Kraft Heinz brand
Tom Dougherty, CEO – Stealing Share
25 February 2019
Kraft Heinz brand blows apart
When the Kraft Heinz brand was born nearly four years ago, it felt like the merging of two powerful food brands. We all know and most of us prefer many Kraft and Heinz brands. Even Warren Buffett was involved.
But now even Buffett regrets it. Shares for Kraft Heinz dove more than 60% over the past two years, dropping 26% just last week. The latest plunge came after news that the SEC is investigating the company’s books.
The response from Kraft Heinz was to slash dividends, which I’m sure makes investors happy. And you have to wonder about the future of multi-billion dollar company.
The Kraft Heinz brand isn’t going anywhere, but it’s a case study for what NOT to do when you merge companies. Analysts say the company is behind the times as consumers look for healthier food, a trend the company ignored.
They also point to lower prices brought about by the grocery dominance of Amazon and Walmart.
All those are certainly factors. But what about the Kraft Heinz brand?
“Everything the Kraft Heinz brand did was reminiscent of an accountant. Cut expenses, buy more and hope for the best.”
The Kraft Heinz brand needs definition
The question that lingers in the air after every merger is what does the new company/brand now look like? The first step leadership took was to cut costs and reduce expenses.
After that? Crickets. It rested on the laurels of the Kraft and Heinz brands, figuring it should leave well enough alone. But that didn’t thrill investors, especially when the company made a bid for Unilever. You know, the company that owns Dove, Vaseline and Q-Tips. (It also owns, it must be said, some food products like Ben & Jerry’s, Lipton and Hellmann’s.)
Everything the Kraft Heinz brand did was reminiscent of an accountant. Cut expenses, buy more and hope for the best.
What it didn’t do was define what Kraft Heinz meant to the customer. Of course, most consumers don’t realize Kraft and Heinz are now the same company. But the combined brand is missing an opportunity to redefine itself like the emergence of FedEx Office when FedEx bought Kinko’s.
Costs, profits and quality of products are all under consideration after a merger. But don’t forget the brand. It’s your most valuable asset.
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