Kraft Heinz Snapshot: company is doubling down on foodservice as 50% of sales are front-of-house where it can teach consumers to prefer its condiments; company is also growing in emerging markets with strategy based on land grabbing, distribution, equity

LOS ANGELES , June 6, 2023 (Industry Intelligence Inc.) –

The following summary comes from comments made by Kraft Heinz CEO Miguel Patricio at Bernstein's 39th Annual Strategic Decisions Conference 2023: 

Kraft Heinz sees long term growth in segments including Emerging Markets, Foodservice, Away From Home and Taste Elevation and Convenience Meals

• Company saw Foodservice grow 30%, Emerging Markets grow 23% in Q1 

Emerging markets strategy is based on land grabbing, distribution and equity

• Partnerships, like company's recent distribution deal with Anheuser-Busch InBev, have been successful as a test, enabling company to start a growth model "from zero" and gain "critical mass" in areas that it is not yet present

While foodservice is “not very profitable” for companies on average because 80% of the segment is basic back-of-house commodities, 50% of Kraft’s sales are front-of-house 

• Company is "doubling down" on foodservice because this front-of-house interaction is the best way to gain penetration
  • Brand's presence on a restaurant table teaches the consumer the taste of products such as ketchup, mustard and mayo, which they then bring home

On R&D, company needs to have “a lot of discipline” on defining what and how to innovate amid past failures 

• Incentives today are “really on incremental innovation"
• Company plans to bring US$2B of incremental net sales in the next five years from innovation

Company’s recent divestitures in notable areas including natural cheese and Planters’ nuts came because consumer needs evolve “very, very fast” 

• “In an ideal world, you have to sell what you predict is going to start declining before declining, and you have to buy what [is going to grow] before it starts growing” 

On price gaps between company's brands and private label, Kraft expects private label to increase their prices

• Company is also counting on an increase in promotion in the remaining part of the year
  • However, it is "not going to do promotions with negative ROIs," which was "very common in the past"
  • "We basically have all the price increases that we had forecasted for the year done"

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