Kraft Heinz Couldn’t Stomach 3G’s Relentless Cost-Cutting

3G Capital, the private equity firm co-founded by Brazilian billionaire Jorge Paulo Lemann, shook up the food industry with its ruthless focus on efficiency. After taking over H.J. Heinz in 2013, with financing help from Warren Buffett’s Berkshire Hathaway Inc. conglomerate, the New York-based investment shop fired thousands of workers and shuttered factories, creating industry-leading profit margins in less than two years.

Then it bought Kraft Foods, also with an assist from Buffett, and started cutting there, too. Again, it slashed the workforce. It also used zero-based budgeting, a strategy that asks managers to constantly justify costs without regard to previous spending levels, to help eliminate $1.7 billion in expenses. The firm even yanked employee perks such as free cheese sticks and Jell-O. Wall Street cheered. Shares of the combined Kraft Heinz Co.—whose largest shareholders are 3G and Berkshire—steadily climbed, hitting a record $96.65 in February 2017.