Kraft Heinz at 2025 dbAccess Conference: Strategic Focus Amid Challenges

Published 06/04/2025, 06:04 AM
© Reuters.

On Wednesday, 04 June 2025, Kraft Heinz (NASDAQ:KHC) presented at the 2025 dbAccess Global Consumer Conference, acknowledging a challenging start to the year influenced by high interest rates and inflation. Despite these hurdles, the company emphasized its strategic commitment to balancing value and premium offerings, enhancing operational efficiency, and exploring strategic transactions to unlock shareholder value.

Key Takeaways

  • Kraft Heinz is facing consumer spending challenges due to high interest rates and inflation.
  • The company is investing in marketing and product innovation, particularly in sauces, ready meals, and snacking.
  • Operational efficiency and supply chain optimization are key focuses to offset inflationary pressures.
  • Strategic transactions are being evaluated to unlock shareholder value while maintaining financial discipline.
  • The company is proactively addressing regulatory changes and potential tariff impacts.

Financial Results

  • Kraft Heinz plans to invest approximately $300 million in pricing and trade in the U.S. to maintain competitive price gaps.
  • Marketing spending will increase to at least 4.8% of net sales, the highest in over a decade.
  • The company aims for nearly 4% productivity savings this year, exceeding the initial target of 3%.
  • Exposure to SNAP benefits has decreased from 20% to 13% over the past three years.

Operational Updates

  • The brand growth system is being deployed across the portfolio, with wave two starting in the U.S.
  • The away-from-home business is growing internationally but remains flat in the U.S.; diversification efforts include stadiums, leisure, and hotels.
  • Food waste in factories has been reduced by 40% over the last two years due to technology and process improvements.
  • Global shared services are expanding in India and Mexico to improve SG&A efficiency.
  • New packaging for Oscar Mayer deli cold cuts uses 25% less material and offers improved reclosability.

Future Outlook

  • Kraft Heinz is evaluating strategic transactions to unlock shareholder value while adhering to its current strategy.
  • The company aims to increase the proportion of its portfolio represented by "accelerate" platforms and expand in emerging markets.
  • Marketing strategies are shifting from emotional advertising to product-based and claim information.
  • Product formulation is being adjusted to address artificial colors and dyes, staying ahead of regulations.

Q&A Highlights

  • Consumer health in the U.S. is pressured by high interest rates and stagnant wages.
  • Kraft Heinz emphasizes product value and benefits, focusing on quality, packaging, and marketing communication.
  • The company is making strategic pricing adjustments while focusing on marketing-driven initiatives.
  • Various productivity initiatives are in place to improve efficiency across supply chain, revenue management, and marketing.
  • Employee engagement remains high, contributing to operational success.

Kraft Heinz remains committed to navigating current market challenges with strategic investments and operational efficiency. For more detailed insights, refer to the full conference call transcript.

Full transcript - 2025 dbAccess Global Consumer Conference:

Unidentified speaker, Moderator: Okay. Welcome back, everybody. Thank you. For our next session, I’m I’m thrilled to welcome back the Kraft Heinz Company and equally thrilled to welcome back chief chief executive officer, member of the board of directors, Carlos Abrams Rivera, as well as executive vice vice president and chief finance financial officer Andre Maciel. Thank you guys for joining us.

Welcome back.

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Thank you. Thank you for having us.

Unidentified speaker, Moderator: So we’ll jump right in. We’re gonna use the entirety of the time for q and a. And I’ll start with Carlos, and we’ll just start kinda high level. I mean, the the year, I think, for a lot of the companies at the conference, you know, it’s been a very eventful and difficult start. You know, a lot of different crosscurrents on the on the consumer, adding adding some pressures that maybe weren’t, you know, preconceived coming into the year.

Let’s start there and just talk about your assessment of consumer health starting in in the home market of The US and then also around the world.

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Sure. And and and you’re right. I think that the year has turned out different than many of us expected. I think we saw new administration. I think they’re focused on driving down inflation on which I think will has gonna help also give some confidence to the Fed so they can start lower interest rates, and and that would have been a relief, I think, for consumers, and we haven’t seen that.

So I think if if I think about The US today, what I’ll say is there’s consumers who are not just at the lower socioeconomic class who are really dealing with the pressures of having to have high interest rates, mortgage, credit cards, and you’ve seen delinquency already increasing, wages not keeping up with inflation. So it is a moment in which what was a difficult 2024, I think, has extended into this year more so than any of us expected. I think beginning 2025, many companies and the economies were expecting the Fed to be taking down interphase a number of times this year, and that will have helped us in ease quite a bit of the pressure on the consumer. At the same time, I think for us as a company, what we’re trying to do then and say, how do we continue to make sure we offer consumers at this moment the right level of value so that they can continue to feel that they can feed their families with great quality products regardless of situation they’re in right now? So while it’s not, you know, what we all expected, I think the for us, it’s not a we don’t we’re not gonna be victim at the moment.

We’re gonna take an offense play in this particular moment, which is let’s make sure we are putting our products and our brands in places that consumers are shopping, that we’re providing great value to them, and that we are emphasizing the benefits that we bring in our products at this particular time.

Unidentified speaker, Moderator: Okay. And I guess we extend that. So how has that translated into recent trends for your business? And and maybe talk a little bit about sort of at home versus, you know, on the go away from And then, also, how does how is it factored into the announcement you recently made that you were evaluating potential strategic transactions?

I think you had talked about that before, but you formalized it in a Yeah. Press release last

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: week. I think there were three questions in there, so let me start to break those up a little bit. The let me start with the the follow-up to the consumer. I think and then I’ll talk about away from home and and the comment on transactions. I think on the on the consumer side of things, what I will say is the way it translates for us is that as we go through putting our brand growth system, which is a proprietary way in which we are examining what is the right level of quality, packaging, marketing, and benefits claims that we wanna make in a product.

As we put our brand through that, it allows us to make sure that we are, in fact, highlighting those things that drive better better comparison in terms of value for consumers. And I’ll give you a couple of example. I think if I think about a comp a product like mac and cheese, you know, we haven’t had artificial colors and ingredients since 2016. And I still get asked about when am I gonna change artificial colors in mac and cheese. Well, it’s just something that we haven’t spoken about.

So now our marketing is gonna be focused on making sure that we are clear with consumers the benefit we bring in our product. If I think about the fact that families are looking for value at this time, we also, this summer, are gonna be launching a family sized pack of mac and cheese that you can feed a family of five for $2. So that idea of us responding to the moment with the right communication, the right packaging format with a great quality at this particular time. And we’re doing that across our portfolio in The US, more focused on our accelerate platforms to make sure that we are continuing to drive the growth in those businesses. In terms of away from home, I will say it’s a little bit of different story international versus The US.

Overall, what we see is and it’s one of our three growth pillars, is for us to end the year about flat. That is growing in the outside of The US. And in The US, what we’re looking to do is, you know, well, there is some still pressure on restaurants right now as consumers are moving more from in home. We are also diversifying the channels in which we compete. So in The US, you’ll see us more going towards stadiums, leisure, and hotels, and other places where we actually have an improvement in our margins and allows us to have a a more diversified portfolio that only depending on restaurants.

You know? And you’ll see us continue to build in that strategy that has worked well for us outside The US, and we’re gonna continue to expand that for us to continue to drive growth as we go into the future. And I think the last third question was related to comments we have made publicly about our our transactions. But I would you know, while I I’m not gonna make any new news today, what I will do emphasize is that, you know, this is something we have been discussing with the board for the last several months. And we felt it was important for us to make a public statement about it because it was us taking a step up in our aggressiveness about looking into this.

Trust me when I say, you know, both the board and management believe our company is undervalued right now in our stock. So we believe there’s opportunity for us to unlock that shareholder value by looking at other type of transactions. Now we always gonna look at it with discipline, and and that’s something we have done through through our company. You know, over the last five years, we divested planters, our natural sheet business, and we have always done those things with a amount of this financial discipline that we’re not gonna violate as we go forward. And our so that that essentially is the reason why we are looking into this and why we’re announcing at this particular time.

Andre Maciel, Executive Vice President & Chief Financial Officer, Kraft Heinz Company: I I would just add to what Carlos is saying is this announcement as well does not represent a shift in strategy. It’s more accelerate our strategy, which we’re confident is the right one. And second, doesn’t change anything in terms of our capital allocation priorities and also including preserving investment grade levels, preserving dividends. Those are continue to be pretty virtuous.

Unidentified speaker, Moderator: Very good. And you answered all three. Andre, picking up on on the on Carlos’ comments about, you know, making sure you’ve got price points correct and leaning into value. How has how have you sort of how does what pressures does that put on the the p and l, and how are you able to kind of manage through that?

Andre Maciel, Executive Vice President & Chief Financial Officer, Kraft Heinz Company: Yeah. So first of all, in our initial outlook for the year, we had already contemplated approximately $300,000,000 of investment in prices less trade in The US, where particularly in those places where preserving a certain level of price gap is important. But as Carlos said, the the way that we wanna grow the business is not through pricing promotion because we left that. It’s by offering the right value to consumers. And the brand growth system that we’re now deploying across the portfolio is shedding lights on opportunities for us to invest in products so then we can maintain or increase superiority that you have the right levels of marketing spend, the right claims on package, the right marketing message.

So that’s how we wanna grow the business. That’s that’s allow us to grow in a in a healthy and profitable way. We we see and value means different things to different consumers. Right? You mentioned, for example, shiftings away from home going to retail, which is common in moments like you’re leaving right now.

So if you look today, there is a certain bifurcation happening in the industry. We continue to see premium growing in part because of those consumers leaving away from home and going to retail and other consumers seeking value. And I think it’s our our job to continue to offer all consumers. We we we have a privilege to have a very balanced portfolio. Our market share across income tiers is very much the same.

Mhmm. So we really need to be mindful about the different needs for different consumers. Yeah.

Unidentified speaker, Moderator: And with the initiatives you have now planned, do you feel like you’ve got price gaps that were out of whack now right where they need to be, or is there is this is there more work ahead? How do you feel about that?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Well, first of all, would say, you know, Andrew mentioned, we’re making investment additional from what we set out to do this year. So we are responding to the moment. Now our investments are disproportionately in our marketing, particularly as we have gone through those brand growth system in our brands to make sure that, you know, we have the right marketing. And in some cases in which we feel like there’s opportunity for us to emphasize certain changes in quality, like we’re doing right now on Lunchables, which we have improved our cookies and crackers to be superior to anything we have done, we will do so. I think for us, you know, the ideal pricing, first of all, will say, you know, we’re not gonna out private label private label.

You know, for us, we it’s about us both coexisting and emphasizing the values and benefits we bring to consumers. Mhmm. So while there may be certain situations in which we have already put in some pricing this year that are more strategic and surgical in certain categories because we felt like, okay. Those are places that it makes sense for us to invest. That’s not the place that we will be continuing to drive a huge amount of level of investment.

So when we talk about incremental investment, now we’re gonna be getting to at least 4.8% of marketing as a percent of net sales, which should be the highest we have had in over a decade. That is really driving marketing driven initiative that’ll help us support better products, better claims, better communication, and level of sufficiency, particularly in our satellite platforms. So that’s what you’re gonna see from us being much more focused on driving that level of investment than just being tactical in our pricing.

Andre Maciel, Executive Vice President & Chief Financial Officer, Kraft Heinz Company: Okay. Yeah. And part of the investments as well went to product, and that’s part of the reason why this year, we don’t see gross margin expanding because we think it was the right decision to do is to invest the productivity that we continue to have very strong into the product. And important to say as well that as we continue to deploy brand growth system across different parts of the portfolio, we are now just starting wave two of the categories in The US. As opportunities arise and I think those are the right decisions to long term, we will not hesitate to step up investments if needed.

K.

Unidentified speaker, Moderator: Maybe we maybe we it’s a good time to talk about the brand growth system because you it talked a lot about it in general and referenced it a couple times in this conversation. For for those less familiar, what what is it? What and what makes it I guess, importantly, what makes it unique to Kraft Heinz? Right. How does it enable innovation and sales excellence?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Yeah. For I think for the audience, what I’ll say is it first starts with us having a forensic like analysis of our products using about 70 different kind of report and research in which we actually then go deep into the consumer understanding of what matters to them, whether it’s in product, quality, messaging, so that then we can really have almost a fingerprinting of what are the things that truly consumer value right now at this particular moment, and how do we make sure we accelerate those communications? I’ll give you an example. You know, we did this with our Lunchables business, and we find out that, you know, as much as the product was loved, we knew that there was some deficiency in our quality in Cookies and Crackers versus within expectations in the past. Some of that came because of COVID.

We needed to make sure we source cookies and crackers from from different places. We invested in making sure we have superior now products, and now we’re telling consumers about it over the summer. So if you think about back to school, we’ll have a product that is superior in packaging, superior in in our product, and we’ll emphasize the benefit that we bring. So one of the things you’ll see from us is emphasizing the fact that every Lunchables have a 12 grams of protein. That came through us going through the brand growth system to understand truly for this particular consumer what matters to them.

Now that may be the different case in either to the products, but it’s all done within the context of us understanding a consumer viewpoint of what matters to them. The other thing that makes it unique at Kraft Heinz is that we tie that with our agile scale kind of way of working. So when we are working through this, then we deploy this with agile groups working in a pod in order to then accelerate those changes. So let me give you an example. We did the same thing with Kraft Mac and Cheese.

One of the things we saw was that one opportunity we have is to reclaim the cheesiest Kraft Mac and Cheese. That type of reformulation, which you can imagine when we’re dealing with an icon like Kraft mac and cheese, potentially can take eight or nine months on a normal basis. Yep. We’re doing it in nine weeks. So by the time from us learning about it, being able to deploy, here’s what consumers really want.

By the time we get to back to school period, we will have a superior product highlighting the claims that consumers care about and making sure we have the marketing to reflect those things. So I think this is something that is transformational for us, and we know that it has worked. We have done it in the past in Philadelphia cream cheese, and it has worked. We have done it in Heinz in The UK, which, you know, last year was the first time we actually grew share in about eight years as we go deeper into what consumers care about. And at the same time, we also have seen it now working in things like Capri Sun and seeing the turnaround already beginning to work in the Capri Sun business.

So it’s something that we’ll continue to do. And as Andrew mentioned, there will be a next stage as we actually expand the number of brands that we are launching with the brand growth system in our US, in particular, portfolio. Okay. Great.

Unidentified speaker, Moderator: I guess over the last several years, you have essentially, you’ve curated a strategy and prioritized certain brands and categories based on where you feel you have, like, an elevated right to win. Right. What are the key building blocks that kinda help you determine that you have a right to win? Yep. And then how does that influence the way you prioritize investment that’s behind what you’ve called your accelerate platforms?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Right. And for the audience who may not be familiar with our strategy, you know, we have clarity in separating our portfolio into accelerate, protect, and balance. In an accelerated platforms, we’re either gonna be driving a disproportionate amount of our investment. Mhmm. It is gonna be places like our our sauces business.

Think of it as our ready meals business, which is the cornerstone of that is our Kraft Mac and Cheese brand. And then our snacking business, which is Lunchables is the cornerstone of those. Yep. What they have in common is that, one, these are places where we have tailwinds in the business. So they are in categories that have been growing faster than food.

They’re places where we have the expertise internally and the capabilities internally for us to differentiate our products in a superior way. And then third is also places we have very good strong margins. So that combination of having great positioning, sure that we understand the capabilities and the have the know how of how to grow those businesses and in a place that there’s also get tailwinds makes those accelerated platform the places we’re gonna be continue to the store resources. And it’s not just the money. It’s also the mental horsepower of the organization are gonna be focused on those areas as well.

Unidentified speaker, Moderator: Okay. And then by by I guess, by contrast, if you drill down into protect and balance platforms, which play a different role, you know, how does that translate into recent initiatives?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Yeah. What I would say is, you know, in our protect business, which is our essentially a desserts and beverage business, those are business actually, both of those have very good margins. Mhmm. You know, the category are growing modestly. And for us is how do we continue to make sure we’re differentiated in those products in a way that, you know, potentially, at some point, they could be accelerate.

But for us right now, what we see is businesses that continue to deliver great great margins, help us fuel the growth in accelerated platforms, and still have a role for us to continue to drive innovation in those particular areas. If you think about our balanced portfolio, they are you know, they give us a significant amount of scale. They’re very strong businesses. They have rooted in in particularly in The US. And those are business that we will continue to make sure that we also are having products that are worth paying for.

So this is not us abandoning those business. It’s just being smart about where we deploy resources. And I’ll give you an example. You know, Oscar Mayer, one of those businesses in our balanced portfolio. As we speak, we’re rolling out a brand new packaging for all of our deli cold cuts business that it is 25% less packaging material, that it has a benefit of reclossability for the first time in fifty years.

And, also, now we’re gonna be highlighting the amount of protein that families can get from real food rather than from powders. So that idea of us, you know, just because it’s part of balance doesn’t mean that we’re not gonna focus on those things. We’re just gonna be as smart about how we invest behind those, realizing that we are competing in categories in which they may not have the kind of tailwind in those categories.

Andre Maciel, Executive Vice President & Chief Financial Officer, Kraft Heinz Company: Okay.

Unidentified speaker, Moderator: As you think about future state Kraft Heinz, I I in in portfolio construction, I guess this this relates back to the the the conversation around strategic transactions. You how how does this sort of accelerate, protect balance hierarchy influence how you how you you would frame your future your future per se portfolio?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Listen. I’m not sure if I can answer the question you’re asking, but what I will say is that any any potential transactions will be consistent with our strategy. And that’s the way you know? So this is not don’t look at us completely shifting and used to a new strategy. It would be anything that we will look at will be consistent with that.

Andre Maciel, Executive Vice President & Chief Financial Officer, Kraft Heinz Company: Okay. And if you see what they have presented in the last two categories, we we have specific pages on that. We wanna continue to expand how much accelerate, particularly this elevation represent of the portfolio. Mhmm. We want to continue to increase our exposure to emerging markets.

Unidentified speaker, Moderator: Yep. So Okay. Since you unveiled the Accelerate, know, kind of prioritization that that framework, how would you you know, there’s a lot of external influences that have inhibited progress, but how would you grade your your own sort of execution against what you can control with respect to accelerating the Accelerate platform?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Yeah. What I would say is, you know, the when we talked about the our strategy and the long term algorithm that we laid out, it was predicated on three things. It was predicated on us getting to double digits in emerging markets. Yep. By the end of this year, we’ll be we’ll be at that long term algorithm of double digits in emerging markets.

It was predicated on us continuing to grow our away from home business. And what I’ll say globally, we are growing in outside, as I mentioned earlier, outside The US, flattish as we go into exit this year, building the right fundamentals by expanding into new channel for us to drive the growth as we go to the future. And I think the the one that has been more challenging has been the The US accelerated platform, which is why we have prioritized those places for us to put the brand growth system and produce us to put the incremental investment. When I tech to get to the when I talk mentioned the idea of getting to marketing levels that are at least 4.8%, this is not spreading a peanut butter across the company. This is focused on The US accelerated platform where we believe we have opportunity for us to continue driving that growth.

Okay.

Unidentified speaker, Moderator: Clear. Andre, you know, tariffs and, you know, changes in tariffs and just changes in global trade have created incremental complexities that, again, weren’t weren’t conceived coming into the year. I guess, level set us on how that’s impacted Kraft Heinz today and and and what it’s doing to impact how you you plan for business, you know, in the back half and, frankly, as you early plan for for beyond ’25.

Andre Maciel, Executive Vice President & Chief Financial Officer, Kraft Heinz Company: Sure. So as we have said before, 99% of the products we consume in The US are produced in The US. Mhmm. And 90% of the raw and packaging materials are sourced from The US. So to a certain extent, that minimize the impact.

Being said that, there is still a relevant impact. We said in last earnings call when China tariffs were still expected to bet a hundred and 45 percent that our our the potential impact will be an incremental 50 to hundred bps on inflation. There are a lot of things emotional as you would expect. The procurement team assessing actively assessing places where alternative sources are available. So some things started to be put in motion.

We obviously built inventory at the beginning of the year before those tariffs were put in place, which should delay a little bit the the effect in in the P and l. We there are reformulations where this makes sense. There is mixed opportunities. You got capitalism, for example. Certain SKUs are totally sourced in The US.

Some others have part of the components coming from China, so that is something that the commercial teams are also doing, prioritizing those items in the West that have less exposure to inflation. And there is price as well, which in some cases, we we see the need to price. And and if if the tariffs remain as they expected to be, we will take action.

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: The one thing I would add is that in spite of all the volatility, you know, we continue to stay focused on those things we can control. And I think the way we are also managing our cash in even in this particular moment, I think, also gives us quite a bit of flexibility, which is why we are able then to invest back in the business as well too. So I think this is something that, you know, the team has taken a lot of pride on that even as we have gone through through, you know, five years of COVID inflation and now the volatility that we see in the marketplace that we continue to improve our cash position and the way we’re managing our balance sheet.

Unidentified speaker, Moderator: K. Good. In terms of I was this is a question on productivity, but it it’s also a question on capability building because you’ve you have put put a lot of emphasis on sources of productivity that are really they’re really sources of profitability, right, in terms of marketing effectiveness and op and automation and and investments in technology. They drive efficiency, but if they’re done correctly, they also benefit the top line. Can you you maybe give us an overview of some of the the the most important investments you’ve made what kind of returns you’ve seen on those investments?

Andre Maciel, Executive Vice President & Chief Financial Officer, Kraft Heinz Company: Look. I think being an efficient operator and operate in a very productive way is part of our DNA, and we always continue to be so. There are several things in motion on the supply chain side. As we have said, we have now several years of of very strong productivity, and we feel confident about the pipeline moving forward. It’s a combination of process, discipline, a lot of talent upskilling, and technology investments.

We invested, for example, millions of dollars in new demand and supply planning capabilities, some of which we built, like, pretty much proprietary with together with with one of our partners that help us to improve a lot forecast accuracy, by consequence, help us to improve logistic costs and working capital. Revenue management, we spend billions of dollars in price promotions. We have dedicated teams. We have a global center of excellence. We have dedicated teams across the countries in The US alone.

We have 50 people only doing that in the last five years. We doubled the amount of promotions that have positive ROI, and there is more room to come. And there is a whole spectrum of things in the way. Marketing is an area that we didn’t have very good consistent visibility across the board. And now we have very detailed understanding on the marketing arise across brands, media types, where where there is opportunity to close gaps to benchmarks.

So there is just all I could spend probably thirty minutes just talking about what you’re doing on the marketing front to improve the ROIs of those investments. The visibility is great now. So it it really SG and A, we have we have now two captive centers, one in India. We just opened a new one in Mexico Second Half Of Last Year. And even though people think that we are extremely lean, there is still a lot to be done in terms of moving more certain type of activities to the shared services organization and being actively doing so.

We have 800 people in India already, 200 people in Mexico, and there’s a whole pipeline of new activities that are gonna be transferring over time. So so there is a a lot to do at least even the company to be more productive. And and this is great because allow us to free up more resources to, among other things, step up investment in product and marketing is to protect the cash flow.

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: I think there’s a it was a big shift in our company going from, you know, the past decade on cost reductions to driving efficiency and making that part of our DNA. And I think, you know, if I was gonna go a little bit deeper on the supply chain side, what I would say is our focus is driving efficiency from farm to fork. So we’re working, whether it’s farmers in Brazil, on how they can improve the yield using AI in order for them to get more tomatoes out of their crops. We’re working, as Andres said, with logistics in order to make sure that we are able to get to the products to the consumer the fastest way possible by us ingesting data directly from the customers. So that way, if a particular trend is happening in TikTok and a particular flavor is pulling up, you know, better in Kroger in Cincinnati, we’re able to then make sure that our logistics team with our human intervention can then shift order directly to that particular area of the country.

But it also is in places in our manufacturing. So we have what we call the connected operator, and what it does is it allows the operator to understand better how is to most efficiently drive that particular line in order to reduce waste and anticipate any maintenance issues. As a result of that, over the last two years, we’ve actually reduced our food waste in our factories by 40%. So those are things that, you know, externally you may not see, but it drives a huge amount of efficiency, and it gives us room for us to continue to focus on it as we go forward so that we can spend back in the business as well.

Andre Maciel, Executive Vice President & Chief Financial Officer, Kraft Heinz Company: Yeah. We have added sensors across factories, and and it’s amazing. We have, like, a real time visibility, like, real time visibility of several things. So you can see if I could then start to vibrate in in a certain way, that is indication that maintenance needs to be done before the machine stops. We have place where we can see real time where there are certain settings overfilling an equipment.

So then you can send instructions straight to the floor or people to adjust settings, then we stop overfilling at that moment and don’t wait until month ends to learn that something happened. That’s a monthly it’s like active management. So there’s there are lots of things in that space. It’s very exciting.

Unidentified speaker, Moderator: Yeah. Because we can’t see on the outside, are are you are you on track? Are you ahead of your original ambitions since you since you set on these journeys, or, you know, or is it a mix?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Yeah. I would say in terms of us driving the productivity to fuel the business, we’re ahead. I think in a long term algorithm, we we we were planning around a 3% savings. Mhmm. We deliver higher than the last couple of years.

And this year, we are planning to end the year closer to almost four. So and, as Andrew said with the example of SG and A, just because we’re a linked company doesn’t mean that we still don’t have a huge amount of opportunity. Yep. And I think this idea of us looking at global shared services is another angle. And I think the use of AI in our system, whether it’s revenue management or in our factories or in logistics, I think that’s another place in which we’re gonna continue to be able to drive efficiency for the time being.

Unidentified speaker, Moderator: Okay. Two hot topics across food and food and beverage. Only

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: two, Steve?

Unidentified speaker, Moderator: Well, that are ex there are many. But the from an externality perspective, the the you you alluded to kinda health and wellness, but also, you know, regulation associated with that. Yeah. So incremental regulation, specifically in The US around formulation and and food dyes as you alluded to with macaroni and cheese. But then also discussion around SNAP and food assistance programs.

How material are those sort of governmental actions, you know, depending on how they take shape on your on your planning and on in your business? How are you and how are you thinking about it?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: So let me separate those two things Yep. Because they’re very different Yeah. Approach to them. I think in artificial colors and dyes, I would say, today, our portfolio, 90% of our portfolio doesn’t have any artificial colors or ingredients or anything like that. If you look at our accelerated platform, that number actually is 97%.

Okay. So really is a desserts and beverage kind of situation. I think what’s happening right there is that our approach is two three things. It’s whether we replace, places where we can, you know, change color pretty quickly, whether we have to then find a different type of solution, or we’re basically gonna reinvent the whole product. So I’ll tell you examples in which, you know, we have made some pretty quick changes in red colors and so forth because we knew how to do those things.

Yep. Things like the color blue and purples are harder, so we actually reinvent in how we go to consumers with those type of products. But we already have dedicated agile pods working against those within beverage and desserts to make sure that we stay ahead of any regulations coming into the future in the pipeline. So I feel actually very good that we have a a good sense of what has to be done and a because it’s also very narrow in scope. It’s something that we can attack pretty quickly.

I think in changes step of snap, obviously, the bill’s still being decided in in, as you know, in the senate. A lot of discussions happening. You know, what I will say is, you know, I think for us, it’s important that we make sure that, you know, our that our products continue to be enjoyed by families everywhere in The US. I think if you look at our exposure to Snap, we went from maybe three years ago, it’s about 20% of our portfolio was supposed to Snap. Today, that number is more like 13, which is about the industry average.

So it’s not like we have a disproportionate amount of exposure to SNAP. And at the same time, I think some of the waivers that you have seen in state local local governments around whether it is sugary products, whether it’s candy, soda, actually doesn’t affect us in our portfolio much either. So I think that, you know, while it has an impact, I will say, yes, in the scheme of our peer set and food companies, I will say it’s probably less so than others.

Unidentified speaker, Moderator: Okay. Very good. In the a couple of minutes left, a couple more questions. You, you know, you’ve you’ve talked about you’ve highlighted an ownership mindset and tried to instill an ownership mindset across your employee base. To what extent do you feel like you’ve been able to do that?

And do you think it’s a truly a point of differentiation?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: A %. I think that you know? And you can see that. I mean, the fact that is that, again, this we talked about efficiency. The idea that efficiency is not just about what happens in the, you know, in the floor in the factory, but it’s what happening in our marketing spending.

It’s what happening in our sales and trade investment. Everyone in the company is thinking with that level of efficiency because they are protecting their own dollar. It’s their company. We’ve also seen that we are also driving the highest engagement with our with our employees. You know?

So last year, in the moment all this volatility happened around us, we had the highest engagement we ever had. We actually prefer you know, prefer work to place to work in 22 different countries, including The US. So there is a sense of pride to what we do about reminding people, but the people are very clear on the purpose of why we exist as a company, which is for us to deliver great tasting quality food for people around the world. And I think people take a lot of sense of ownership and pride. It’s also you can see that in the way we ex looking at our brand growth system.

It is to say we are gonna be intellectually honest with ourselves to say, if there are places that our quality is not up to the superiority that we need, a consumer expect from us, we’re gonna do something about it. We’re not gonna get defensive. We’re gonna get offensive about it. And if that means that we need to then change of our communication, change the packaging in our claims, making sure that we have the right messages, that maybe we change from more emotional advertising to more product based and claim information, that’s what we will do because that’s what consumers expect from us. So I think it’s a sense that we are now afraid to kinda look at ourselves and say where we can do better, and I think something translated across entire organization.

Unidentified speaker, Moderator: Great. Maybe as a as a way to wrap up, you know, earlier this year, you framed the current year, ’25 as a year of stabilization, with ’26 being a return to growth and ’27 aspiration being, you know, a return to on algo performance.

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Yeah.

Unidentified speaker, Moderator: Since then, obviously, near term dynamics have have been have been different and more challenging as we’ve discussed. How does that impact, as you sit here today, your ’26 and ’27 ambitions?

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: I would say it’s a little early for me to start thinking about ’26, ’20 ’7 where we still have to navigate a few things in ’25. And I think, you know, you saw that our revised guidance is about us making sure that we reflect the moment, but that we also are reflecting the fact that we are gonna be going in offense by us investing more into our business. So I think in moments like this in which it can be challenging, you can see companies whether they retreat or go forward, and we wanna go forward. We wanna say, this particular time, we’re actually gonna spend back more ambition because we believe in our brands. We believe that we bring great solution for consumers.

And I think that’s how we’re gonna be navigating 2025. And then 2026, you know, look forward to talking to you further as we go throughout the year. Yeah.

Unidentified speaker, Moderator: Very good. With that, we’re right about at the end of the time, so I’ll wrap it there. Thank you, Carlos. Thank you. Thank you, Andre.

Thank you all for joining us.

Carlos Abrams Rivera, Chief Executive Officer & Member of the Board of Directors, Kraft Heinz Company: Thank you for your time. Yep.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.