Kraft Heinz Food marketing strategies

When business leaders develop strategies to tackle problems, they often have to take risks. Nobody can predict the future, but businesses do have to anticipate it and make judgments.

The Kraft Heinz Company, based in the US, is a major player in the food industry. Over 90 years, Kraft built up a portfolio of well-known food brands, including confectionery, biscuits, snacks, and dairy products.

In the first decade of the 21st century, Kraft's performance was poor. Markets lacked confidence in the company's growth prospects. Its profits were disappointing.

Kraft's products were less appealing to a new generation of consumers.

It was seeing demand for the processed food and drinks that it manufactured from dairy all the way to Oreo biscuits decline, and that the profit margin, the amount of money it was making for every unit of sales, had been squeezed almost to the thinness of a piece of paper.

This was only the first of Kraft's problems. The second issue that Kraft had to tackle was that it relied too heavily on its home US market. That meant it was missing opportunities in fast-growing emerging markets around the world.

The company's third problem was that its costs were too high. That meant it was not making enough profits on its sales.

Kraft's management came up with a bold plan to tackle these issues. It started with a takeover bid for the chocolate maker Cadbury.

Cadbury had a 200-year history of making chocolate in the UK. Its products were well established around the world, especially in emerging markets.

There was clearly an attraction of having an even larger portfolio of internationally recognized brands that they could seek to take into different markets. So, inevitably, attracting a bigger international audience was part of Kraft's interest in Cadbury.

Kraft took a gamble that combining the operations of two established companies would be successful and solve another one of its problems.

Kraft's primary interest in Cadbury was it enabled it to, because it became a bigger company, essentially cut costs where there was overlap between the two companies, it found a way of saving money and increasing therefore the profit margin that it was able to get from each one of its products.

The second stage of the strategic solution was a merger. Kraft merged with another food giant, Heinz, and became the Kraft Heinz Company.

The merger created the world's fifth largest food company. As with the Cadbury deal, there was an opportunity to cut costs. There were other potential advantages, which helped to solve Kraft's problems.

Heinz was considered more innovative in its development of new product lines that met changing consumer preference.

The immediate results were positive. The Kraft Heinz Company's share price rose 17% on news of the merger.

The combined company has been successful in cutting costs.

Looking at the Kraft story, it is clear the solutions involved considerable risks. Takeovers and mergers do not always work.

Irene Rosenfeld was Kraft's Chief Executive. She was responsible for the company's strategy.

I think there were a number of folks that were questioning our acquisition of Cadbury. We said it was going to be important to us to expand our portfolio, to expand our footprint, particularly in developing markets, and it's played out that way. We are very much on track with the integration. It's enabled us to outperform our peers around the world.

For Kraft Heinz, it seems that the risks paid off, but finding solutions to large corporate problems is not straightforward, and taking risks can lead to business failures as well as successes.