ORLANDO — Executives of Kraft Heinz Co. continue to lean into innovation as the most promising avenue for success at the company, even as sales of existing core product lines remain weak and as overall sales are projected to give ground again in 2025.
Updating investment analysts on wide ranging innovation initiatives was the focus of a presentation Feb. 18 by Carlos Abrams-Rivera, president and chief executive officer of Kraft Heinz. The weakness in sales volume, particularly in North America, that was the primary drag on the company’s financial results in 2024, was absent from Abrams-Rivera’s remarks.
The company’s base for growth is a powerful one, Abrams-Rivera said during CAGNY Conference 2025.
“Within the US, we have household penetration of 96%, with eight brands representing approximately 60% of our business globally,” he said.
While the company enjoys “universally high awareness,” its global penetration is only 19%, lagging the 30% threshold Abrams-Rivera called the benchmark for “similar iconic brands.”
Updating the analysts on the company’s Accelerate platforms, categories Kraft Heinz views as especially promising, Abrams-Rivera offered examples of innovation in each of three platforms — taste elevation, easy-ready meals and substantial snacking.
Calling Heinz Pickle Ketchup introduced in 2023 a “huge success” for its taste elevation platform with 50% incrementality to the category, Abrams-Rivera said the product is now being rolled out across four continents.
In easy-ready meals, he said the company is “expanding the use of occasion flavors” with Kraft Mac & Cheese. He also highlighted a partnership with Nintendo and the introduction of Super Mario shapes, in connection with the Super Mario Brothers Movie.
The company also is looking for ways to meet the needs of consumers watching their budgets, Abrams-Rivera said.
“We are redefining convenience and value by delivering solutions in the right sizes and formats, making it easier for consumers to feed their families,” he said. “For example, our value-sized Kraft Mac & Cheese provide a lower price per ounce and 50% more cheesy goodness than the standard-sized blue box.”
Lunchables Spicy Nachos were cited by Abrams-Rivera as an example of Kraft Heinz’s efforts to bring excitement and heat to consumers through its substantial snacking category, with products meant to be enjoyed between meals or instead of a meal.
“We are improving our product performance by renovating an Oscar Mayer Bites with elevated graphics highlighting 15 grams of protein and adding a new premium cracker,” he said.
Details of new Oscar Mayer packaging first previewed last year also were shared by Abrams-Rivera. The packaging, which he said improves “sealability” and reduces plastic by 30% is rolling out now and will launch nationally in April, he said. The product uses 50% less plastic than competitive products, he added.
“We have achieved a major win for both our consumers and the environment by innovating our packaging without passing any additional cost to our consumers,” Abrams-Rivera said.
Both Abrams-Rivera and Andre Maciel, executive vice president and chief financial officer, emphasized cost cutting steps the company has taken and the way these actions are helping boost gross margins at Kraft Heinz.
“In 2024, we generated gross savings equal to 4.4% of COGS (cost of goods sold), which is best in class,” Abrams-Rivera said. “We expanded gross profit margin by 1 percentage point as we protected profitability and generated a 4 percentage point increase in free cash flow conversion, and we reinvested in marketing and innovation.”
Maciel projected that, excluding the effects of cost inflation, prices in North America are expected to be lower in 2025 than 2024.
“Keep in mind that gross margin expansion from unlocking efficiencies is expected to more than offset inflation and the incremental investments in price, resulting in a flat to slightly positive year-over-year adjusted gross profit margin,” he said.
He cautioned that gross margin is expected to be tighter in the first half of the year than the second.