Business_news Kraft Heinz just unveiled a ‘platform’-based strategy for managing its food brands. Here’s how one executive hopes that could finally get sales growing again.

Business_news

  • Kraft Heinz’s executives outlined a long-expected new strategic plan Tuesday, spearheaded by CEO Miguel Patricio.
  • Included in the plan is a streamlined structure for managing its food brands, the elimination of one-fifth of the company’s products as well as finding new niches for its products.
  • The company has struggled to stoke growth and please investors despite significant cost cutting in recent years and has even written down the value of brands like Oscar Mayer.
  • Carlos Abrams-Rivera, Kraft Heinz’s US zone president, told business Insider that the new plan is “not necessarily about cost cutting, it’s about being more efficient,” and that the company wants to develop new business at restaurants.
  • Visit business Insider’s homepage for more stories.

The last several years have been about reducing costs at Kraft Heinz. Now, executives are trying to shift focus to the company’s top line.

A strategic plan unveiled Tuesday “will focus on sustainable profitable growth,” US Zone President Carlos Abrams-Rivera told business Insider. 

As part of its new plan, the food giant condensed 55 product-focused divisions into six “platforms” that combine management of products that serve a similar function on consumers’ tables, such as ketchup and peanut butter, which are both now managed as part of Kraft Heinz’s “Taste elevation” platform.

The goal, executives say, is to find fresh opportunities to sell the company’s largely processed food products to new customers. The plan also considers ways of improving employee retention and developing entirely new products.

“It’s the first time in the five years of Kraft Heinz that we are touching everything,” Abrams-Rivera told business Insider after a presentation unveiling the plan Tuesday. “This is not necessarily about cost cutting, it’s about being more efficient.”

Reducing costs will still play a large role: Kraft Heinz plans to save $2 billion in costs over five years, CEO Miguel Patricio told analysts and investors during Tuesday’s investor presentation. Kraft Heinz is known for its efforts to cut costs and carefully justify expenses using its zero-based budgeting approach, a strategy the company has employed since its inception in 2015.

That savings will come from a variety of sources, including reducing the number of individual items that the company manufacturers by 20%.

“Our problem has not been the categories we are in,” Basil io said during Tuesday’s presentation. “It’s how we’re playing in these categories.”

Specific product changes that Kraft Heinz hopes will boost its top line include larger sizes of its Kraft Mac & Cheese bowls aimed at young adults as well as smaller, snack-sized versions of its Lunchables meals.

Kraft Heinz is also trying to hold on to as much of the sales boost it has received in recent months as consumers continue to spend more of their food dollars at grocery stores and prepare more meals at home instead of eating out due to the COVID-19 pandemic.

As part of that effort, Kraft Heinz is beefing up its marketing spending by 30% in the next five years.

“One of the things we’re seeing as kids are spending more time at home, kids are looking for new solutions,” Abrams-Rivera said, adding that additional marketing spending will aid in “reminding parents of new things” that the company is doing with its products, such as healthier formulations of mac and cheese.

Despite the pandemic’s hit to restaurant sales, Abrams-Rivera said that he is also interested in expanding Kraft Heinz’s reach in the foodservice industry. Executives said Tuesday that eating at restaurants allows customers to sample new products for the first time which they may buy later at a retailer.

“As a company, we really haven’t leveraged what foodservice can do,” he said.

The company also said during the investor day that it would sell its natural cheese business, including the Cracker Barrel brand, to French dairy products maker Lactalis for $3.2 billion in cash. The deal is expected to close in the first half of 2021.

Natural cheese is an area where Kraft Heinz sees “more difficulties” than in related categories, such as Kraft Singles and Philadelphia cream cheese, Patricio said in the presentation on Tuesday. 

Big, well-known brands like those will still play the central role in Kraft Heinz’s strategy going forward. “If you think about how consumers are responding right now” to the pandemic, Abrams-Rivera said, “they are looking for brands that they trust.”


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