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NEW YORK — Continually trying to forecast consumer trends 10 years into the future will fuel growth at the Kraft Heinz Co., said Miguel Patricio, chief executive officer. He gave baby food and pet food in China as a way the strategy could have helped in the past.
“If we had done this 10-year plan 10 years ago, we would have understood that birth rates would decrease incredibly, and we would have sold that business, and we would have understood that pet food would increase exponentially because Chinese are having more pets and less babies,” Mr. Patricio said June 1 at the Sanford C. Bernstein Strategic Decisions Conference.
Looking to the next 10 years, innovation will remain a focus. Kraft Heinz now has 124 employees working on “disruptive” innovation, Mr. Patricio said, adding the emphasis on innovation has attracted talented employees to the company.
“Four years ago, 40% of our organization told us on our engagement survey that they wouldn’t recommend the company for a friend or family member,” he said. “So it was a huge disengagement in the company. These were the factors, but today that number is just 7%.”
The Heinz brand, especially in the foodservice category, will drive company growth, Mr. Patricio said. He pointed to a successful Heinz pasta sauce launch in the United Kingdom and adding flavors such as ranch, mayonnaise or mango to ketchup.
A supply chain project will aim to make the company’s logistic footprint in the United States less complicated.
“We have about 80 warehouses,” Mr. Patricio said. “Today, only 5% of our logistics are done through railroads, and that’s not good. I mean, we should have far less of these warehouses, to do far more of railroad, and the reason why is because (the warehouses) are far away from the railroads, right? So we have a big project in that sense.”
A majority of Kraft Heinz growth over the next 10 years will come in emerging markets and foodservice.
“We’re going to be a very, very different focused company, and that’s what we are building,” Mr. Patricio said.
Kraft Heinz stock on the Nasdaq closed at $38.37 per share on June 1, which compared with $27.65 per share on May 31, 2019. Moody’s Investor Service on Feb. 24 of this year upgraded the Kraft Heinz unsecured credit rating to Baa2 from Baa3.
“We left the hole,” Mr. Patricio said. “We are proud of the journey. We feel we are a good company and we evolved immensely during these years, but good is not good enough, and we have to aim to be great. I mean, if we high-five too much just on the evolution that we had here, we miss a big opportunity to become a much better company.”
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