Kraft and Heinz: A Corporate Marriage Based On Good Reputation

kraft-heinzStephen Hahn-Griffiths, VP of Strategic Consulting, Reputation Institute

The recent announcement of the merger between Heinz and Kraft to create “The Kraft Heinz Company” as the fifth largest food company in the world, raises all sorts of questions from a corporate, branding, and reputation perspective. As the two enterprises continue to finalize the details of their corporate marriage and make plans to tie the knot in saying I do, my cognitive wheels are turning as I start to contemplate the implications from a branding and corporate reputation stand point.

1. Why Kraft Heinz, and not Heinz Kraft?

At first, I thought about the optimal corporate brand name for the new entity and the decision to put the Kraft before the Heinz. I subjectively wondered if it might have made more sense to brand the new enterprise the other way around as Heinz Kraft? The name Heinz Kraft rolls off the tongue a little better – and it would also make more sense to put the H before the K based on the protocol of alphabetic privilege. But in weighing-up the issue objectively, it would seem that Kraft Heinz actually makes more sense based on the merits of reputation. That’s because not only is Kraft the larger entity with a market cap almost triple the size of Heinz, but by right of reputation and the principle of leading with the stronger corporate brand name, the decision to put Kraft first is the right one given that it ranks higher than Heinz on the merits of admiration, trust, feeling, and esteem. According to the 2014 US RepTrak® study, Kraft has a reputation Pulse score of 78.9 (borderline great) and Heinz has a Pulse score of 72.8 (reasonably good.)

2. What – No Hyphen?

Then, I wondered as to why the enterprise had not used a hyphen within the corporate brand name, i.e. Kraft-Heinz, as a way to honor and respect the marriage of two corporate powerhouses? I reflected back to the days of old when families of good stock sought out each other to arrange a marital union as a way to enhance their social standing. Especially in the Western hemisphere, budding brides and grooms of noble ancestry elevated their perceived reputation by adopting each other’s family name to create a hyphenated marital surname as a way to allow the legacy of their names to continue (e.g., Spencer-Churchill.) I noted that upon reviewing the Global RepTrak 100, the phenomenon of corporate hyphenation was almost non-existent despite the myriad of mergers and acquisitions that have occurred over time. Interestingly, among consumer packaged goods companies, Colgate-Palmolive was the only hyphenated named enterprise on the Forbes / Reputation Institute ranking of the world’s most reputable corporations in 2014. Overall, hyphenated enterprises are not rated as highly as non-hyphenated enterprises. And so maybe Kraft Heinz is right, given that in general, a hyphen in the corporate world does not seem to translate into an enhanced reputation.

3. Who Is The Dominant Spouse Going Into The Marriage?

No doubt, Kraft is the larger corporate entity prior to the merger. Although based on the yet to be finalized details of the proposed corporate marriage, Heinz stakeholders will own a larger piece of the new corporate structure with a 51% ownership. So what does that mean in terms which of the two corporate cultures is more likely to prevail? Based on US RepTrak data from 2014, the evidence would suggest a symbiotic relationship is most likely, with both entities being somewhat complementary to the other. Kraft and Heinz have an equally strong reputation based on the product and services they manufacture, but Kraft has a reputation advantage over Heinz on the merits of innovation; however, Kraft is less well-regarded for good corporate citizenry and by contrast, Heinz’s reputational strength is based on Citizenship. In all, both enterprises could thrive as part of a lasting marriage in making the other stronger overall, but only if the reputation advantages for Kraft and Heinz are transferred as best practices across the new enterprise. The sum of the reputational whole of Kraft Heinz has the potential to be stronger than the individual parts.

What Consumer Driven Corporate Brands Can Learn From Kraft Heinz:

1. Your corporate naming convention and identity of the parent (corporate brand) matters.

2. Especially in consumer-driven industries, stakeholder perceptions of brand and reputation are highly intertwined.

3. Bigger doesn’t always mean better when it comes to reputation.

4. Carefully managing reputation for merging entities can enhance overall enterprise value.

Ultimately, time will tell as to how the corporate marriage of Kraft and Heinz will play out. Stay tuned for more news, views, and interpretations of current events – and how it all affects reputation within consumer, retail, travel, and leisure industries.