Why KraftHeinz Views Platforms, Not Categories, As The Future Of Food

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This is a podcast episode titled, Why KraftHeinz Views Platforms, Not Categories, As The Future Of Food. The summary for this episode is: 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.

Nina Barton: At Kraft Heinz, I have one simple mission and I have one simple thing that we're focused on with my team, which is to really trailblaze the growth for the organization.

Dave Knox: I'm your host, Dave Knox and this is Predicting The Turn, a show that helps business leaders meet their industry's inevitable disruption head on. Welcome to another episode of Predicting The Turn. Today, we sit down with Nina Barton, chief growth officer at Kraft Heinz to talk about her journey and where Kraft Heinz is going in the years to come. Nina, welcome to the show.

Nina Barton: Thank you very much for having me I really appreciate it.

Dave Knox: Oh, it's my pleasure. So I want to start with a little bit of a grounding on your background. Can you start with a little bit about your career?

Nina Barton: Yeah, sure. I've been in the industry, the consumer industry for over 20 years and I started my career in marketing. I've always had a passion for that, I've always had a passion for the consumer and a passion for understanding what they do. I joined Kraft Heinz, which is now Kraft Heinz in 2011 and I've had the pleasure of touching many of our businesses. I worked on our Philadelphia business, our coffee business, and before this turn I was actually the president of our Canadian business where I got to see the entire portfolio. And then last fall, I was promoted to the global chief growth officer role for Kraft Heinz.

Dave Knox: So I want to dive into that role a little bit more. So growth officer is kind of a new title, so what's encompassed in that role as chief growth officer?

Nina Barton: Yeah, it's a great question. It's actually one of those titles or roles that can actually mean a lot of things. And for us at Kraft Heinz, I have one simple mission and I have one simple thing that we're focused on with my team, which is to really trailblaze the growth for the organization. So what that means for us is actually we do a couple of things. We focus on building out new capabilities for the organization. So for example, we work on building out creativity in the organization and building that creativity muscle, we're accelerating our insight approach and driving closer consumer insights. And I also work with our R&D organization develop market leading technologies. That's one bucket of things that we work on. The second is building up new businesses and new business models, so really trailblazing the growth. So I have the pleasure of leading our in house incubator Evolve, where we're really developing with entrepreneurs new businesses to the market. And I also work with a breakthrough innovation team that's looking for the next big consumer idea. We also have a venture fund that invests on forward looking growth areas and we have a strategy team that's helping to craft the strategy of the organization. So those are all the pieces that we build in terms of building up the business. And finally, I have the absolute pleasure of leading the eCommerce business around the world.

Dave Knox: So you talked about the consumer insight falls in and how you think about that application to R&D and where things are going. How have you seen consumers evolve in the recent years and probably in the last few as well?

Nina Barton: Yeah, the consumer path and the consumer change is something that continues to evolve and that's what makes my role so exciting and frankly, why I've always loved the consumer, just when you think you have them figure it out or you understand, they continue to evolve and change and that makes it for a lifelong pursuit to understand what makes them tick and how they want to continue to live their lives. I think over the past few years, we've seen some trends that have continued to grow. So the first, which has been accelerated actually recently is the rise of eCommerce and consumers really looking for ways to get food into their home, which is something really that's grounded in the concept of convenience, but really for the consumers to understand ways to live their lives. And food has lagged some of the other industries of the rise of eCommerce, but we've seen, especially since a pandemic, the acceleration in this area, that's one big trend that we're seeing. The second is consumers are really looking for more taste in every bite, and they're really willing to experiment to find solutions and it's something that as they continue to expand their taste horizons and what they want out of food, I get excited because it allows us to really help them to experiment and push their boundaries. The third, which is linked to that first one that I mentioned to you is a continued desire for convenience and really they're looking for product solutions that help them with convenience. So part of it is how they get the food into their home and also how the products that they have in their home once they get them there, that they can really help them to live a more convenient life. And the fourth one is the increase in snacking and mini meal occasion. That's been a trend that has been growing for a while, but what we've seen in the more recent months and years has been an increase on what we're considering whole food solutions or real food solutions. So things that feel more real to the consumer that help them to find great snacking and mini meal occasions. So those are the trends, there's lots of trends but those are trends that we're continuing to see rise in the last few years.

Dave Knox: So with all of these changing consumer behaviors, how are we going to be aligning the business to meet those needs?

Nina Barton: Yeah, it's a great question. Over the last 12 months, myself, our leadership team led by our new CEO, Miguel Patricio have really been focused on how we're going to operate the Kraft Heinz business going forward. And central to that was the concept of taking those consumer needs that I just spoke to you about and bringing them into the center of our business. So we actually in the last few months have launched a new enterprise wide strategy that's really going to take these consumer needs that I just mentioned and bring them into the core. So we're making the shift in our business from a category focus, which is basically how we've always run our business to a platform focus. And that platform view will allow us to, instead of focusing on category definitions, like for example, ketchup or gravy, it will allow us to focus on a platform consumer need. So for example, taste elevation. So instead of looking solely through the category, we're able to bring together a number of consumer needs and address that instead. So this shift will allow us to basically address some of those trends that I mentioned before. In total, we have six platforms and they're all arranged around those consumer needs. There's four that are going to basically be our focus for growth and we will disproportionately invest in, and our platforms, those four platforms, our taste elevation, which really hits on that concept of consumers wanting more taste from their food. Real food snacking, which really hits on that trend of wanting to find real whole food ingredients in snacking occasions, easy meals made better where consumers are looking for the constant trade off between convenience and wanting to find solutions they can feel good about feeding their family and fast fresh meals where we really provide solutions for the consumer in convenience, that she can make meals in under 45 minutes. So each of these four platforms are really going to address the concepts that I mentioned earlier in terms of the consumer needs.

Dave Knox: So that brings up an interesting one when you think about platforms. When you think about your brand portfolio, do they need to play under a single platform or all of the platforms?

Nina Barton: We think about brands or the ability for brands to go transversely across platforms. So while some brands will sit primarily in one area, for example, Oscar Meyer sits in fast fresh meal, if there was a desire to bring it into another platform, like say real food snacking, because we thought that was going to provide a benefit, we would look at the consumer need first, and then we would understand what was the right brand to address that, so that's how we think about our brands. We have some brands today that will travel across platforms from the start. For example, our ketchup sits in taste elevation. Our Heinz ketchup sits in taste elevation, but we also have Heinz beans globally that will sit in easy meals made better and we're comfortable with that because they're really focused on the consumer need and the right way to meet them.

Dave Knox: So when we look at your role as chief growth officer, you mentioned that you have the incubator under you, you have the venture capital fund and then some R& D efforts, have you determined where to make the future investments and how you're going to allocate the resources for those investments?

Nina Barton: Yeah, that's a great question. We really make future investments based on a number of factors. So we look at everything from growth possibilities for ourselves, our right to win, like our competitive advantage, how the competitive landscape looks and then importantly, the trends we see in the market. So we do prioritize the platforms. We already know the role that we want each of the platforms to play. We think about it in three buckets and we look at prioritizing across those platforms from that standpoint and we will have differentiated levels of investments based on where the platform sits. It's also important to note though that with our new enterprise strategy, we're going to be investing 30% more in marketing, so we make sure that we can fund that growth that we need for the future. So all of those criteria together, plus the increase investment is going to set us up for great growth.

Dave Knox: Talent is a big part of predicting the turn and as we talk about talent, I wanted to mention one of our sponsors, Hunt Club. Imagine the power of the best marketers in the world, helping you to find your next marketing leader. That's the power of Hunt Club. Hunt Club is a new category of talent company that powers the network of experts, connectors and business leaders to help you find the best talent. Let's face it, recruiting hasn't changed with the times. Hunt Club is changing the recruiting game by leveraging technology and crowd source referrals to find you the best people possible for your company. Stop paying job boards that don't work or recruiting firms that recycle the same active candidates, partner with Cunt Club. So speaking of growth, 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?

Nina Barton: So eCommerce has really grown rapidly around the world as you know, and it actually has been accelerating during the pandemic as consumers have been looking for ways to bring products more easily into their home. So what we've been focused on at Kraft Heinz has been developing new marketing capabilities to ensure that we're 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, Kraft Mac and cheese, that she can find us, and that she has the right way to understand what the product is. So we're focused on creating new content, we make sure we have the right assortment, we've focused on increasing our data analytics and we want to make sure that we also have a 360 degree connectivity to the consumer when she leaves the platform as well. The other part that's really important to us, that we've been focused on is we've been partnering with our retail partners to continue to accelerate our omni channel supply chain. So 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 to make sure that we have the right products available at the right time. And what we have been seeing, which has been great is we've seen it paying off for us. The investments that we've been putting in have been outstanding, and we're seeing a significant growth in our business. Our share, for example, well, I'm not going to share the absolute numbers, has been significantly outpacing our brick and mortar share. So we know that those strategies that we've taken are working, although we have a lot more to do and we're excited about the future and the possibilities it brings us.

Dave Knox: Let's switch gears a little bit and talk about the impact of COVID. Obviously it's been impacting businesses far and wide, what's been the impact on Kraft Heinz and what have you learned that you think will benefit the company in the future?

Nina Barton: Mm- hmm( affirmative). I think it's been such an unprecedented time for all of us. I mean, I don't think the word unprecedented will ever mean the same thing for me in the future because we've used it so much and I think that as we look at what has happened, it's been a tough time for the entire globe. And for us at Kraft Heinz, it challenged all the parts of our business, for our supply chain, to our procurement, to how we showed up as commercial teams. At the same time, it increased at home consumption of food and it challenged the entire food industry. So what we learnt was how quick and agile we could be and what was so interesting is that we realized that our agility is something that is going to be a competitive strength for us. Our ability to respond with speed was something that was a huge learning for how we responded to this pandemic. And it's actually going to be a part of our 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 really, really critical and that's been our big focus. Overall though, we're 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 especially as we continue the transformation through our enterprise strategy.

Dave 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?

Nina Barton: Yeah. If I could try and take quite a few months of work and analysis and I'll try 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. It allows us to leverage our scale. I mean, we're a large company, in the U. S. alone, for example, our household penetration is 97%, that's a massive penetration. At the same time, we're going to build out our agility as an organization to move faster. Something that we actually realized and worked through as we've been working through the pandemic. So together at the core, from a behavioral standpoint, we have scale plus our agility and that powerful combination is going to be critical for us as the foundation to this. We started though the model, the actual model that we're using going forward with our most important asset, which is our people and coupled that with our purpose. So we're investing in building capabilities, we're investing in building out our teams and we're bringing together our ESG to connect 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 in the organization. So the platform strategy that I talked to you about earlier, that really allows us to reorganize the company around the consumer and putting the consumer need back at the center. And this shift allows us to look at consumer trends and consumer needs without the constant constraint of category definitions. And also coupled with increased investment that I talked to you about is going to fuel our growth. That's the second part. The third part of the model is what we're calling op center, which brings together our procurement, supply chain and operations groups together in a new way to unlock increased efficiency. The fourth part of our model is to partner with our retail partners and suppliers in absolutely new ways to create value for both them and Kraft Heinz. And finally, the foot 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 differentiated. So this model is a flywheel that allows us to go from our people through to our consumer, through to our ops center, through to our partnerships, through to our investment back again to our people, so that investment goes cyclically. That is basically our new model. Underpinned bring together the scale of Kraft Heinz with our new agility.

Dave Knox: And when you dial that in and think about the work you're doing with growth in particular around the incubator, the venture fund and all the other forward thinking approaches, how's that new operating model going to change the way you and your teams do business going forward?

Nina Barton: No, I think it's going to affect all areas of our organization. We have now a clear plan to accelerate growth at Kraft Heinz overall. But we do recognize that this is going to be a journey. So we expect this transformation to touch all aspects of the organization. Within my area specifically, we will be focusing on leveraging our scale, but more importantly, in addition, we will be focused on agility and making sure that we have the speed of innovation, of new ideas that we can bring rapidly to help fuel growth. So my area focuses a lot on what is the future, how we trailblaze for the future, how we continue to fuel growth, but agility and scale are equally important. As an example, if I look at our eCommerce business, if we had not been as agile as we had been, if we had not started this transformation, if we didn't have ops center and our supply chain integration already working and the strong partnerships that we have with our retailers that was a start of this new model, our eCommerce response would not have been as strong as it needed to be. And so, I'm proud to say that we already see the model in action as I look at areas like eCommerce, and will continue to focus on that as I look across other areas of my growth organization globally.

Dave Knox: So earlier we talked about the challenges of COVID, we've talked about all the work your team has put into the new operating plan and what you just shared. What would you point to as your biggest challenge and accomplishment in the last year?

Nina Barton: There's a lot. It's been definitely, as people have said many times, it's been an unprecedented year, and I think both because of the pandemic, but also because of the transformation that we're going through at Kraft Heinz. I think the biggest challenge was the impact that COVID had on the business and the speed at which we were able to respond. We focused first and foremost on the health and safety of our employees and creating a consistency of the supply chain. And as I mentioned already, the lift that we have seen in eCommerce is unprecedented and had required us to respond incredibly quickly for an industry that lept forward about two to three years. And that challenge was something that really tested us as an organization and we're very pleased with the response that we've been able to have. I think the biggest accomplishment is a very broad one, it's not mine alone, but it's one that I worked on with the entire leadership of Kraft Heinz and a lot of our employees, has been the transformation that we've started. I'm so proud of the Kraft Heinz employees as we've charted this new and exciting journey and I'm very excited about the next chapter and what it holds for us as a company.

Dave Knox: Well, I really appreciate you sitting down to share a little bit more about the journey and where the company is going, so it's been pleasure having the conversation.

Nina Barton: Thank you very much and I hope you have a great rest of your day.

Dave Knox: Thanks so much for listening. If you like the show hit that rating and make sure to subscribe so you don't miss a single episode. And for more resources, head over to predictingtheturn. com.

DESCRIPTION

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.