BOSTON — Three pillars support the Kraft Heinz Co.’s long-term growth algorithm — US market share stabilization, emerging markets and foodservice, which currently represents between 13% and 15% of sales. Speaking at the Barclays Consumer Staples Conference in Boston, Andre Maciel, global chief financial officer, said the expectation is the foodservice business will continue to grow at mid- to high-single digits.
“Foodservice is today a strategic more than a channel,” said Miguel Patricio, Kraft Heinz chairman and chief executive officer. “The first reason is because it grows about 1.5x the industry. So, it’s growing, or has been in the last 10 years, a growing channel.
“The second is because foodservice, if you do it well, can become the most impressive penetration machine in market. I mean, if you sell branded products, then you are basically teaching consumers (about) how great our products are.”
He noted that Heinz Ketchup and Philadelphia Cream Cheese currently account for almost 80% of the company’s sales in foodservice and that 50% of those sales are branded and “front of house.”
“What is front of the house is what's on the table,” Mr. Patricio said. “And if we do a good job as we are doing, and we have it branded foodservice, it can become an incredible way of teaching consumers about your flavors, your brand. That's why we are putting a lot of emphasis on foodservice.”
Carlos A. Abrams-Rivera, president of North America, said Kraft Heinz made some specific changes to its foodservice business. The first was in leadership.
“We brought in new capabilities to the company,” he said. “And then we were able to kind of focus our resources to areas (where) we can see a bigger potential for growth, whether that is in QSR (quick-service restaurants), (or) whether it's moving from more supporting operators to actually national and regional distributors in a way that allows us to actually expand our penetration on some of our core categories.”
The second area of focus is schools, specifically kindergarten through 12th grade. The company is already doing business in the channel with its ketchup, Mac & Cheese and Lunchables brands, but management sees opportunities for brands like Jell-O.
Finally, Mr. Abrams-Rivera said that since 2019 Kraft Heinz has reduced the number of stock-keeping units in its away-from-home business by 50% in an effort to be more efficient and improve customer service.“Today, we have to make sure that we have superior products in all of our critical dip and sauces, whether that is mayo, ketchups and so forth,” he said. “That allows us to also have an advantage as we think about this particular channel.”