Kraft Heinz Leaning On RGM To Maintain Promotion ROI
While consumers may be hunting for deals this holiday season, Kraft Heinz remains firm that it won’t return to its pre-pandemic promotion-heavy tactics.
That’s according to company leaders on a recent call with investors, in which global CFO Andre Maciel stressed that getting aggressive on promotions to gain volume and market share wasn’t a game they were going to play. Instead, the No. 21 publicly owned consumer goods company intends to lean on such revenue growth management techniques as price architecture to maintain sustainable growth.
“We need to make sure that we are responding to the moments in which consumers are going to be looking for the right solutions for whether it’s at the holiday seasons or all the points throughout the year,” said Carlos Abrams-Rivera, Kraft Heinz president of North America. “And as we go into Q4, for example, we will make sure that we are making the right investments. However, we will be doing that with the right level of discipline to make sure we drive the right returns on that investment.”
The company improved third-quarter promotion ROI in the United States by 15 percentage points vs. Q3 2019, according to a presentation shared during the call. Abrams-Rivera, who will transition to the role of CEO in 2024, added that the company will look to drive profitable volume through its marketing investments and use of revenue management tools to drive investment efficiency and effectiveness.
Building Promotion ROI Capabilities
Kraft Heinz promotion levels are currently below 2019 levels, according to the CPG company, and improving promotion ROI has been a key priority within its larger turnaround strategy. As part of this, it developed a proprietary trade management system to more effectively measure promotion impact and provide recommendations through real-time data. Use of artificial intelligence, meanwhile, improves promotion ROI by identifying the right product mix for a retail location or region.
Maksym Roshchyn, global RGM lead at Kraft Heinz, shared on a CGT webinar earlier this year that the company has been building a three-stage “academy-like” RGM capabilities program over the last several years, as well as a playbook that assesses RGM capabilities best practices and then digitizes the actions in Tableau.
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“I will just say that our [promotion] strategy continues to be the same; it’s working,” said Maciel on the earnings call this month. “And I think we feel that’s heading in the right direction. We don’t want to make a change in direction because of temporary situations in the industry.”
Kraft Heinz Restructuring
In a different type of promotion news, Kraft Heinz announced a series of leadership changes that include Pedro Navio succeeding Abrams-Riversa as EVP and president, North America. He is currently president of taste, meals, and away from home in North America.
The company is also forming global leadership teams for the growth and omnichannel functions to better centralize expertise and resources, and it’s dividing its international business into three zones:
- Europe and Pacific developed markets, to include Europe, Australia, New Zealand, Japan, and South Korea
- West and East emerging markets, to include LATAM, Eastern Europe, and the Middle East
- Asia Emerging Markets, to include its Asia businesses outside of Japan and South Korea
Rafael Oliveira, current president of international markets, will depart the company in March 2024 and serve in an advisory role until then.
