Kraft Heinz overcomes consumer shifts and market volatility to transform its go-to-market strategy

The Kraft Heinz Company (Kraft Heinz) is one of the largest CPG organizations in the world with over $26 billion in annual revenue. It manufactures and sells products across 80 food and beverage categories and has a consumer penetration rate of 97% in the US. Forecasting and planning is a critical function, performed on a monthly, quarterly, and annual basis by teams around the world. Budgets and resources are constantly re-assessed. In 2020, Kraft Heinz reorganized and regrouped its categories into 6 new product platforms, based around consumer behavior, supporting a transformational new growth strategy. COVID rocked even their most stable categories and triggered a new initiative to start planning with macro economic views and predictions for all key markets.

Challenges

Consumer shifts in behavior 

In 2019, Kraft Heinz saw that consumer behavior in their markets was shifting, even before COVID. It was seeing an increase in eCommerce, a desire for greater convenience, more snacking and mini-meals, and a willingness to experiment with taste. The company saw a real opportunity to reorganize and focus on a new growth strategy, so it decided to regroup its categories into consumer behavior-based platforms, and to develop objectives, plans, and marketing around these new trends. They needed visibility and intelligence around these go to market platforms—especially regards CAGR predictions—to optimize forecasts, budgets, and resources. And then COVID struck.

COVID + volatility

In 2020 the business world was shaken by the pandemic as every industry was impacted in varying ways. Kraft Heinz experienced a surge in demand and their teams adjusted the best they could. It was clear that forecasting based on historical performance and internal projections was not going to cut it anymore. This was the realization that strategic planning and ongoing forecasting needed to incorporate external market dynamics, and to quantify the unique set of market drivers for each platform and market.

1. To gain predictive insight into the new consumer-behavior based platforms, to be able to 1 optimize resources for growth.
2. To build market volatility into planning and forecasting processes plus create top-down macro views of markets.

Solution

Proof of concept 

Kraft Heinz expressed interest to incorporate macroeconomic views into forecasting and planning. An initial project that targeted one of its key consumer platforms was executed. The goal was to identify contributing market drivers, then create economic-based forecasts and industry outlooks from econometric predictive models. 

• Board Foresight’s Global Intelligence Cloud and modeling engine was leveraged to identify the leading indicators and create platform forecasts and scenarios.
• These were presented to the Kraft Heinz team, along with back-tested forecasts. Board Foresight was able to review the identified economic drivers and validate their potential impact on the business. 
• Forecasts were compared to internally generated forecasts, which were then adjusted based on Board Foresight’s input. 
• Kraft Heinz now had a platform forecast validated by correlated economic data and macro predictions.

Global solution

After a successful pilot resulting in a much higher degree of forecast accuracy and market visibility, Kraft Heinz decided to expand the number of predictive models across the organization, including Canada and 80 international territories. The company’s senior financial leadership realized that they needed to supplement planners’ own internal knowledge with a better understanding of established and emerging market external drivers. 

Increased standardization 

Teams across the world do not all use the same practices for forecasting, so adding a macro based first step creates a common foundation for planning. 

Planning culture 

All planners are now enabled with macro data and views that relate to their own businesses. Their knowledge has greatly increased into the real drivers of their markets.

The outcome: Enable transformation and growth, manage volatility and risk

Contributing drivers from Board Foresight:

• Forecast accuracy: Kraft Heinz leverages Board Foresight economic forecasts and scenarios for each platform and key market around the world. Forecast accuracy is improving, and confidence in planning has skyrocketed.
• Guard rails: Economic baseline forecasts and scenarios combined with market assessments by Board economists provide critical intelligence and the ultimate safety net for Kraft Heinz planners.
• Market savvy: Planners and leaders around the world now understand what fundamentally drives their business and are far more knowledgeable about the economic impact on supply and demand.

Conclusion

Kraft Heinz has experienced two significant changes to its global business, namely shifts in consumer behavior and significant market volatility due to COVID and increasing external disruption. The company is now ready for all types of operating conditions, leveraging data-driven predictive analytics and economic intelligence. It is realizing both tactical and strategic advantages working with Board Foresight’s global data, AI technology, and team of economists, including: 

• Forecast accuracy, where a 1% improvement results in millions of dollars of cost savings or revenue growth. 
• A new layer of understanding, as to what is happening in the industry, with data-driven predictions to help drive supply chain decisions. 
• Ability to attain insights and discover new and impactful consumer level drivers.
• Ability to attain CAGRs, market size projections and other financial metrics that were previously difficult to produce.

There are no more surprises or market blind spots with its new-found confidence and ability to plan for future opportunities and risks. Kraft Heinz is armed with an accurate understanding of market drivers and predictive models that are custom fitted to their global operation—the company has effectively transformed its go to market strategy. 

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