It’s late in the game, but Kraft Heinz has made some recent moves that might assist in turning around the declining food company.
After several years of cost-cutting prompted by the owners at 3G Capital, the food giant has apparently come to its senses and begun to make some needed changes – cost cutting, alone, is never the answer. For one, the company has named a new CEO and for another, it appears that the owners will actually allow the CEO do some important work in restoring the Kraft brands. Miguel Patricio, who has worked in the consumer-packaged goods industry for over 30 years at Anheuser-Busch, Coca-Cola and Johnson & Johnson, will succeed Bernardo Hees as CEO on July 1st. Patricio has said that he will shift Kraft’s strategy to focus on making the company’s existing brands appeal more to modern-day consumers. Proctor & Gamble has recently been successful with this approach, as has ConAgra – to date the reining master of re-making older brands. Patricio commented that “some of the brands are a bit dusty, but we have to rejuvenate them.” What a great idea. There had been earlier talk that Kraft was preparing to divest itself of some of its weaker brands, but Patricio disagrees, saying that it’s his job to improve growth of the company’s existing products. He points out particular potential for growth in the Planters nuts line as well as the Heinz products and Philadelphia cream cheese. People still buy all of those products, so it would seem like a good place to start. He says, “I’m not working to sell brands at this moment; I just have plans to grow.” How nice – and talk about being crafty! But, before Patricio could get the company reigns, one international brand was sold last year – the Canadian natural cheese business – which would seem to have been a good growth opportunity, as well. Patricio had two decades of brand-building experience at Anheuser-Busch which is far more brand development experience than other executives at 3G. CEO Hees, led the company through the merger of Kraft and Heinz orchestrated by 3G as well as the stringent cost-cutting practices of recent years. Hees has recently proclaimed that he is not the one to lead the company for its future, depicting a “different background” as the need for the future. Kraft’s spending cuts over the past several years left its brands in a weaker position to compete on store shelves, just as many consumers were turning away from packaged goods. These actions necessitated the writing-down of its Kraft and Oscar Meyer brands by $15 billion in February. Kraft has started the process of introducing new varieties of its packaged meals as well as making an investment in a company focused on delivering locally grown foods along with an on-line grocer. It appears that there’s still a lot of room for improvement, however, once Patricio takes over. We’ll follow the progress.
ALL THE MOVING PARTS – THE COMPANY’S CEO IS FIRST AMONG EQUALS IN MAKING THE COMPANY SUCCESSFUL.