Oscar Mayer might be on auction block, but still has a ‘role to play’ at Kraft Heinz

By Elizabeth Crawford

- Last updated on GMT

Source: Getty/GMVozd
Source: Getty/GMVozd

Related tags Kraft heinz

Kraft Heinz will continue to innovate and actively promote its Oscar Mayer brand, which has a “role to play in the scale of the company,” CEO Carlos Abrams-Rivera told investors last week when asked about rumors that the company could divest the iconic hotdog, bacon and cold cuts business.

That role may not be as a growth driver, but Oscar Mayer is an important brand in the retailer environment and brings scale because of its size, Abrams-Rivera said at Bernstein’s 40th​ Annual Strategic Decisions Conference last week.

Earlier this month, The Wall Street Journal​ reported that Kraft Heinz met with Bank of America and Centerview Partners to gauge interest in the business, which it reported could go for between $3 billion and $5 billion.

Without directly confirming whether Kraft Heinz is actively seeking a buyer for Oscar Mayer, Abrams-Rivera said the company is “always going to look at opportunities.”

But, he added, Kraft Heinz is “very disciplined in how we think about those things. If you think about the divestitures we have made, we have done it at the right value evaluation.”

The strength of Kraft Heinz’s balance sheet also means the company can take its time evaluating opportunities – if there are any.

“In the meantime,” Oscar Mayer has “a role to play in the scale of the company” as a brand that is housed in Kraft Heinz’s “Balance” portfolio – one of three divisions, which include “Accelerate” and “Protect,” as part of the broader corporate strategy​.

Under “Balance” with meat is cheese and coffee – all brands that Abrams-Rivera said offer “less growth” than those included in “Accelerate.”

The role of the teams managing “Balance” brands “is not going to be driving 2%, 3%, 4% growth. [Their] business is to make sure we have the right product for us to maintain the share in the environment in which we compete,” Abrams-Rivera said. “But, at the same time, we are more focused on the bottom line, so that we can have the right [economic value added] contribution for those businesses.”

To this end, he said, Kraft Heinz is still investing in Oscar Mayer and continuing to renovate the products under the brand.

“If you look at Oscar Mayer business, by the end of the year, you will see new packaging that truly brings new benefits to consumers. We have new innovation. We have a plant-based Oscar Mayer.​ We just launched stuffed hotdogs Oscar Mayer,” he said.

Innovation, renovation drive growth across the portfolio

Renovation and innovation efforts at Kraft Heinz stretch far beyond Oscar Mayer with new product launches in recent years helping the company earn accolades, such as from Fast Company, which dubbed it one of the world’s most innovative companies.

The external recognition is appreciated and hard-earned, according to Abrams-Rivera.

“The fact that today we are already recognized as one of the most innovative companies is a huge amount of a win in a very short amount of time. And it is because this is something that we have prioritized,” he said.

He explained that Kraft Heinz approaches innovations from two angles – the one that consumers see and the one they do not.

“The things that consumers see [are] the renovation of our products. So, whether that is cleaner ingredients, better packaging, less sugar … and with the attributes they care about,” such as gluten- or sugar-free options or plant-based alternatives, he said.

They also will see more “disruptive” IP-driven innovations, such as the new 360 Crisp technology that allows a microwaved cheese sandwich to taste like one that was grilled on the stovetop, he said.

“What the consumer may not see is the innovation we are driving on how we actually produce some of our products – the amount of investment in technology to drive better efficiency in our factories, better efficiency in our logistics,” which “is a huge benefit for us as a company,” Abrams-Riviera said.

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