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Heinz And Beech Nut Case Study Solution

Decent Essays

Problem Statement The Heinz case study discusses the proposed merger between the Heinz company and Beech-Nut that was struck down by the Federal Trade Commission in 2001. Once the panel announced its decision to block Heinz’s purchase of Milnot Holding Corporation, the maker of Beech-Nut, for $185 million Heinz decided to no longer pursue the deal (Labaton, 2001). The three major producers of baby food companies at the time were Gerber who still maintains a solid hold on the first place slot. Gerber has a significant presence in the baby consumer products arena, being that most companies that carry baby products typically carry Gerber baby food (Wilmer, Cutler and Pickering, 2017). The second and third place slots were held by Heinz …show more content…

Price is one of the various determining factors of consumer demand. In an oligopoly the market leaders can adjust these factors as needed to ensure their dominance in the industry. With only three market leaders in the baby food industry, merging two of those leaders into one company would lead to two companies driving the factors that influence demand.
ECONOMIC FACTORS
Customer preferences Consumers have grown more health conscious and knowledgeable about the ingredients that go into their food. They are particularly concerned about the food they feed their babies. Parents want to avoid foods that contain genetically modified organisms and comprised of natural ingredients which is leading them to turn to brands that are promoted as organic or to make their own baby food. A Nielsen’s 2015 Global Health & Wellness Survey polled over 30,000 individuals online suggests consumer mindset about healthy foods has shifted and they are willing to pay more for items perceived as healthy (Gagliardi, 2015). While Gerber, Beech-Nut and Heinz have developed organic products to accommodate the growing trend to more natural foods, this trend has also provided an opportunity for smaller brands to enter the market. Brands such as Earth’s Best, Sprout and Plum are staking their claim and consumers have

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