Kraft Heinz tries new recipe

Under the leadership of Miguel Patricio, Kraft Heinz has resolutely changed its strategy: whereas co-owner 3G Capital used to focus on aggressive takeovers, the CEO is now trying a new recipe by primarily boosting internal growth. Above all, this entails a renewed commitment to the familiar high performers.

Financial storm

Brazilian investment group 3G Capital was the driving force behind the merger between ketchup producer Heinz and food company Kraft in 2013. Four years ago, the group even tried to acquire Unilever, but that attempt was thwarted.

Since then, things have changed: sales were in a slump and the company was discredited because of accounting malpractices and (alleged) insider trading. It led to Kraft Heinz having to write off some 14 billion euros in 2019.

Currently, 3G Capital still owns 17.65 % of the food company, making it the second-largest shareholder, and the Brazilian group keeps a firm grip on the reins through CEO Patricio. However, since taking office in 2019, Patricio has completely altered the course of Kraft Heinz. He was left with few other options, as the group was weighed down by a mountain of debt and several product launches had failed.

Promoting old brands

Patricio, therefore, shifted the focus to internal growth. The coronavirus crisis came at the right time for this change in course: many people had to eat at home over the past year, which resulted in the American company’s turnover growing by 6 % in 2020. In 2019, the turnover still experienced a decrease of 2.2 %, Belgian newspaper De Tijd reports.

The marketing budget went up by 30 % to bring the old favourites back into the spotlight. They will be offered as “healthier versions”, with lower sugar and fat content, an approach that should also appeal to more health-conscious consumers.