Kraft Heinz turns corner on transformation with focus on innovation in flavor, snacking & easy meals

Kraft Heinz turns corner on transformation with focus on innovation in flavor, snacking & easy meals Since Abrams-Rivera joined Kraft Heinz in February 2020 as the US Zone President before rising to CEO last month, the company has undergone a dramatic strategic shift​ that is now paying off. Abrams-Rivera explained at the Consumer Analyst Group of New York’s annual conference this week that the company’s year-over-year sales in 2023 are up 3.4% compared to 2019 when they were down 1.7%. Voluntary employee turnover is also down to 9% in 2023 compared to 16% in 2019 and 3-year total shareholder return is up 20% at the company compared to the average 14% of the broader consumer goods segment. “Our strategy is working. With our financial, operational and cultural improvements, combined with our divided yield and recently announced $3bn share buyback program driving overall share value,” he said. “Now,” he added, “our goal is to do this consistently, by being the leader in elevating and creating food that makes you feel good.” To do this, the company once again re-evaluated where it has a “right to win” and where the market is most attractive – an exercise that revealed the company is best positioned to succeed in “taste elevation, easy ready meals and substantial snacking,” Abrams-Rivera said. Together these segments have been dubbed by the company as “accelerate platforms,” and they include “categories in which we have higher market share with only limited exposure to private label,” explained Abrams-Rivera. The company has divided its remaining brands into two other platforms – the “protect platforms” will include brands with moderate growth potential and high growth margins, and the “balance platforms,” which offer scale and can generate cash to invest in other platforms – these include meats, cheese and coffee, he added. Elevating taste will lead to expanded usage occasions ​ Elevating taste will lead to expanded usage occasions ​ To make the most of its “accelerate platforms,” Kraft Heinz is investing in innovation to meet modern consumer demands, including new flavors and expanded uses of its condiments within its “taste elevation” category, said Abrams-Rivera. For example, he said, the company is launching new ketchup flavors, including a spicy ketchup in the US and one that combines pickles with its ketchup for a “tangy and savory” option. It also is highlighting its “simple, clean ingredients” on ketchup bottles in Brazil and more sustainable packaging in the form of recyclable lids. The company also is expanding in “non-core host foods” so that its condiments can play beyond burgers and hotdogs to include burritos, tacos and other foods, he said. Easy meals offer more flavor, convenience ​ Easy meals offer more flavor, convenience ​ The company plans to accelerate its position within “easy ready meals” the same way it will expand its taste elevation category, which is by “evolving the core,” Abrams-Rivera said. For example, he said, “we found consumers were customizing their Heinz Beanz to make them a bit more special, so we made it easier by launching the bold new Heinz Curry Beanz,” which generated 60% incrementality and brought in new customers to the category. The company has also added convenience with its Heinz Beans snap-pots that can can be microwaved and new frozen Kraft Mac & Cheese options for even easier prep. It also is leveraging partnerships, such as with Taco Bell home and NotCo, to innovate additional products. Kraft Heinz expects these strategies will fuel about 17% growth within its global portfolio compared to a projected 4% industry growth. ‘Substantial’ snacks as meals offer substantial growth potential ​ ‘Substantial’ snacks as meals offer substantial growth potential ​ The third area in which the company will focus – substantial snacking – is concentrated primarily in North America and the frozen aisle and represents a predicted 4% compound annual growth rate. The company will grow in this space by expanding its iconic brands into new areas, such as bringing Lunchables to the produce aisle with fresh fruit offerings, and by leveraging its “ownable technology,” such as its 360CRISP technology platform to create crispy products in the microwave. Across these categories and the business at large, Kraft Heinz expects to deliver $2bn of incremental net sales from innovation. But this is just the beginning, according to Abrams-Rivera. He said that the company will increase R&D investments by 15% year-over-year, practice a test-and-learn in market approach before scaling broadly and focus on the highest incremental opportunities.