How Kraft Heinz Is Breathing New Life Into Its Classic Brands
Kraft Heinz is going back to basics and refocusing on marketing its core brands like Velveeta and Philadelphia cream cheese, this strategy has led to an increase in stock value and a sales growth of 2.9%.
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In business, there is nothing more depressing than working for a company that is trending in a downward trajectory. Back in 2015 two of the largest processed food companies merged to create a conglomerate in the highly competitive supermarket food industry. Kraft Heinz was born with a mission to diversify its product lines and start making a dent in the niche healthy and fresh foods market space which has been dominated by much smaller companies and retail store brands, but that focus has since shifted back to the company’s core foundational brands.
That was the corporate decision that plummeted the new Kraft Heinz company towards an inevitable insolvency. They found out rather quickly that being able to distinguish your brands in the healthy food space is incredibly difficult due to the volume of local competitors and the retail store brands. They have an inherent advantage over Kraft Heinz because it costs a global company more to get that product to the market, which equates to a reduced cost to the consumer with a lower retail price point.
Over the past two decades, the consumer trend has shifted from being an extremely brand-loyal society to one that is more willing to purchase off-brand products at a cheaper price point. Kraft Heinz attempting to compete in this market space spurned the beginning of their company collapse when they wrote down a 12.6 billion 4th quarter loss in 2018. Their stock price reflected the lack of investor confidence and it dropped from established highs of above $100 per share in 2017 to $22 per share in 2020.
During the stock pitfall in 2019, the decision was made to bring in a new CEO Miguel Patricio who understood that changes to the company’s strategy needed to be put in place to save it from complete collapse. Over the past three years, he has shifted their focus away from competing in the niche healthy food arena to focusing on their older well established processed food brands such as Kraft Macaroni & Cheese, Heinz Ketchup, Velveeta Cheese, Philadelphia Cream Cheese, Oscar Meyer Hot Dogs, Capri Sun, Lunchables, and Ore-Ida.
Source: Kraft Heinz
According to CNN Business “Kraft Heinz reworked its portfolio to cut its healthier nuts and cheese business and focus on the processed icons, putting them front and center in flashy, even goofy, marketing campaigns that have captured the attention of social media. (Consider the eight-foot-long Velveeta box that appeared in New York City’s Central Park.)”
The largest brand Kraft Heinz cut from their lineup was the iconic Mr. Peanut which some thought was a perplexing decision. However, when you examine their mission to move focus away from the niche Nuts and Cheese business this decision falls directly in line with selling that brand to another company.
Patricio and Kraft Heinz are starting to see the fruits of his strategic shift in the marketplace with the company’s shares rising to $37 per share and net sales growth coming in at 2.9% or 6.5 billion dollars in the third quarter of 2022. This can be attributed to them knocking the dust off these older and more iconic brands by integrating their marketing efforts into quirky brand awareness campaigns.
They have campaigns that had them partner with a steakhouse to create and sell a Velveeta martini. Quite honestly it doesn’t sound appealing to me personally but I certainly would remember that I saw that on a restaurant’s menu which is the whole point of brand awareness.
A few other brand awareness campaigns to look out for are Oscar Meyers Cold Dog which is a popsicle that tastes like a hot dog. Kraft Real Mayo partnered with Juicy Couture to create sweatsuits with the word smooth on the rear. This brand-awareness-focused strategy is creating a buzz giving the company a presence on social media channels and gaming platforms like Roblox and six of these campaigns have garnered over a billion earned online impressions. One thing is certain is that getting back to the basics of what made this company great in the past is an integral part of its recipe for success in the future.
