Company Background

Kraft Heinz Co. (KHC), is the fifth-largest food and beverage company worldwide,
resulting of decades of takeovers in a growth strategy that shows no signs of slowing.

The H.J. Heinz Company was founded by American entrepreneur Henry John
Heinz, son of German immigrants. He began a small food business with his brother and
cousin in 1876. Heinz Tomato Ketchup was among the company’s first products, and it is
now Heinz’s most iconic brand, claiming more than 50% of the market share for ketchup
in the U.S.

Heinz eventually bought out his partners and established the H. J. Heinz Co. in
1888. That company was incorporated in 1905 with Heinz serving as the first president,
a position he held throughout his life as he built more than 20 processing plants
throughout the country.

During the Great Depression in the 1930s, Heinz became a top-seller in ready-to-
eat meals and baby food under the leadership of Howard Heinz, Henry Heinz's son.
During World War Two, Heinz provided food aid to the United Kingdom and then
expanded its international presence with new plants in several countries in the post-war
years.

Over the next few decades, Heinz continued to grow with brand acquisitions like
Starkist Tuna and Ore-Ida until Berkshire Hathaway and 3G Capital bought the company
for $23 billion in 2013. Two years later, the investors pursued the massive merger with
Kraft Foods Group
 In 2017, the food products giant launched a $143 billion somewhat hostile bid
for Unilever plc (UL) but eventually shelved that plan. In an effort to revive growth of the
company made by 29-year old David Knopf — a former Goldman banker — as its CFO,
and made the former CFO, Paulo Basilio, the zone president of U.S. operations.

Now with more than 200 household brands , Kraft Heinz has roots that date back
to the late 1800s through its Pittsburgh-based Heinz line, and back to the early 1900s
through its Chicago-based Kraft line. The two companies merged in 2015, in a massive
deal spurred on by 3G Capital and Berkshire after decades of absorbing brands like
Nabisco, Post and Oscar Mayer.

The history of ketchup

Born in 1844, Henry John Heinz began helping his mother with her gardens along
the Allegheny River, just east of Pittsburgh, when he was nine years old. He learned
business practices while working as a bookkeeper for his father's brickyard and at night
school. By his teens he was employing three women to help process garden products
and bottling his mother's horseradish for distribution. Heinz distinguished his horseradish
from his competitors by using clear glass bottles to emphasize the product's purity.

Twenty years later, Heinz was operating another family food processing firm.
Riding the New York elevator one day in 1892, he saw a sign advertising 21 varieties of
shoes. He took the concept, came up with a figure of 57 because he thought it was a
memorable number, and created the catch phrase "Heinz 57 Varieties."

In 1893, seeking to bolster attendance at the World's Columbian Exposition in

Chicago, Heinz distributed thousands of small tokens throughout the fair grounds. The
tokens were redeemable for a free Heinz souvenir, a watch charm in the shape of a pickle,
at the food pavilion, which was soon overrun with visitors. The "pickle pin" went on to
become one of the best-known corporate souvenirs in history, with over 100 million
distributed.

In 1898, Heinz bought the Iron Pier in Atlantic City, New Jersey, renamed it the
Heinz Ocean Pier, and operated it until 1945 as a free public attraction with antique
displays, lectures, concerts, and motion pictures amid the displays of Heinz products and
souvenirs

Raw Material

The main ingredients of ketchup are tomatoes, sweeteners, vinegar, salt, spices,
flavorings, onion, and/or garlic. The types of sweetener used are usually granulated cane
sugar or beet sugar. Other sweeteners include dextrose or liquid sugar in the form of corn
or glucose syrup. The white vinegar, commonly 100-grain distilled, helps to preserve the
ketchup. The spices commonly used to enhance the flavor of the tomatoes are allspice,
cassia, cinnamon, cayenne, cloves, pepper, ginger, mustard, and paprika. Some
manufacturers believe that whole spices produce a superior, more mild flavor than ground
spices or spice oils. More modern processes use premixed or encapsulated spices, which
are easier to use but more expensive. Whatever the form, spices must be of a high quality.

The various brands of ketchup have slightly different formulas, which vary primarily
in the amounts of spices or flavorings. Thicker consistencies require a greater ratio of
sugar and spices relative to the tomato juice. Occasionally formulas must be slightly
adjusted according to variations in the acid and sugar content of tomatoes, which occurs
with changes in growing conditions and types of tomatoes.

Manufacturing Processes

1. Developing quality tomatoes. Ketchup manufacturers must seek out the best
quality tomatoes for their product. Tomato varieties are developed which are
superior in color, flavor, texture, and yield. Consistency is an important factor, as
slight variations in tomato characteristics could alter the flavor and color of the
finished product.

2. Preparing tomatoes. Tomatoes are harvested mechanically between June and

July. The fruit is commonly conveyed by water from the trucks into a flume, or an
inclined channel. The water method washes the tomatoes and protects them from
 bruising while they pass from the truck to the factory. The U.S. Department of
Agriculture or state inspectors approve and grade tomatoes to meet initial
requirements. The tomatoes are sorted, washed, and chopped. Next, precooking,
or scaling, in stainless steel vats preserves the tomatoes and destroys bacteria.

3. Washing. The tomato is washed with clean water using about 3times by weight of
tomatoes. Water is introduced as spray. The reception area comprises of
unloading system which includes recirculation pump, staff platform, sludge and dirt
discharge, and an air water bubbling system

4. Crushing. Tomatoes are carried to a crushing unit, where they are processed into
small pieces, resulting in a mixture composed of liquid and solid parts. Crushing
system uses a mill containing a rotor that spins and crushes the tomatoes at high
speeds. The resulting paste is pumpable and ready for thermal treatment

5. Preheating. In the preheating unit, the crushed tomatoes undergoes enzymatic

inactivation. Hot break is recommended for high viscosity product. It inactivates
completely the pectin enzymatic activity, increasing the consistency and viscosity
of the mixture. Hot break temperature is between 85-95oC

6. Pulping. The crushed tomato is fed into an electrically driven mechanical pulper.
This separates the juice from seeds and skins. The tomatoes are rubbed against
a perforated drum by two brushes which are fixed to the central shaft driven directly
by the motor. The juice passes through the perforated drum into the outer
stationary drum and collected through an outlet. The remaining seeds and skins
are pushed out through an outlet connected to the inner perforated drum

7. Evaporation. This involves the removal of water from the juice and serves two
main purposes:
 Improve microbiological stability with reduction of water activity, which is the
predominant factor in most organic degradation processes;
  Reduce transportation, packaging, distribution and storage costs by
minimizing volume and weight

8. Sterilization. The sterilizer has 4 layers tubular structures, the inner two layers
and the outside layer will go through with the hot water and the middle layer will be
running with the product. The product will be heated by the hot water to the setting
temperature and then hold the product under this temperature for few times to
completely sterilize the product and then cool down the product by the cooling
water or chilled water. The sterilizer consist of product tank, pump, heat exchange,
holding tubes and control system.

9. Filling. To prevent contamination, the ketchup passes from the receiving tanks
to the filling machines at a temperature not lower than 190°F (88°C). The
containers are filled with the ketchup and immediately sealed to retain the
freshness of the product. Ketchup containers come in various sizes and shapes,
including 14-oz. bottles, No. 10 cans, pouch packs, room-service sizes, and single-
servepackets.

10. Cooling. The containers must be cooled to prevent flavor loss through stack
burning, which occurs when ketchup stays at high temperatures after cooking is
complete. Containers of ketchup may be cooled in cold air or cold water.

11. Label and packing. Finally, the ketchup containers are labeled and coded with
product information, including ingredients, date and location of manufacture, and
shelf-life. The bottled ketchup may be inspected again before shipping. The entire
process of ketchup manufacturing generally takes two to three hours.
Equipments and Product

The equipments used in Kraft Heinz Co. (KHC) for making ketchup are:

1. Crushing Machine

Design Intent: To carry out size reduction of fresh tomatoes.

Cause: No or Low rotor speed due to poor power supply worn out blade.
Consequence: Tomato lumps will be sent forward.
Hazards: the poorly crushed tomatoes would damage pumps upstream of the process
line.
Safeguard: Regular maintenance.
Action: Repair and Replacement.

2. Preheating Machine
Design Intent: To raise temperature of the crushed tomatoes to 920C.
Cause: No steam supply or steam partially supplied. Steam flow rate could be
excessively high.
Consequence: If no or low temperature, poor enzyme inactivation would occur. If high
temperature, the cost of the operation would escalate.
Hazard: Poor enzyme inactivation result in biological activities which would cause
spoilage.
Safeguard: Install low and High Alarm.
Action: Confirm that steam line is supplying adequately.

3. Pulper

Design Intent: To separate the juice from seeds and skin.

Cause: Worned mechanical parts of the pulper.
Consequence: The juice would contain imparities.
Hazard: High load on the homogenizer

Safeguard: Regular Maintenance.

Action: Repair and replace.

 4. Evaporator

Design Intent: To lower the moisture content in tomato juice.

Cause: Same as preheater.
Consequence: Off spec product.
Hazard: Spoilage
Safeguard: Controllers should be installed at the evaporator..
Action: Repair and Replace.

Best Practices

1. The Kraft Heinz Global Agriculture Program ensures key crops used in Kraft
Heinz products are safe for consumers and helps suppliers and their farmers
increase productivity.

They ask their suppliers to implement Good Agricultural Practices (GAP) to help
minimize the adverse effects of farming on the Earth’s natural resources and
biodiversity. Over the last three years, GAP has helped achieve the following:

• Greater yields

• Increased organic matter percentage in soils

• Improved water retention

 • Improved irrigation/decreased water use

• Reduced chemical use

• Minimized soil erosion

• Decreased energy, waste and pollution

• Increased worker safety

2. They believe quality coffee starts at the source, which involves responsible
sourcing and supporting the hard-working and dedicated farmers at origin.
Their goal is to improve both the value of production output and the producer’s
quality of life.

In 2015, Kraft Heinz partnered with TechnoServe, a global nonprofit

organization that focuses on breaking cycles of poverty in the developing world
by strengthening business and technical skills. They we’re assisting 2,000
smallholder coffee farmers in Honduras by delivering training and resources to
help them increase their yields and income so they can better nourish their
families for years to come.

3. In Australia, They have committed to stop using fish aggregating devices (FAD)
in all tuna sourcing activities. All Greenseas products manufactured by Kraft
Heinz are transitioning to FAD-free tuna.

Safety Management

Safety in the Workplace Kraft Heinz is committed to providing a healthy, safe and
secure workplace for employees and all people who visit our facilities. Kraft Heinz Safety
Process (KHSP) is their framework for health and safety management, and forms part of
their Manufacturing Playbook requirements. The best-practice KHSP management model
starts with a baseline of legal and regulatory compliance, then drives continuous
improvement toward world-class performance. The KHSP requirements are followed in
every country in which Kraft Heinz operates. In locations where a more stringent local
requirement exists, they follow those regulations.

They track and measure implementation through internal audits, with results
reflected in Management-by-Objectives KPIs and Factory Championship rankings. Due
to robust site-level implementation, Kraft Heinz improved its safety KPIs over last year,
representing some of the best results among our food and beverage industry peers.

Total Recordable Incident Rate Our compiled worldwide Total Recordable Incident
Rate (TRIR) is a medical incident rate based on the U.S. Occupational Safety and Health
Administration (OSHA) record-keeping criteria (injuries per 200,000 hours). 2016 was a
very successful year in Worldwide Safety Performance, delivering year-on-year incident
reductions for the past six years. With the combined business (Kraft and Heinz), the 2016
TRIR was 1.10, a 40 percent improvement over 2015.

Safety Rules At the end of 2016, we introduced “Safety Rules”—focused,

standardized controls intended to address workplace conditional risks associated with
severe and high-cost incidents. The Safety Rules provide guidance on the essential
resources, equipment, conditions, processes and behaviors that our employees need to
work safely.

They added the Safety Rules to our Safety Playbook and will begin to implement
them in 2017. Led by Operational Risk Management in each Zone, the 15 Safety Rules
aim to provide the greatest amount of conditional risk reduction and safe behavior
modification, and to address the most serious accidents that have occurred in the past.

Environmental Impact

In the factories, the sustainability process drives decreased energy consumption

by installing new technologies and more efficient equipment while optimizing business
and manufacturing processes. Kraft Heinz also works with experts in the energy sector
to assess facilities and identify potential energy-saving projects. The objective of these
efforts is to identify and initiate opportunities to improve energy efficiency, which in turn
can directly and indirectly help reduce greenhouse gas emissions. Kraft Heinz recognize
that using less energy is not only better for the environment, it is smart business because
it can help mitigate the financial impact of rising energy costs.

Every stage of the operations presents an opportunity to eliminate waste. We have

been focused on finding ways to reduce, reuse or recycle to divert solid waste from
landfills.

Water is a vital resource for all Company operations worldwide. It is needed to

grow tomatoes and many other crops key to the business. It is a crucial resource for the
manufacturing process. Kraft Heinz have implemented water conservation measures and
evaluations globally to protect one of our earth’s most precious resources. Kraft Heinz
conserve water across a wide range of actions extending from recycling water and
installing new technologies to upgrading water treatment plants.

Kraft Heinz also recognizes that our growers and our manufacturing operations
impact the plant and the consumption of water and energy. Also encourage the adoption
of drip irrigation, for example, in tomato growing because it delivers the precise amount
of water the crop needs, when it needs it, where it needs it, thus minimizing irrigation
waste.