In the world of Consumer Packaged Goods, businesses are generally defined by their categories and where they appear on shelf at retail. To fuel growth, Kraft Heinz is taking a different approach, looking at their businesses by consumer platforms instead of category definitions. I sat down with Nina Barton, Chief Growth Officer at Kraft Heinz, to learn more about why this is such a meaningful change and to discuss the new operating model behind this move.
Dave Knox: Chief Growth Officer is a newer title at companies. What falls under your role at Kraft Heinz?
Nina Barton: Here at Kraft Heinz, I have one simple mission, which is to trailblaze growth for the organization. That means a couple of things. First, we focus on building out capabilities like creativity. We also drive closer consumer insights, which includes working with our R&D organization to develop market leading technologies based on these insights. The second bucket is building up new businesses and new business models for trailblazing growth. I have the pleasure of leading our in-house incubator Evolv, where we are working with entrepreneurs to develop new businesses. I also work with a breakthrough innovation team that is looking for the next big consumer idea, a venture fund that invests in forward looking growth areas, and a strategy team that is helping to craft the strategy of the organization. These are all pieces that help build up the business. Finally, I lead the eCommerce business around the world.
Knox: Given the consumer insights work that you team focuses on, how have you seen consumers evolve in the recent years?
Barton: That’s what makes my role so exciting! Just when you think you have figured it out, consumers continue to evolve and change. Over the past few years, we have seen several trends continue to grow. The first is eCommerce. Food has lagged some of the other industries in terms of eCommerce, but we have seen, especially since the pandemic, acceleration in this area. Second, consumers are looking for more taste in every bite, and they are willing to experiment to find solutions. As they continue to expand their taste horizons and what they want out of food, I get excited because it allows us to help them experiment and push their boundaries. Third, they are looking for product solutions that help them with convenience. Part of it is how they get food into their home and how the products help them to live a more convenient life. Fourth is the increase in snacking and mini meal occasions. That’s been a trend that has been growing for a while, but what we have seen recently has been an increase in what we call whole food solutions.
Knox: With those changing consumer behaviors, how is Kraft Heinz aligning the business to meet those needs?
Barton: Over the last 12 months, our leadership team has been focused on transforming the company. We launched a new enterprise wide strategy that takes consumer needs and brings them into the core. We’re shifting our business from a focus on categories, like ketchup or gravy, for example, to focusing on consumer needs. We have six platforms that are all arranged around consumer needs. Four of these platforms will be our focus for growth that we will disproportionately invest in. These include:
· Taste Elevation, which really hits on that concept of consumers wanting more taste from their food.
· Real Food Snacking, which hits on that trend of wanting to find whole food ingredients in snacking occasions.
· Easy Meals Made Better, where consumers need help with the constant tradeoff between convenience and wanting to find solutions they can feel good about feeding their family.
· Fast Fresh Meals, where we provide solutions for the consumer in convenience, to make meals in under 45 minutes.
Knox: When we look at your role as chief growth officer, you mentioned that you have the incubator, venture capital fund, and several other tools. How do you determine where you are going to allocate resources to invest in growth?
Barton: We make future investments based on several factors. We look at everything from growth possibilities for ourselves, our right to win – in other words, our competitive advantage – how the competitive landscape looks and then, of course, the trends we see in the market. We already know the role that we want each of the platforms to play. We will have differentiated levels of investments based on where the platform sits. It is also important to note that with our new enterprise strategy, we are going to be investing 30% more in marketing, so that we can fund the growth that we need for the future. All those criteria together, plus the increased investment, will set us up for great growth.
Knox: One of the areas under your purvey is the world of eCommerce. How does the growth in eCommerce change how you develop those marketing strategies around your products and brands?
Barton: Obviously eCommerce has grown rapidly around the world, particularly during the pandemic as consumers have been looking for ways to bring products more easily into their home. At Kraft Heinz we’ve been focused on developing new marketing capabilities to ensure that we are top of mind for the consumer when she visits these platforms. So, for example, we want to make sure that when she goes to any of our retail partners and looks for one of our great products like Kraft Mac and Cheese, she can find us and she has the right way to understand what the product is. We are creating new content, making sure we have the right assortment of products, and increasing our data analytics. We also want to have 360-degree connectivity to the consumer when she leaves the platform as well. The other part that is important to us is partnering with our retail partners to continue to accelerate our omni channel supply chain. A lot of our retailers are shifting to an omni channel approach, and we want to make sure that our supply chain is as seamless as possible, so that we have the right products available at the right time. The investments that we have been putting in have been outstanding, and we are seeing a significant growth in our business. Our share has significantly outpaced our brick and mortar share. Our strategies are working, although we have a lot more to do. We’re excited about the future of eCommerce and the possibilities it brings us.
Knox: You mentioned the pandemic and the impact on eCommerce. What has Kraft Heinz learned over the last few months and has it shifted your strategy at all?
Barton: It has been such an unprecedented time for all of us. I do not think the word unprecedented will ever mean the same thing for me in the future because we have used it so much. Without question, it has been a tough time for the entire globe. And for us at Kraft Heinz, it challenged all parts of our business. What we learned was how quick and agile we could be, which was a competitive strength for us. Our ability to respond with speed was so crucial to responding to this pandemic. It’s the backbone of our transformation. The other part was our employees. We are so proud of them. They came together with pride as we really focused on feeding people at a time when food stability was critical. Overall, we are proud to say our business is executing well through COVID because we had already started our transformation. And we continue to look for ways to invest in our brands and our future as we continue the transformation through our enterprise strategy.
Knox: You just wrapped up with Kraft Heinz sharing a new operating model with investors and analysts. What are the main takeaways of this strategy?
Barton: I’ll try and take quite a few months of work and analysis and boil it down to the simplest of ideas. The new operating model is an incredibly powerful unlock for us. At its core, it allows us to do two things. First, it allows us to leverage our scale. We are a large company. In the U.S. alone our household penetration is 97%. Second, at the same time we are going to build out our agility as an organization to move faster. So together at the core, from a behavioral standpoint, we have scale plus our agility and that powerful combination is the foundation for us.
We started with our most important asset, our people, and coupled that with our new purpose, Let’s Make Life Delicious. We are investing in building out our teams and we are connecting our company to the communities and the environments in which we work. The second part of the model is to put the consumer back into the center of everything we do. The platform strategy allows us to reorganize the company around the consumer. And this shift allows us to look at consumer trends and consumer needs without the constraint of category definitions. The third part is what we are calling Ops Center, which brings together our procurement, supply chain and operations groups in a new way to unlock increased efficiency. The fourth part of our model is to partner with our retail partners and suppliers in new ways to create value for both them and Kraft Heinz. And finally, the fifth part, we will generate investments that will allow us to invest back into growth areas in differentiated levels, both in terms of our platforms and globally as we look at countries to invest in.
This model is a flywheel that allows us to go cyclically from our people through to our consumer, through to our Ops center, through to our partnerships, through to our investments back into our business.
That is basically our new model. I am so proud of Kraft Heinz employees as we have charted this new and exciting journey, and I’m very excited about the next chapter and what it holds for us as a company.