Brazil’s richest man already owns Burger King. Now he’ll own the ketchup you put on your Whopper.
Jorge Paulo Lehmann, who also holds a major interest in the company that makes Budweiser, teamed up with the U.S. investor Warren Buffet to buy the iconic American ketchup manufacturer Heinz for $28 billion. Burgers, ketchup and beer: the all-American diet, now brought to you by Brazil.
Over the last few years, Heinz has made a major push to boost revenues from emerging markets, according to a report in Britain’s Daily Telegraph. Heinz generated $11.6 billion in sales last year. Almost two-thirds of that came from overseas. One-fifth came from China and Brazil. Oh, how the tables have turned.
“We’ve been prospecting in the emerging world for a long time, and now they’re prospecting here,” Heinz CEO William Johnson explained in comments carried by Business News America.
Even though Brazil’s epic Carnival festival just ended, the story is still making headlines in the country’s major media outlets and on social media.
One Brazilian Twitter user expressed his delight at the deal: “After meat, beer and the burger place, now even the ketchup is Brazilian. The Americans must invest in açai!”
Açai is a fruit that grows in the Amazon. Many Brazilians enjoy it in the form of frozen yogurt, and it’s been hawked in the U.S. by celebrities as a disease-fighting “superfood.”
Lehmann’s 3G Capital group, made up of Brazilian investors, will run day-to-day operations at Heinz, which will become a private company. “Any partnership where I don’t have to do the work is my kind of partnership,” Buffett joked. Lehmann currently has a personal net worth around $19 billion, putting him at number 36 on Bloomberg’s list of wealthiest billionaires. Buffet, with $53.2 billion, clocks in at number four.
Heinz’s headquarters will remain in Pittsburgh, according to both Heinz and 3G. Latitude News has already reported on how Brazil’s middle class is helping to fuel growth in unexpected places like Illinois. Pennsylvania could be next.
The man behind the mask
Who is Jorge Paulo Lehmann? The businessman has kept a low profile since kidnappers tried to abduct three of his five children in 1999, according to a report in the prominent Brazilian news website UOL. Lehmann moved to Switzerland soon after the incident. But the Harvard-educated Lehmann, a former champion tennis player, wasn’t always so publicity shy: he won five national singles titles in Brazil and competed at Wimbledon in 1962, losing in the first round.
Lehmann got his start in business as an investment banker. In 1989, he bought Brahma, a Brazilian brewery. Within ten years, he had parlayed Brahma’s modest success into a multinational powerhouse, AmBev, the third-biggest brewer in the world. He’s now a major stock-holder in Anheuser-Busch InBev, the biggest brewery in the world, which own Budweiser and Stella Artois, as well as Brazilian brands like Brahma, Skol and Antartica.
In 2010, Lehmann and 3G Capital bought Burger King for $4 billion.
UOL writes that Lehmann will try to use Heinz as a “platform” to acquire other businesses in the food industry, emulating the strategy that was profitable at Brahma. Even before the deal — which reportedly took just six weeks to complete — Heinz had been looking to diversify its holdings in the food business.
Heinz is not just ketchup anymore: in 2010, the Daily Telegraph reports, Heinz bought Foodstar, a major Chinese soy sauce manufacturer. In 2011, it purchased Quero, a Brazilian company that makes tomato sauce.
So why the deal between Buffet and Lehmann? The Brazilian newspaper Estadao writes that the two businessmen have a lot in common. Both look to invest in highly visible businesses (Burger King, Coca Cola, Walmart, AB InBev) whose size produces better bargaining power, bigger distribution areas and the potential for savings in areas like R&D and logistics:
Now with the deal closed, the Brazilians of 3G will have more flexibility and freedom to put into practice what they have already demonstrated mastery of: delivering results. And probably the appetite of the group will not end here: the goal is to expand the menu.
What do you think the Lehmann empire should focus on next? Hershey’s for dessert? Dr. Pepper and Snapple to wash it all down?
Let us know in the comments section below.