Kraft Heinz’s Struggles in 2019

AUGUST 27, 2019

CHICAGO TRIBUNE

Once upon a not-so-distant past, Kraft Heinz enjoyed an era of robust growth, industry dominance, and a reputation as a staple in American households. Their iconic products graced the dinner tables of millions, from the delectable mac & cheese to the ubiquitous ketchup bottle. But as the saying goes, “change is the only constant.” As the world transitioned from the 2010s into the late 2010s and early 2020s, Kraft Heinz faced a series of unprecedented challenges, testing the resilience and adaptability of this once-indomitable giant.

1. Acquisitions and Innovations (2018-2019):
Early in 2018, the brand showcased its ambition with a bold but unsuccessful $143 billion bid for Unilever. Not to be deterred, Kraft Heinz continued to explore growth, introducing innovations such as the “Ketchup Caviar” and “Mayochup.” Furthermore, they smartly acquired Primal Kitchen, tapping into the health-conscious trend of paleo-friendly condiments.

2. Leadership Shuffle (2019):
A leadership upheaval marked 2019 for Kraft Heinz. CEO Bernardo Hess’s departure paved the way for Miguel Patricio, a seasoned Anheuser-Busch executive. Later, the young CEO David Knopf made way for another experienced hand, Paulo Basilio. Amid these leadership transitions, the company’s performance woes were palpable: a 4.8% sales decline in the year’s first half, accompanied by significant layoffs.

3. Strategic Focus and Restructuring (2019-2020):
Financial strains were evident, with rising prices and reduced sales promotions coming under scrutiny. By 2019, challenges mounted with a massive $12.6 billion Q4 2018 loss and an accounting scandal. Yet, under Patricio, Kraft Heinz unveiled a plan in 2020 to slash $2 billion in costs over four years while boosting marketing by 30%.

4. Forward-Thinking Initiatives (2018-2019):
Kraft Heinz earmarked $100 million for Evolve Ventures, a venture focused on innovative food tech companies, echoing moves by other CPG majors like General Mills.

5. Brand Refinement and Sales Strategy (2019):
To streamline and align with consumer tastes, 2019 saw Kraft Heinz considering the sale of its Maxwell House coffee brand, potentially valued at $3 billion.

Kraft Heinz’s evolution through these pivotal years emphasizes the imperatives of agility, innovation, and consumer-centricity in today’s retail. As retail leaders, this chapter of Kraft Heinz serves as a beacon, reminding us of the need for adaptability and profound consumer understanding in an ever-changing marketplace.