CO-LOCATED WITH:

Kraft Heinz replaces CEO with AB InBev marketer Miguel Patricio

Ad Age 22 Apr 2019 05:23

Kraft Heinz Co. is bringing in Miguel Patricio, an executive with years of marketing experience in the competitive beer industry, as CEO as the packaged food maker tries to regain relevance.

Bernardo Hees has been CEO of Kraft Heinz since the company was created with the 2015 merger of Kraft Foods Group and H.J. Heinz Co., a move orchestrated by investors 3G Capital and Berkshire Hathaway. He will leave the CEO role on June 30. The change at the top comes two months after Kraft Heinz took a massive $15.4 billion charge to write down the value of assets including the Kraft and Oscar Mayer trademarks, slashed its dividend payout, disclosed an investigation by U.S. regulators into certain accounting practices and posted weak quarterly results.

Patricio spent two decades at Anheuser-Busch InBev, the world's largest brewer, including serving as its global chief marketing officer from 2012 to 2018. He led marketing as the brewer grew international distribution of Budweiser, Stella Artois and Corona in key markets such as China.

“We think this change at the helm is a good sign for investors because it demonstrates that the company is very serious about pivoting its priorities toward growth rather than just cost-cutting,” Credit Suisse analyst Robert Moskow said in a note to clients, adding that “Kraft Heinz needs to regain its marketing acumen.”

When Kraft Heinz was formed in July 2015, the company touted its “unparalleled portfolio of iconic brands.” But Kraft Heinz came to rely more on cutting costs to boost profits rather than seeing any big sales growth driven by the strength of its brands. In fact, sales in 2018 were roughly $26.26 billion, lower than the combined annual sales of the companies in 2015 of about $27.45 billion, aided by a 53rd week in the fiscal year.

It’s clear that Kraft Heinz is excited to get an executive with a strong marketing background at the helm. “In his final year as chief marketer, AB InBev was the most awarded brand owner at Cannes Lions 2018,” Kraft Heinz pointed out in its statement announcing Patricio’s appointment. And Alex Behring, a co-founder of 3G Capital who serves as chairman of Kraft Heinz’s board and is also a director of AB InBev, in a statement cited Patricio’s “distinguished track record of building iconic consumer brands around the globe, driving top-line revenue growth through a focus on consumer-first marketing, innovation, and people development.”

Kraft Heinz has plenty of well-known products, including its Kraft macaroni and cheese and Heinz ketchup, which lead their categories. And it has been spending to promote some of its brands, including running two Super Bowl commercials this year. One of the spots was for longtime nut brand Planters and another one for frozen brand Devour, which launched in 2016. However, while many Kraft Heinz products have been updated to remove artificial ingredients and been put in convenient packs to make them appeal to today’s shoppers, the brands have lost some ground to smaller competitors more in line with people’s changing tastes. Also, many industry watchers expected Kraft Heinz to be acquisitive to keep growth going. Instead, it has yet to make a major acquisition and failed when it tried to buy Unilever in 2017.

In bringing in Patricio, Kraft Heinz gains an executive with marketing chops and international experience who is also familiar with 3G. Partners of the investment firm including Behring sit on AB InBev's board and through various holdings own a big stake in the brewer.

Patricio, a Portuguese citizen, joined Ambev, AB InBev's Latin America operation, in 1998 as VP-marketing. He went on to hold executive positions in North America and Asia Pacific before being named global CMO. In July, AB InBev placed Pedro Earp, who had been running its global innovation unit, in the CMO spot and moved Patricio into a new role overseeing global marketing projects. Prior to AB InBev, Patricio held roles at companies including Philip Morris, Coca-Cola Co. and Johnson & Johnson.

In February, Kraft Heinz posted a fourth-quarter loss of $12.6 billion, or $10.34 per share, weighed down by the hefty $15.4 billion non-cash charge. Fourth-quarter sales ticked up modestly to $6.89 billion from $6.84 billion.

Continue reading original article...