The Kraft Heinz company was formed in 2015 after a merger of Kraft Foods Group with Heinz.
Heinz was a wholly owned subsidiary of H J Heinz Holding corporation, which was renamed Kraft Heinz Foods company after the merger. Previously, Berkshire Hathway and 3G Global Food Holdings, LP controlled H J Heinz, which had acquired it on June 7, 2013.
The company formed after the merger (The Kraft Heinz Company – Nasdaq: KHC), became the third largest food and beverage company in North America and the fifth largest in the world. Now, it has 8 billion dollar brands in its portfolio. Kraft Heinz is a global company that generates a significant part of its net revenues from outside its main market, North America.
The Kraft Heinz company is co-headquartered in Pittsburgh and Chicago. It sells more than 200 popular brands across nearly 200 countries. As the retail landscape is changing worldwide, the company has continued to grow its focus on innovation to achieve superior results. In fiscal 2020, the company had net sales worth $26.2 billion. The brand is globally known as a leader in the food industry and famous for its product quality. The Kraft Heinz company has also maintained a strong focus on philanthropy and sustainability.
In this marketing mix, we will present the four Ps including product, place, price and promotion as applicable in the case of the Kraft Heinz Company.
The Kraft Heinz company sells more than 200 brands across more than 200 countries. Its product portfolio also includes 8 billion dollar brands or brands that generate more than $1 billion in retail sales globally.
The company sells products in five main categories that are listed below:
- Condiments and sauces: The largest product category based on net sales accounting for 26% of the company’s net sales in 2020.
- Cheese and dairy: The second largest product category based on net sales accounting for 20% of the company’s net sales in 2020.
- Ambient foods: This product category accounted for 11% of the company’s net sales in 2020.
- Frozen and chilled foods: This product category accounted for 10% of the company’s net sales in 2020.
- Meats and seafood: This product category accounted for 10% of the company’s net sales in 2020.
Apart from the company owned brands, Kraft Heinz also sells products licensed from third party groups.
Here is a list of the majority owned and licensed trademarks sold by The Kraft Heinz Company:
United States: Kraft, Oscar Mayer, Heinz, Philadelphia, Velveeta, Lunchables, Planters, Maxwell House, Capri Sun*, Ore-Ida, Jell-O, Kool-Aid.
International Heinz, ABC, Master, Kraft, Golden Circle, Quero, Plasmon, Wattie’s, Pudliszki.
Canada Kraft, Philadelphia, Heinz, Classico, Maxwell House.
The licensed brands that the company sold in 2020 included Capri Sun, TGI Fridays, McCafe single cup coffees and Taco Bell Home originals. The Kraft Heinz company makes products using a large variety of raw materials including dairy products, meat products, coffee beans, nuts, tomatoes, potatoes, soybean and vegetable oils, sugar and other sweeteners, corn products, wheat products, and cocoa products.
The Kraft Heinz company is co-headquartered in Pittsburgh and Chicago. Its leading markets are the United States and Canada. However, it has maintained a strong global presence and sells its products across 200 countries using a diverse mix of sales and distribution channels including online and offline channels.
Apart from its own sales organizations, the company utilizes a diverse mix of sales and distribution channels like independent brokers, wholesalers, retail chains, grocery stores and other several channels including a few government agencies. The company sells its products online through e-commerce channels and e-retailers. Walmart was the largest customer of the company in 2020, accounting for 22% of its net sales in 2020.
Kraft Heinz has divided its business into three segments based on geographical locations that include the US, Canada and International.
The food and beverages industry is marked by heavy competition. Pricing plays an important role in terms of marketing. Due to the heavy competition, food and beverages brands focus on two important factors, which are product quality and pricing strategy. The pricing strategy of a food brand also has a significant impact on sales and customer loyalty.
The Kraft Heinz company has employed a competitive pricing strategy, which helps drive higher sales and customer loyalty. The company is also known to use zero based budgeting and other aggressive cost cutting tools to reduce expenses and maximize profit margins. It has also maintained strong relationships with suppliers which helps maintain a healthy supply of raw materials and keep costs low. These benefits are passed on to customers in the form of competitive prices.
Marketing and promotions play an important role in driving sales, brand equity and customer loyalty in the food and beverages industry. Companies invest in marketing and promotions to differentiate their brand from the others in the market. Due to the heavy competition in the food industry, companies invest large sums in advertising. In 2020, The Kraft Heinz company invested $1.2 billion in marketing of which $646 million were spent solely on advertising (Annual report, 2020). It utilizes several channels for advertising and promotions including television, radio, print, digital and social media channels. The other form of consumer incentives and trade promotions that the company utilizes include discounts, coupons, rebates, performance-based in-store display activities, and volume-based incentives.
The Kraft Heinz company has achieved strong brand equity through focus on customer needs and preferences. A strong focus on marketing has also led to higher customer loyalty, stronger sales and global recognition.
Purpose: Let’s make life delicious.
Vision: To sustainably grow by delighting more consumers globally.
A few last words about Kraft Heinz:
Kraft Heinz is a global food and beverages brand with a strong global presence that has been bolstered through continuous investments in technology. Despite the uncertainty caused by the pandemic, the company has performed well in 2020. Apart from focusing on marketing, it also invests in innovation that drives superior customer loyalty and product development that can drive higher growth. Kraft Heinz has maintained a strong focus on quality to maintain its competitive edge in the food industry. Its pricing strategy has also played an important role in driving sales and customer loyalty. As of December 2020, the company had approximately 38,000 employees globally. Its CEO is Miguel Patricio. The company has also maintained a strong focus on sustainability and philanthropy. It has achieved several awards and recognition for its efforts in sustainability.