In an unveiling a major transformation plan, Kraft Heinz is adopting a new strategy, approach and operating model. We highlight some of key changes it has planned, including a shift from a category approach to consumer-driven platforms.
Scale and agility
Having been appointed last year, Miguel Patricio, CEO, has undertaken a significant review of the business. This has enabled it to identify several major opportunities with a focus on simplifying its model, driving consistent growth, improving profitability and increasing the relevancy of its brands and products. At the heart of this is a desire to unlock the scale of the busines while injecting it with agility.
From categories to platforms
In one of the most significant changes, the business is being reorganised to focus on six consumer-driven platforms, as opposed to its previous category-driven approach, which extended to 55 categories. The platforms are based on how consumers live their lives and eat today. Each platform will have a specific role within the business which will guide its allocation and investment decisions. In parallel, it will drive operational efficiency, with the aim to generate $2bn in savings to invest in the platforms.
Source: Kraft Heinz
Tactics to win
Different tactics will be used to grow, energize or stabilise the platforms. These include:
- Innovation – with a focus on fewer, bigger, better innovations fed by consumer insights
- Renovation – evolving core brands to meet emerging consumer needs
- Marketing – increasing investments and aiming for breakthrough creative campaigns. Spend will increase by 30% over the next five years, but will not be spread evenly among the grow, energise and stabilise platforms
- Distribution - channel-agnostic leadership expanded to include all retail formats, foodservice and ecommerce with joint value creation at centre of partnerships
- Revenue management – better price size architecture to capture incremental sales
Consumer solutions and missions
As part of the switch away from a category focus, the company will focus on meal occasions and consumer needs, with the broader approach expected to unlock new opportunities. Going forward it will shift its emphasis to create consumer solutions, not products and aim to increase its share of meal occasions captured. Beyond the six core platforms, it is also developing and incubating new disruptive businesses and growth areas. This includes a direct-to-consumer model, plant-based ranges and pursuing food that supports consumers with their health and wellness needs.
Scale as a competitive advantage
This approach should enable Kraft Heinz to use its scale as a competitive advantage and open up significant white spaces. Its previous focus across 55 categories resulted in a dilution of its efforts as it focused on winning across too many areas. The narrow focus meant that it missed the more holistic consumer needs that would enable it to drive a change in performance. This is a major shift for the business but one which has already started to deliver positive results.
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