Kraft Heinz has many lessons from the pandemic and a clear vision for 2023. The company is focused on revitalizing its iconic brands, creating value for its consumers, and working with its retail partners to make sure products are available to shoppers.
Turning around one of America’s most recognized global brands has been quite a journey for Carlos Abrams-Rivera, North America president of Kraft Heinz. He joined the company in February 2020, right before the pandemic lockdown in the U.S.impacted most companies in March. Abrams-Rivera shared how he leads the brand into the future, emphasizing employee and customer engagement and retail partnerships.
With the significant shifts in consumer demand that occurred rapidly from March 2020 through the end of the year, many manufacturers and retailers struggled with production, distribution, and supply chain issues. “When I joined Kraft Heinz in February 2020, the mission was to put the company back on track and to reset the strategy for the U.S. business by transforming the company in a sustainable, organic way.” Then Covid hit, and the company immediately needed a new way of doing business.
Despite the challenges brought on by the pandemic, the company achieved many of its objectives due to the commitment of its employees. “Our team has completely transformed the organization, breaking down silos, innovating from the inside out, and shifting to a growth mindset across the business,” explained Abrams-Rivera. Kraft Heinz North America now has the highest employee engagement scores in years.
North American sales (85% of Kraft Heinz’s total global business) were up 15.3% for the third quarter, capping ten consecutive quarters of growth. The results since the pandemic have demonstrated the success of the turnaround strategy and the brand's resilience. The ability to quickly pivot to meet changing consumer demands by working creatively with suppliers in the supply chain has positively impacted the company's growth.
“The way our collaboration has impacted our two-way relationship with retailers is incredible,“ stated Abrams-Rivera. “We are working closely with our customers to ingest real-time shelf data to better and more accurately understand the inventory levels in specific stores.” The data enables the Kraft Heinz team to anticipate and help prevent out-of-stock situations. “Initial calculations since our collaboration with one specific retailer resulted in a 40% reduction in out-of-stock in just eight weeks,” said Abrams-Rivera. The company plans to apply that same data analytics model to improve in-stock positions across other retail partners.
In December 2022, the consumer price index (CPI) for all categories for the rolling 12 months was 6.5%. However, the food segment CPI was a whopping 11.8%. As consumers have focused more on value, especially in food categories, Kraft Heinz has responded by delivering products that meet these demands. “Value means offering great solutions to consumers by expanding package formats and price points so people can still enjoy their favorite Kraft Heinz brands in the same way they always have,” stated Abrams-Rivera. Examples are updating the packaging size and increasing the amount of food in some products, such as family favorites like Lunchables. The company offered $1 Lunchables for dollar stores and added multipacks for warehouse club stores, such as 10-packs of Kraft Mac & Cheese and Capri Sun. “We offer great value to families worldwide and are in nearly every kitchen in America. We’re proud of that, and we don’t take it for granted,” said Abrams-Rivera.
U.S. retail consumption and consumer spending behavior are challenging to predict as recession concerns continue to loom coming into 2023. Abrams-Rivera discussed how the pandemic trend of cooking more at home continues, and the rise of hybrid work has spurred more home eating and people looking for convenient “on-the-go” foods. The company has seen price elasticity for its products hold better than historic levels but admits that it’s difficult to predict how long the elasticity will stay. “Our portfolio offers multiple entry points across income levels, which positions us nicely. Still, we know it’s our responsibility to provide affordable solutions for families, and we take that responsibility seriously,” stated Abrams-Rivera.