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New Kraft Heinz CEO May Have To Rely On Used Playbook

Miguel Patricio, former CMO of AB InBev, has been tabbed to succeed Bernardo Hees as chief of Kraft Heinz. Will his strategy revive the CPG giant?

While the new CEO of the troubled CPG giant counts AB InBev’s Renaissance-themed marketing campaign as one of his past big successes, Patricio has outlined a strategy for his new job that already has failed in other forms.It’s going to take more than shouting “Dilly! Dilly!” for Miguel Patricio to turn things around at Kraft Heinz. While the new CEO of the troubled CPG giant counts AB InBev’s Renaissance-themed marketing campaign for Bud Light as one of his past big successes, Patricio has outlined a strategy for his new job that already has failed in other forms.

Patricio, former CMO of AB InBev, has just been tabbed to succeed Bernardo Hees as chief of Kraft Heinz, the packaged-food behemoth backed by investment firm 3G Capital whose brands range from Oscar Mayer to Jell-O.

Kraft Heinz has suffered a 40-percent swoon in its stock price over the past year in large part because its devotion to zero-based budgeting has deteriorated marketing and sales support for traditional brands and product lines that already were creaking. Another reason for its softness is the underlying weakness in some of its brands in an era when consumers are shifting wholeheartedly away from processed foods. Thus Kraft Heinz recently had to write off about $15 billion in value in its Kraft and Oscar Mayer brands. Also, the SEC has been investigating the accounting practices of the company’s procurement division since October.

So what has Patricio already said interviews that he wants to do as a strategy for turning around the fortunes of the venerable Chicago-based company? “Rejuvenate” brands that he says are “dusty,” and grow Kraft’s brands overall. He told The Wall Street Journal that, in particular, he sees promise in overhauls of Planters nuts, Heinz products and Philadelphia cream cheese.

Trouble is that Hees already tried a whole bunch of similar stuff during his four years at the helm, during which time he also had to try to make sense of Kraft’s merger with Heinz under the aegis of Brazil-based 3G, which is backed by Warren Buffett.

For example, over the past few years Kraft has reformulated its iconic mac-and-cheese line to exclude artificial colors and flavors. Philadelphia has attempted all sorts of innovations to move beyond its commodity reputation, including suggesting its use as a cooking sauce.

Kraft Heinz tried reinventing Jell-O by including molds that make the colorful gelatins fun for kids. And it has leveraged its successful Lunchables franchise under the Oscar Mayer brand into a new variety of packaged meals called Brunchables. All of these count as significant innovations in “dusty” brands, but they’re still not enough to move the needle significantly – at least the way investors see things.

Moreover, Hees oversaw the creation of an internal outfit called Springboard Brands, which has taken over some legacy brands such as Jell-O, and Boca meatless burgers, and “ideated” new brands such as Devour, a line of frozen food for meat-loving millennial men.

Springboard also has set up an incubator meant to attract startup brands to Kraft Heinz’s corporate umbrella. They include Ayoba-Yo, a twoyear-old company that created a high-quality beef jerky with a 400-year-old family recipe from South Africa, and Cleveland Kraut, positioned within the burgeoning fermented-foods market.

Can Patricio pull different rabbits out of his hat that will amount to material change for Kraft Heinz? Investors, employees – and the rest of the CPG industry – will be hanging on the answer.

Read more: CEOs in CPG Understand How Tough Small Acquisitions Can Be


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