Kraft Heinz will once more make big spending cuts, but will do so more strategically this time, its executives are telling investors.
Carlos Abrams-Rivera, Kraft Heinz’s head of U.S. business, told CNBC that the company would eliminate more than 1,000 products, amounting to 20% of its business, by the end of the year. Abrams-Rivera said that about 60% of growth going forward will be due to innovation, and 40% to “renovation.”
In an investor conference Sept. 15, Kraft Heinz executives said they would cut back on introducing new brands to meet consumer trends. Instead, the company will concentrate more on helping existing, long-established brands meet those needs, such as a gluten-free version of Kraft mac & cheese.
In an interview before the conference, CEO Miguel Patricio told the Wall Street Journal that the company plans to make $2 billion in cuts. He said some of the savings will be used on marketing and other means to pump up certain brands.
“In the past, we made decisions that were too short-term,” Patricio told the Journal. “We are changing that mindset.”
Kraft Heinz engaged in a round of cost-cutting shortly after the company was formed by a 2015 merger. It was well received by Wall Street at first, but then a lack of product innovation began to tell, with the stock crashing last year. The pandemic helped sales as consumers stocked up on the kind of center-store items Kraft Heinz specializes in, but the company is still losing market share in categories like coffee, deli meats and cheese.