X
MENU

A race to the bottom: The Kraft Heinz Story

Liam Mooney - August 8, 2019

Classic Philadelphia Cream Cheese TV ad recreated - still image of angles in a kitchen in heave
Companies that don’t do the hard work of innovating, creating, and building with purpose get left behind. Those that focus on cost cutting, and mergers for market share will ultimately lose. That is exactly what’s happened (is happening) to Kraft Heinz.

Aside from the predictable “premiuim-ification” strategy that Kraft Heinz’s CEO keeps talking about  – the company’s most recent innovations include Sour Kool-Aid, and Brunchables. This, in an age of mass customization, and plant-based everything. Even classic brands like Coca Cola, McDonalds,  not totally unlike the ones in the Kraft Heinz portfolio in terms of heritage and seminality of the North American consumer psyche (Kraft cheese, Philadelphia cream cheese, Heinz Kethchup, Oscar Meyer weiners, Kool Aid, Jell-O to name a few), have evolved (Coke Zero, custom soda machines, McDonald’s Remastered, etc.

In 2016 the top 200 new packaged consumer goods brands in the United States captured a cumulative year-one sales of more than $5.8 billion. Consumers are clearly willing to try new products and it’s a very valuable – experimental – progressive – forward thinking space to be in.

How can Kraft Heinz enter this same lucrative and progressive market? Start with analysis, research, product development, corporate values clarification, and strategy. Marketing comes last.

Start by looking at the business lines they are in:

  • Beverage
  • Cheese
  • Convenience foods
  • Dairy
  • Snack foods

What does the future look like for each category? How have the cultures, conversations, consumers and communities around these business areas shifted in America, Canada, and the rest of the world?

Beverages
Trending toward sugar-free, herbal/ flavour infusions, coffee, alcohol-free, plant based / fibre, craft curiosity, clean, organics / bio availability, supply chain ethics and fairness, CBD infusions.

Cheese / Dairy
Grass fed, innovations in filtering systems and focus on whey milk, nut milk/beverage, consumption trending down for cheese/traditional dairy in US but up in Canada, Omega 3 fatty acids,regenerative agriculture practices, reduced fat/allergen, fat and lactose free, supply chain ethics and fairness, animal welfare, small / independent dairy farm outlook.

Convenience Foods
Sustainability, healthy aging, regenerative agriculture practices, health and wellness concerns for general and specific health needs: bone, mind, joint, seismic shift to bio-packaging, some / light value driven connection to consumer, and up cycled products, some elevated / premium-ification.

Snack Foods
Responsible snacking, lil’ snacks, hometown flavour, probiotics, CBD interest, high in fat / fat bomb / keto, plant based, sea greens, bio-packaging, value driven connection to consumer, artisanal style iced cream/frozen desserts, reputational risk in supply chain, dining pop-ups, bitter/sour, further integration into busy lives.

The Way Forward
Kraft Heinz should identify the core values that will lead the company in their re-examination – if they already exist and are used in day-to-day business decision making that’s fabulous; if they don’t really exist, now would be a good time to decide what you really stand for. Fair warning: you need to have a purpose that inspires or this exercise will fail.

Once values are clarified (or re-clarified) the company should look at lists like the one above and figure out which ones they can and should really lean into. Plant-based, all natural, up-cycled granola bars w standard and snack sizes in new bio-packaging is one first bad idea. Figure out your values and they will show you the way.

This is a great example of how real, sustainable growth needs to come from value driven creativity and innovation. Cost-cutting and merger for market share are not sustainable strategies for earnings growth – in a dynamic market, market dominance alone will necessarily endure attrition. With consumer preferences changing so rapidly Kraft Heinz better get creative quickly if they want any of these brands to survive.