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Oscar Mayer. Velveeta. Capri Sun. Kraft Heinz CEO Miguel Patricio admits: Some of the company’s iconic products had become “a little bit dusty.”

“For a while, we were apologetic about the brands that we had,” Patricio shared his views with The Sunday Review Business. “We got distracted believing that the future was launching new small brands, niche brands.”

Recently, “we stopped and said, let’s go back” to basics, Patricio said. “Let’s be proud of the brands we have. Because they’re incredible.”

More than half Kraft Heinz’s business comes from just eight brands — the aforementioned three, plus Kraft Mac and Philadelphia Cream Cheese, Cheese HeinzLunchables and Ore-Ida. They may not seem glamorous, but they’re the very brands The company’s success is dependent on the in its It has been a long, hard work. to turn around the world’s fifth-largest food and Beverage conglomerate

Processed foods are “where the industry makes its money,” Alexia Howard is a senior analyst at Bernstein who covers US Food. “That’s traditionally been what works in packaged food.”

So Kraft Heinz Reworked its portfolio to Cut its healthier nuts and cheese business and Focus on the processed icons and place them front. and Flashy and even silly marketing campaigns have attracted the attention of social networks. (Remember the eight-foot-long Velveeta box that appeared in New York City’s Central Park.) However, this strategy comes with risks as consumers tend to choose healthier options.

For Kraft HeinzPatricio is the only one that can provide this information. to execute a comeback, there’s a lot on the line.

Kraft and Heinz joined forces in 2015A deal was made by Heinz’s owners at the time, Warren Buffet’s Berkshire Hathaway and 3G Capital is an investment company. At first, investors were optimistic, buoyed by 3G’s successful track record of using mergers to Create powerhouse conglomerates like Restaurant Brands International

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Burger King owner and Tim Hortons. The winning formula in this case was not to be found. The company was finally founded after a few years. to lose value, fast.

Critics claimed that a drastic cost-cutting strategy stifled innovation. The company also revealed in 2019 that it had acquired Securities and Exchange Commission was investigating its Accounting practices. It determined the value of its Kraft and Oscar Mayer brands A loss of $12.6 Billion was recorded for the fourth quarter 2018, a sum of $15 billion and Had to Revise financial statements from the past and In a settlement, the victim was later required to pay millions.

Even the most revered Harvard Business Review offered harsh criticism. “While investors were hungry for growth, 3G could not change the Kraft Heinz legacy brands quickly enough to meet consumer demand for healthier, fresher and, in some cases, cheaper private-label products,” You can find more information at 2019 piece in the magazine proclaimed. “While Jell-O, Kool-Aid, and Velveeta were being stacked onto shelves, the tectonic plates of big-box food were shifting beneath Kraft Heinz’s feet, and they could not adapt fast enough.”

Change your management.

Kraft Heinz CEO Miguel Patricio has had to make some tough decisions in his quest to turn the company around.

Patricio joined Patricio in 2019, as the company was in crisis. Kraft Heinz Anheuser Busch InBev

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. Since 3G Capital had also managed AB InBev’s huge 2008 merger, that connection set off alarm bells for some. “Everybody was like, ‘Oh, gosh, is this really going to work?’” Howard.

“He had a monumental task when he first came in,” She noted. Sales were declining and shares of the company had plummeted. and Low investor confidence

Today, Kraft Heinz Shares are now worth $37 per share, an increase of its 2020 Lows of $22 its High of nearly $100 per share in 2017. Net sales increased in the third quarter. to $6.5 billion, an increase of 2.9% over the previous year.

“Three years ago, our company was in the bottom,” Patricio stated this during the Bernstein conference held in June. “Today, we feel that we are a good company.”

But that’s not enough. “We think we can be great. And to be great, it’s a very different game,” He said.

Patricio has simplified operations and invested in improving the supply chain and He has increased his advertising. He’s also made some potentially risky changes to the company’s portfolio.

Patricio decided to reduce divisions so that he could focus solely on the core categories.

2020 Kraft Heinz It announced it was selling its natural cheese business. The next year, it stated the same for Planters, ending bidding. to The iconic Mr. Peanut.

Although it may sound like a headscratcher, natural nuts make this move possible. and Cheese can be more easily identified as healthy foods than processed meats. and cheese. But they’re also hard to Differentiate yourself from your competitors

Natural cheese and nuts didn’t fit “​​our strategy for the future,” Patricio shared his views with The Sunday Review. “It’s not … where the growth would come from.”

Kraft Heinz decided to sell off its Planters nuts business.

These two categories are especially exposed to Private label or store brandsHe said: and Experts agree. Shoppers love it. “very price driven,” When it comes to These items, said Daniel Hooker (a Cornell University senior lecturer in applied economists with a specialization in food industry management).

The competition is particularly fierce now because consumers are increasingly interested in private label products as the grocery prices continue to rise. These categories are vulnerable to price swings, so it is possible to reduce costs by lowering ingredient prices.

Selling off Those brands “helped us immensely,” Patricio said.

Kraft Heinz’s current portfolio is less likely to Face competition from generic brandsHooker, noted. Heinz Tomato Ketchup is far and Get the best brand This category includes and “there’s no private brand equivalent, really, of Capri Sun,” He pointed out.

“The best way to compete with store brands is having very strong brands,” said Patricio. “They really play a role in the hearts of consumers. So we have more loyalty.”

This is why Kraft Heinz Has leaned in to Promotion its Legacy brands — and With sometimes bizarre marketing. In Patricio’s words, “we need to be creative and make the consumers talk about these brands.”

In Velveeta’s case, Kraft Heinz Partnered with a steakhouse chain to Sell Velveeta martinis and I also created a Velveeta-themed nail varnish to tweaking the processed cheese brand’s logo.

Velveeta teamed up with a steakhouse chain to sell the cheesy Veltini.

Other Kraft Heinz brands Attention-grabbing marketing campaigns have been used as well. Oscar Mayer launched the “cold dog,” A popsicle that tastes just like a hotdog. Popbar locations were able to sell the item in limited quantities in a few cities. Kraft Juicy Couture and Real Mayo have partnered to create sweatsuits. The pants should say “Smooth” To the rear.

These efforts raise brand awareness and help to create buzz online and Media attention. Kraft Heinz’s brands Roblox now has a presence on gaming platforms such as Roblox to social media channels and Other platforms. In his discussion of the company’s third-quarter results, Patricio noted that six of the company’s campaigns this year have garnered over a billion earned impressions each, referring to Views received from media coverage of promotions

In an ever-changing media landscape, it is important to have the right tools. “far more work and people to reach consumers,” He The Sunday Review.

Even clever promotions may not suffice to Convince consumers to go for Kraft Heinz’s highly processed products.

One way to You can reach health-conscious customers without having to overhaul your core brands It is possible to form partnerships with other companies. Recently, Kraft Heinz NotCo is a plant-based dairy company that I have been working with since my first day of work and protein. Patricio pointed out that it was expensive to acquire a company so a partnership was the best option. to go.

Patricio seems to Howard suggested that you should consider partnerships. They are, for him, “may be the way to tap into some of these bigger, more disruptive changes that are going to hit the industry,” In the years to come.

Kraft Heinz The first product, plant-based American cheese slices from the joint venture was launched in a trial market in October.

Grilled cheese sandwiches are prepared with Kraft Heinz NotCo American Style plant-based cheese slices.

The company is also making significant changes. to Some products may be included in an attempt to Make them healthier: A recent commercial laments the woes faced by “adulting,” promotes Heinz’s No Sugar Added Ketchup. Capri Sun was offered with a reduced sugar formula this summer by the company. Kraft Mac and Cheese is free of artificial colors, dyes, and preservatives and Also available gluten-free and Whole grain varieties

“It is definitely a trend in the world to have healthier foods, and we need to be part of it,” said Patricio. “We need to adapt .. and we’ve been doing that.”

Even after ingredient changes and marketing pushes, however, there’s a limit to How many adjustments can a company make to the product without modifying the core of the product.

“Some of these brands, they can only make them so much healthier, before they cease to be the products that they are,” said Cornell’s Hooker. “You get to a point where you can’t do much more.”

At the moment, things look good to Howard, the food analyst, said that they should be at work. “Three years in … he is actually moving things in the right direction.”