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Kraft Heinz to cut costs by $2B with turnaround plan

Kraft Heinz to cut costs by $2B with turnaround plan
The maker of Heinz Ketchup aims to boost sales by up to 2% under a turnaround plan announced Tuesday. File Photo by Gary C. Caskey/UPI  | License Photo

Sept. 15 (UPI) -- U.S. food giant Kraft Heinz said Tuesday it will cut costs by $2 billion and seek to increase sales under a five-year turnaround plan.

Kraft Heinz, maker of the Heinz ketchup and mustard brands and Oscar Meyer, said it plans to accomplish the goals with a new operating model focused on procurement, manufacturing and logistics.

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"I am extremely confident that unlocking the power of scale with agility, combined with our new operating model, will return Kraft Heinz to consistent and sustainable growth," CEO Miguel Patricio said in a statement.

The strategy involves making "growth investments" including a 30% increase in marketing spending. Patricio said the moves will create "a clear path to rebuilding" Kraft Heinz into an industry leader.

Organic net sales are targeted for growth of between 1% and 2% under the plan.

Costs were also cut by $2 billion following the merger of H.J. Heinz and Kraft Foods in 2015, but the combined company struggled to grow sales of its long-running food brands in an era of changing tastes. The downturn resulted in billions in losses for many of its brands, like Maxwell House.

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A leadership shake-up last year saw Patricio succeed Bernardo Hees as CEO after he'd been chief marketing officer for Anheuser-Busch InBev.

Kraft Heinz has seen an increase in sales as a result of the COVID-19 pandemic among "comfort staples" like macaroni and cheese. The company said it expects an increase in third-quarter sales.

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