CHICAGO – Product developers at the Kraft Heinz Co. will be focusing on 50% fewer innovation projects in 2021 than they did in 2019, said Carlos A. Abrams-Rivera, president of US Zone. The reduction will open opportunities for the renovation of some brands and allow the company to create a foundation for more successful innovation efforts.
“The important element is making sure that innovation sticks, that it has the right insight and that it's executed flawlessly,” Abrams-Rivera said Dec. 2 during a virtual presentation at the Morgan Stanley Global Consumer Conference. “So, for us to be successful in innovation, we had to do some things first.
“We needed to make sure we improve the quality of our marketing, the sales execution and our supply chain. (That’s) the focus … we’re doing right now … basically creating the foundational base in which we can launch that innovation as we go forward.”
With the right fundamentals in place, management hopes the company will generate more “sticky” innovation that is based on consumer and retailer insights. As an example of using retailer insights, Abrams-Rivera pointed to how the company is targeting the breakfast occasion.
“We have a huge opportunity to win in breakfast because we have a range of brands, whether it's Oscar Mayer, whether it's Philadelphia Cream Cheese, Ore-Ida, Just Crack an Egg and Maxwell House,” he said. “So, we are actually partnering with our retailers to create an in-store breakfast destination that leverages that scale and then saves the consumer much more time in store.
“It's really shifting the focus of what traditional CPG has done to talk about our brand, to really talk about our consumer solution and us partnering with retailers in a different way for us to win greater share of breakfast occasion rather than any one particular brand.”
With an innovation foundation in place, Abrams-Rivera said more sizable innovation will occur in 2022 and 2023.
“What's important is that you'll see and feel quite a bit of renovation as well in our big brands to make sure we continue to build on the household penetration gains that we have made this year,” he said. “So, that is part of also the way you should think about what's coming out of Kraft Heinz.”
He added that half of Kraft Heinz’s brands are growing double-digits in terms of household penetration.
“We are actually encouraged by the fact that we're seeing not only the health of penetration gains, but also when you look at new buyers, the rate of those new buyers repurchasing two or more of our products is actually double what we have seen in the past,” Abrams-Rivera said.
He called the household penetration gains “more durable than episodic” and said the changes being seen in consumer behaviors are expected to last longer than the company originally believed.