but I do think it’s an overall win for our movement that we can and should celebrate.

This has been very much an opinion piece as I work through what it means when Heinz purchases Primal Kitchen, and I’m open to differing opinions as well.  I’d love to hear your thoughts on this.  Some of you have much more business knowledge than I do, so please feel free to post in the comments (but be respectful, of course).