Editor's Plate: What to Do With Kraft Heinz?

While I never thought the 2015 merger of Kraft and Heinz made a lot of sense, I didn’t think the planned split of the two companies would fix things either. Not with the same top executives who created this mess.

But now they’re gone. And a new chairman and CEO, Cahillane, was hired Jan. 1, presumably to effect the split, as he had just done in late 2023 at Kellogg Co. Barely a month into the job, Cahillane probably surprised even the Kraft Heinz people by calling off the demerger and saying “many of our challenges are fixable and within our control.”

I may be little more critical of the company only out of fondness, because Heinz is from my hometown of Pittsburgh. I had a relative working at one plant and the pride of seeing a little reminder of my birthplace on tables all over the world.

I felt right from the start – the 2013 acquisition of Heinz – that 3G Capital, a Brazilian investment firm, and Berkshire Hathaway were going to ruin this company. In came a bevy of Brazilian executives, who maybe were not inept but just not adept at running a North American food company.

That’s not xenophobia. And it’s not just me saying it. I heard that a lot in the first year or three after the acquisition. It made as much sense as appointing an American as CEO of a Brazilian food company. Heinz was a company dependent on U.S., Canadian and Western European sales (maybe too much so).

A lot of good people left after that acquisition, and most were replaced by people trusted by 3G Capital. They had big global ambitions for Heinz, which already was succeeding in some foreign markets, just not as many or to the extent the new owners wanted.

Then came the 2015 merger with Kraft, another overwhelmingly American company after the split-off of Mondelez. That didn’t help the ambitions of 3G Capital. The results were waves of layoffs, cost-cutting and annual decreases in sales. Now, while Kraft Heinz’s foreign markets aren’t hitting any home runs, it’s North America, specifically U.S. sales, that have been the main drag on the company for years.

In 2019, six years after he stepped down or was booted, Bill Johnson, Heinz’s last chairman and CEO before the acquisitions, told Fox Business, “I’ve lost a lot of confidence in what’s going on there. In their zeal to cut costs and so forth, they’ve removed all the institutional knowledge, and therefore no one can tell them what they shouldn’t do because it had been done before and hadn’t worked.”

Lately, while other food & beverage processors were creating new products, Kraft Heinz has been launching a new fast-food French fry container with a built-in ketchup compartment. Or skis that look like Ore-Ida french fries. Maybe parading around the Oscar Mayer Wienermobile. What fun stuff! But I can’t see how any of those things will move the needle on sales. If the Marketing Dept. spent more than 5 minutes or 5 dollars on any one of those efforts, that was time and money wasted.

At the same time he called off the split on Feb. 11, Cahillane announced a $600 million investment in marketing, sales and R&D, “as well as product superiority and select pricing,” he said. That’s a great start.

I’ve been encouraged to see Heinz ketchup and Kraft mac & cheese commercials back on TV recently, the first time in a long time. I just hope there are more. More product development, more new categories, more meaningful marketing. And ultimately more sales. Good luck, Mr. Cahillane.