Kraft Heinz - The food giant with a comms blind spot

News dropped last week that Kraft Heinz, the US-based food behemoth, had posted a quarterly loss, prompting a 20 per cent slump in share price.

Kraft Heinz must redouble its comms efforts, argues Warren Johnson
Kraft Heinz must redouble its comms efforts, argues Warren Johnson

It also prompted much debate in the business media about what the business had done wrong (aside from pissing off the SEC, who've launched an investigation into its accounting policies and internal controls).

The answer, I think, lies back in 2015, when private equity business 3G Capital acquired Kraft for $40bn and merged it with Heinz in a deal backed by Warren Buffet’s Berkshire Hathaway.

This bold move towards global consolidation ran strongly against a rising tide of consumer mistrust in ‘global food’ and has met a perfect storm of young millennials demanding healthier foods, allergy-driven food trends and a sustained increase in food entrepreneurs and start-ups.

At the time of the merger, Forbes was reporting a 30 per cent growth in the US allergen-free segment, quoting a Nielsen report which found that 88 per cent of consumers were willing to pay more for healthier foods and predicting that the global healthy foods market would be worth $1 trillion by 2017.

Furthermore, a couple of years later, The Grocer was reporting on a start-up boom in food and grocery and a 36.2 per cent annual growth rate amongst its Fastest Growing Food Suppliers.

The business issue for Kraft Heinz is that the market was changing but they failed to read – or at least act on – the runes.

Their focus was firmly on a programme of belt-tightening and cost-cutting – admittedly a very successful one, given margins grew from 15.1 per cent to 23.5 per cent in three years.

They have been looking inwards and failing to communicate appropriately.

The consequent communications issue has been a failure to ride the wellbeing wave, whilst the competition has fully capitalised.

A search for health-related comms and news for the likes of Unilever, Mondelez & General Mills show they have a real sense of wellbeing innovation.

For example, Unilever’s Sustainable Living Plan (USLP) clearly flows through everything they do in food, and all three actively communicate about everything from gluten-free and vegan variants to issues such as soil health and supply chain transparency.

A similar search for Kraft Heinz yields headlines like ‘Heinz Admits its Sugar-free Beans Aren’t Suitable for Vegans’ and rafts of predictable ‘healthy recipe’ PR.

Now that Kraft Heinz is on the back foot, it is doubly important that it re-doubles its communications efforts, ties its strategy to the consumer and media agenda and demonstrates that it is responding to an increasingly healthy customer base.

And it needs to do so quickly – something not straightforward for a lumbering US food giant.

Kraft Heinz CEO Bernardo Hees is quoted as saying that their model is working – this may well be proven true from a business perspective, but their communications model needs to change – and it needs to change fast.

Warren Johnson is founder & global CEO of W Communications

Thumbnail image ©Jeffrey Blackler/Alamy Stock Photo

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