Expert Column: Kraft-Heinz Brand Possibilities
Last month’s announcement that Kraft Foods Group and H.J. Heinz Co. will merge to form the Kraft Heinz Company made headlines and left many food brands, grocery retailers and consumers wondering what impact it will have on the aisles of their grocery stores.
The combination will make Kraft and Heinz a powerhouse company with a presence in nearly every section of the grocery store. In fact, many popular Kraft and Heinz brands are complementary products, which will create greater synergy on store shelves, demonstrating that the whole is greater than the simple sum of its parts. Moreover, with an increasing number of brands under the Kraft Heinz umbrella, there will be even more opportunities to offer new food choices for consumers.
Heinz and Kraft are each purveyors of some of the most beloved brands in grocery retail. Heinz has its iconic ketchup, as well as its range of Classico sauces, Ore-Ida frozen potatoes and Bagel Bites. Equally as beloved are some of Kraft’s favorite brands, including its Macaroni & Cheese, Oscar Mayer meats, Philadelphia cream cheeses and Cool Whip dessert toppings. Together, all of these hero brands command deep consumer loyalty across almost every aisle. Talk about immeasurable brand value.
Over the years, both companies have created and established deep and meaningful brand equity that will help further elevate the new Kraft Heinz enterprise into an enviable and stronger competitive position with greater critical mass. The united companies will likely also enjoy increased economies of scale and other cost savings, in addition to the prospect of exciting new possibilities for consumers and grocery retailers. A few examples include: 1) co-brand “mash-ups,” 2) shared best practices, and 3) the advantage of a bigger and better partner for licensed and retail relationships.
Shelf Shake-up
Looking ahead, it’s possible that consumers will see a “shelf shake-up” -- new co-branded refrigerated, shelf stable or frozen food offerings that incorporate ingredients from both companies’ well-known brands. Imagine Kraft Macaroni & Cheese toppings on Bagel Bites, or as an addition to a Lunchables selection. Or consider A.1.and Lea & Perrins, two venerable names joining together to create a wonderful new flavor profile for sauces and marinades. The possibilities are endless and the combined food expertise of both companies opens the door to a whole new world of choices for consumers to experience.
Sharing of new and best practices will be another possible advantage for the combined companies. Consumers are seeking healthier options and more transparency and clarity in food labeling. Whether it’s natural, minimally processed, reduced-fat or gluten-free, consumers want to know what they’re eating. Increasingly, food suppliers are responding to consumers’ advocacy and right to know with “clean labeling” and healthier offerings. Heinz, for example, has made significant inroads in the health and wellness area by serving up products including its Simply Heinz Ketchup, new varieties of Classico pasta sauces, as well as Ore-Ida Simply, a natural line of potato cuts.
Equally committed to this trend, Kraft recently announced that it will be removing all artificial ingredients from its Kraft American processed cheese singles. This past February, Kraft replaced the high-fructose corn syrup in its Capri Sun juice drinks with sugar, and changed to a stevia leaf extract from the artificial sweetener, sucralose, in its flavored water, Roarin’ Waters. Hopefully, consumers will continue to see healthier food options across the new Kraft Heinz portfolio. In turn, this may drive competitors to respond with better food options of their own to effectively compete with the new company.
And finally, what are the possibilities on the licensing front? Brand owners -- whether they are restaurant brands, chefs or other food-based trademarks -- seeking to extend their equity into the grocery space with a trusted, global food partner will now have access to a consolidated corporate entity that can provide a far broader range of food products and greater global reach than ever before. The benefit for a brand owner? A bigger and better partner that can develop and execute a seamless and sustainable branded food line.
The times are changing for the food industry and the impending merger of Heinz and Kraft is sure to shake things up even more. Suffice it to say, this new combined force will delight consumers and grocers with the promise of exciting new food options from their portfolio of beloved and iconic brands.