Kraft Heinz's announcement that Miguel Patricio is replacing Bernardo Hees as CEO raises questions over what went wrong and what to do to fix things.
div > div.group > p:first-child"> Brazilian private equity firm 3G Capital built its reputation by scooping up iconic consumer brands, aggressively cutting costs and using those savings to fund acquisitions.
During his run at AB InBev, Patricio oversaw brands including Budweiser and Stella Artois, boosting sales growth excluding impact from mergers and acquisitions by high single digits. The brands accounted for nearly a third of overall such growth in 2018. In his final year as chief marketing officer, AB InBev was the most awarded brand owner at the Cannes Lions awards for advertising and creative communications.
Kraft Heinz extracted roughly $1.7 billion in savings over two years. The company helped support those savings by slashing research and development and tightening marketing dollars, analysts say. It also cut 2,500 jobs — roughly 5 percent of its workforce — within a month of the merger. Then, three months later, it slashed another 2,600 jobs.
The company also shifted its focus from pumping out scores of new products that often fall flat for Big Food brands to taking limited"big bets" on new products. It redid its Oscar Mayer facilities at a rapid-fire rate but was plagued with operational issues, analysts said. The strategy's shortcomings were evident in the results of some key brands, which ceded ground to competitors.
Before Monday's shakeup, Kraft Heinz had hired only one external U.S. senior executive during the past two years — General Counsel Rashida La Lande. The firm has been actively scouting out new acquisitions, people familiar with the situation say, including deals in the chemical sector — implying it's very much a believer in its strategy, despite the challenges at Kraft Heinz. A spokesman for 3G Capital did not immediately respond to a request for comment Tuesday.
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