Ownership & Control

The American food system has long been populated with foreign companies. Many producers of consumer goods, including household names like Nestle and Unilever, are based abroad. But as mergers and acquisitions have facilitated an even more global food industry, a growing number of seemingly all-American companies are no longer based in the U.S. The consequences of this shift of power and capital overseas include lower taxes on corporations, and a less transparent food system for consumers.

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The most prominent foreign acquisition of an American food company in the past few years was Chinese company WH Group’s 2013 purchase of Smithfield Foods for $4.7 billion. The combined company is the largest pork producer in the world. WH Group, formerly known as Shuanghui, allegedly has received subsidies from the Chinese government. The deal was the largest ever Chinese acquisition of an American company.

And China isn’t the only growing power in the American food system. Two powerful Brazilian companies, 3G and JBS, have amassed enormous influence in the food sector. JBS is a meatpacker that, by annual sales, is the number two food company in the world, second only to Nestle. The largest meat producer in the world, JBS leads in beef, chicken, and lamb production, and is number three in pork, after Smithfield and Tyson. In 2007, JBS acquired Swift Foods Co., which was at the time the third-largest pork and beef processor in the U.S., for $1.4 billion. In 2009, JBS purchased a controlling stake in Pilgrim’s Pride, now the largest chicken producer in the U.S.

JBS also has ties to the Brazilian government. In 2007 when it became a publicly traded company in Brazil, JBS received investment from the Brazilian Development Bank, a government-controlled bank that funds development projects in the country. This relationship to the state concerns some experts, who wonder if JBS would have accomplished its level of dominance in the meat industry without state capital. For Americans, this relationship also means that the Brazilian government – an institution unaccountable to the American people – is involved in the control and financing of much of the country’s meat supply.

Another key player in the Brazilian food world is Marfrig Global Foods. Marfrig is the third-largest food processor in Brazil, and the fourth-largest beef producer in the world. Marfrig bought a majority stake in America’s fourth-largest beef packer, National Beef, in 2018 and increased its ownership to 81% in 2019. Marfrig is connected to JBS: in June 2015, JBS agreed to pay $1.5 billion for Marfrig’s Moy Park poultry business, the largest in the U.K. These Brazilian powerhouse companies have complicated relationships – while they compete in some markets, they also work together to consolidate their control over their respective industries.

3G Capital has also made headlines with its rapidly growing portfolio of American food companies. At the center of 3G’s strategy and ethos is Jorge Paulo Lemann, a Brazilian billionaire. In 2010, 3G acquired Burger King, which it then merged with Tim Horton’s to create Restaurant Brands International. RBI is now a $23 billion quick-serve restaurant company. Lemann was also heavily involved in the creation of the beer giant Anheuser-Busch InBev. Around 2002, Lemann merged two breweries into AmBev, which would then merge with Interbrew to form InBev in 2004. Lemman was also heavily involved in InBev’s $46 billion takeover of Anheuser-Busch, solidifying his position as the largest individual shareholder in the largest beer company in the world. Four founding partners of 3G sit on ABI’s board. Lemann has worked closely with Warren Buffett and Berkshire Hathaway, first when they purchased Heinz in a hostile takeover in 2013 for $28 billion and then to coordinate the Kraft/Heinz merger in April 2015.