Frederic Melton
Kraft Heinz is a company that manufactures and sells processed cheese products, including Kraft Singles, Kraft Natural Cheese, and Kraft Parmesan Cheese. Kraft Singles, introduced in the 1950s, are individually wrapped cheese slices that have become a favourite in American households. The company has a history of innovation, having created the first commercially packaged cheese slices. Kraft's cheese products have undergone label changes due to FDA regulations regarding the percentage of milkfat and the use of additives. Despite this, Kraft continues to be a popular brand, offering a range of cheese options for consumers.
| Characteristics | Values |
|---|---|
| Company | Kraft Heinz |
| Headquarters | Chicago, Illinois |
| Products | Kraft Singles, Kraft Natural Cheese, Kraft Parmesan Cheese, Macaroni and Cheese |
| History | Merged with Heinz in 2015, forming the 5th-largest food and beverage company in the world |
| Sales | Flat as of 2019, with around 40% of US households buying Kraft Singles |
| Advertising | In 1992, the Federal Trade Commission ruled that Kraft must stop claiming that each cheese slice had as much calcium as a glass of milk |
| Packaging | Individually wrapped cheese slices were introduced in 1965 and updated in 2023 |
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What You'll Learn
Kraft Singles: individually wrapped slices, introduced in 1950
Kraft Singles, the brand of processed cheese products, were introduced in 1950 as "Kraft De Luxe Process Slices". They are individually wrapped slices that are formed separately during manufacturing and are not actually slices off a block. Kraft Singles are manufactured and sold by Kraft Heinz, which was formed in 2015 through a merger between Kraft Foods Group, Inc. and the H.J. Heinz Company.
Initially, Kraft Singles were not wrapped individually. It was only in August 1956 that an American engineer, Arnold Nawrocki, developed a machine that allowed for individual wrapping. However, it was not until 1965 that Kraft Foods introduced individually wrapped cheese slices as a product.
Kraft Singles do not meet the requirements for the label "Pasteurized Process Cheese" because the percentage of milkfat in the product derived from added dairy ingredients exceeds 5%. Prior to December 2002, Kraft used the label "Pasteurized Process Cheese Food", which permits a higher proportion of added dairy. However, the FDA issued a warning that year, instructing Kraft to discontinue using that label due to a formulation change that replaced some of the non-fat milk in the recipe with milk protein concentrate, which is not an approved additive. In compliance with the FDA directive, Kraft modified the label to the current "Pasteurized Prepared Cheese Product".
One notable advertising campaign for Kraft Singles claimed that each 3/4-ounce (21-gram) slice contained "five ounces [140 grams] of milk", making it superior in taste to imitation cheese slices, which are primarily composed of vegetable oil and water with minimal milk content. This campaign drew criticism for implying that each slice provided the same amount of calcium as a 5-US-fluid-ounce (150 ml) glass of milk and had more calcium than rival imitation cheese slices. In 1992, the Federal Trade Commission ruled against Kraft, ordering the company to cease making these misrepresentations in its advertising.
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Kraft's merger with Heinz in 2015
Kraft Heinz, formed by the merger of Kraft Foods Group, Inc. and the H.J. Heinz Company in 2015, is an American multinational food company. The merger was completed on July 2, 2015, resulting in a new company called The Kraft Heinz Company (KHC), commonly known as Kraft Heinz. With co-headquarters in Chicago and Pittsburgh and offices worldwide, Kraft Heinz became the third-largest food and beverage company in North America and the fifth-largest in the world, generating over $26 billion in annual sales as of 2021.
The merger presented opportunities for cost savings, particularly through the refinancing of Heinz's high-yielding debt due to Kraft's superior credit rating. It also provided scope for expanding Kraft's brands internationally, as Heinz had a more global sales footprint, with 60% of its sales coming from regions outside North America, compared to Kraft's 98% North American sales concentration.
The combined entity benefited from increased sales volume, which improved its bargaining power with clients such as large retail outlets, specialty food stores, and restaurants. This resulted in enhanced operating margins and more shelf space in retail outlets. The total assets of the merged company doubled in the year after the merger (2016) compared to the year before (2014), with cumulative returns during the merger period of approximately 7.1%.
However, the merger also faced some challenges and scrutiny. In September 2021, Kraft Heinz was fined $62 million by the U.S. Securities and Exchange Commission due to improper claims of $200 million in cost savings related to the merger, which forced the company to restate its financial results for 2015-2018. Additionally, the merged company had to navigate brand transitions, such as the retirement of the Kraft branding in Australia in 2017 and the sale of its cheese products line to Bega Cheese, although it retained the rights to the Kraft name.
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Kraft's controversial use of synthetic dyes in macaroni and cheese
Kraft's use of synthetic dyes in its macaroni and cheese products has been a source of controversy and concern for consumers and health activists. The presence of artificial food dyes, particularly Yellow 5 and Yellow 6, in Kraft's macaroni and cheese sold in the United States sparked outrage and prompted calls for their removal.
Yellow 5 and Yellow 6 dyes are man-made in a laboratory using chemicals derived from petroleum, a crude oil product also used in gasoline and diesel fuel. These dyes are not only unnecessary but also potentially harmful to human health. They have been linked to health concerns, with some countries like Norway and Austria banning their use, and the UK phasing them out. Additionally, these dyes are contaminated with known carcinogens, posing a potential cancer risk to consumers.
In 2013, a Change.org petition was started by food activist Vani Hari, also known as "The Food Babe," demanding that Kraft eliminate these artificial food dyes from its macaroni and cheese products. The petition gained significant traction, garnering over 365,000 signatures. Hari and other health-conscious consumers argued that these dyes added no nutritional value and were solely used for aesthetic purposes.
Facing increasing pressure from consumers and activists, Kraft pledged to remove artificial preservatives and dyes from its Kraft Macaroni & Cheese by January 2016. The company announced that it would replace synthetic dyes with natural coloring ingredients like turmeric, paprika, and annatto. This decision was influenced by consumer demand for healthier and simpler ingredients, with sales of additive-free products experiencing significant growth.
Kraft's reformulation of its macaroni and cheese recipe was not entirely new, as the company had already made changes for markets in the European Union where certain yellow artificial dyes were banned due to health concerns. By removing synthetic dyes, artificial preservatives, and flavors, Kraft addressed health concerns and met the evolving needs of its consumers, especially parents seeking healthier options for their children.
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Kraft's successor company in Australia, Mondelez
Kraft Heinz is a well-known manufacturer and seller of processed cheese products, such as Kraft Singles, which were introduced in 1950. The company has a long history in the dairy industry, with its roots tracing back to the National Dairy Products Corporation, formed in 1923.
In 2012, Kraft Foods Inc. announced its intention to split into two publicly traded companies: a snack food company and a grocery company. The snack food company would focus on global snack and confectionery businesses, while the grocery company would retain the Kraft name and focus on the North American grocery business.
The successor to Kraft Foods Inc.'s snack food business is Mondelez International, Inc., which was established in 2012. Mondelez is an American multinational company headquartered in Chicago, with operations in approximately 160 countries and an annual revenue of about $26.5 billion. The name Mondelez is derived from the Latin word "mundus", meaning "world", and "delez", a fanciful modification of the word "delicious".
Mondelez International has a long history in the food industry, with roots tracing back to the National Dairy Products Corporation, founded in 1923. In 1924, the Kraft Cheese Company was founded and listed on the Chicago Stock Exchange. Over the years, the company expanded through acquisitions, diversifying its product lines beyond dairy products to include items such as caramel candies and macaroni and cheese dinners.
In Australia, Kraft's successor company is Mondelez, which sold its cheese product line to Bega Cheese but retained the rights to the Kraft name. This resulted in a name change for the sliced cheese product from Kraft Singles to Dairylea Slices, as Bega acquired the rights to the Dairylea brand in Australia as part of the deal.
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Kraft's sponsorship of Major League Soccer and the National Hockey League
Kraft Heinz has been a sponsor of Major League Soccer (MLS) since 2014. The multi-year sponsorship deal includes Kraft brands such as Capri Sun, Kool-Aid, Country Time Lemonade, and Tang. As part of the agreement, Capri Sun became the official juice drink of MLS, and the brand has been used in grassroots extensions like youth soccer clinics throughout the United States.
Kraft has also been involved in sponsoring the National Hockey League (NHL) and the National Hockey League Players' Association (NHLPA) through its Kraft Hockeyville competition. The competition has provided more than $1.6 million in funding for arena improvements in over 40 Canadian communities. Kraft's sponsorship exclusivity includes food and drink categories such as roast and ground coffee, cheese, packaged cold cuts, and desserts. However, in 2012, Kraft cancelled a contest amid an NHL lockout, citing the need to maintain its connection to its key target customers, which are moms. Despite this setback, Kraft's involvement in local hockey through Hockeyville has positively impacted its sales, with baseline sales increasing by 5 to 6 percent annually during the program's run.
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Frequently asked questions
Kraft uses milk from dairy farms to make their cheese. In 2002, the FDA ordered Kraft to change the label on their Singles product range to "Pasteurized Prepared Cheese Product" as the product contained milk protein concentrate, which is not a permitted additive.
Kraft sells a variety of cheese products, including natural cheese in the form of string cheese, cracker cuts, cubes, and chunks. They also sell Parmesan cheese, shreds, and slices.
Kraft first introduced cheese slices in the 1950s with their KRAFT DeLuxe product, which was the first commercially packaged cheese slices in the world. In 1965, Kraft introduced Kraft Singles, which are individually wrapped cheese slices.
Kraft stopped producing cheese during World War II to focus on producing pre-served butter spreads and canned cheese for the armed forces.
