Kraft Heinz to shake up media spend and cut product launches

New CEO to back flagship brands in turnaround.

Heinz: ran first global campaign this summer, featuring Ed Sheeran
Heinz: ran first global campaign this summer, featuring Ed Sheeran

Kraft Heinz is planning to shake up its media spending as part of an overhaul of the company’s strategy by recently appointed chief executive Miguel Patricio.

Patricio told an analyst call that the company leadership, which includes top marketer Nina Barton, had been studying how to optimise its marketing spend by brand and by "working/non-working allocations" (ie channels delivering acceptable or unacceptable ROI).

"So far, we identified the opportunity to reallocate a substantial amount of dollars to working media in 2020, as well as redirect dollars disproportionately towards support of our flagship brands," he said. "Based on this alone, we will see a significant percentage increase in media spend and then an even greater increase for the brands that are the biggest drivers of our profitability."

Barton was recently promoted by Patricio to chief growth officer, with responsibility for ecommerce, digital and innovation.

This last area is also being overhauled, so expect to see fewer product launches in 2020, Patricio told analysts.

"Around our innovation efforts, we are revamping our product development preocess so we can be faster and more consumer-centric with our new products," he said.

"And we are evaluating shifting innovation support to fewer, bigger, better initiatives – launches that promise to be more incremental to our base. As a result, in 2020 we will reduce the number of projects being launched by half."

Patricio, who spent six years as chief marketing officer at brewing giant Anheuser-Busch InBev, took over from Bernardo Hees on 1 July and was tasked with turning around a company that saw its share price plummet in February when it was forced to write down the value of two US-focused brands, Kraft and Oscar Mayer, by $15.4bn (£12bn).

The analyst call yesterday marked the company’s third-quarter financial results, which showed a 4.8% drop in net sales to $6.08bn (£4.75bn).

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