Tyson Grows Perimeter Presence; Kraft-Heinz Goes Premium

Meagan McGinnes

Snyder’s-Lance, The Kraft-Heinz Company, Tyson Foods, and Dean Foods all held all held quarterly earnings calls last week to share their latest sales and strategy insights. Here’s a look into what some of these leading players are up to.

Snyder’s-Lance Explains SKU Phase-Outs

Snyder’s-Lance gave more context into its previously announced plans to slim down its portfolio. CEO Brian Driscoll said his team has identified close to 750 of approximately 2,000 branded SKUs that can be eliminated over a three-year timeframe. Executives believe this will have a minimal impact to revenue and a positive effect on operating income.

Once the portfolio is streamlined, the company said it does not plan to add more SKUs to its core, but rather build on its existing profitable brands.

“We think we’ll get better productive capacity, if you will, in terms of our shelf presence than we have today in certain key categories. We’re also trying to time some of this activity around the introduction of bigger ideas,” Driscoll said. “So what you’ll hear about going forward, as we move into some of the SKU rationalization phases is that correspondingly, we will be introducing a new core innovation that we think will have a much improved ability to win on the shelves.”

Snyder’s-Lance also recently announced a $7.8 million expansion of its Baptista’s Bakery facility, which the company acquired in 2014 to brighten its snacking health halo.

Kraft-Heinz Embraces Premium

Kraft-Heinz is hoping that adding premium characteristics — and prices — to some of its lines will help its slumping sales.

During the company’s call, executives spoke about previously-announced price-hikes happening across numerous lines this year. The rise in prices comes as the company is focusing on new ways to increase value with existing brands through more premium offerings. In recent months Kraft-Heinz has released Capri Sun organic, and ”simply” and organic varieties of Heinz ketchup.

“There’s always that changing landscape in consumers. And what we’re finding there is a very large number of consumers in [the premium] market. They’re happy to move up the value chain, and premiumization was one of our strategies to create growth,” COO George Zoghbi, said. “We find when we move to a more premium product, it can be margin accretive. In some area, we added costs in to protect the brands, and we could not price up in that category, so we have to do it in another category until consumers see value of it.”

Tyson Focuses on Platforms and Efficiency

New CEO Tom Hayes credited Tyson’s recent sales success to its newfound focus on innovation and its protein platform.

“Our protein-packed brands resonate with consumers,” Hayes said during the call. “Our continued success relies on innovation, and we’re focused on three platforms that will continue to drive our growth in the retail perimeter: Fresh meal kits and starters, a fresh take on breakfast and keeping the Core 9 fresh.”

In looking to the perimeter, Tyson is expanding its recently launched meal kit, Tastemakers, beyond e-commerce into select retailers, and adding distribution to its Hillshire Snacking line. With this distribution growth, the company said it’s recognizing the need “to improve efficiency and sustainability in today’s tightening labor market,” bringing on Silicon Valley veteran Scott Spradley as Chief Technology Officer.

Dean Foods Announces Cost Reduction Initiative

After struggling to navigate today’s competitive retail landscape, Dean Foods is looking to cut costs.

CEO Ralph Scozzafava said the company is targeting a cost reduction of $40 million to $50 million on an annual run rate basis. The budget restructuring is expected to put the company in a better position to compete in retail.

“We need to have our customers look at us, as not just a strong private label supplier, but also a strong branded innovator. And that doesn’t happen overnight,” Scozzafava said. “So while we’re changing our ability to unearth consumer insights, to build competitively advantaged products to put them together with branding propositions that work for the consumer and the retailer. We’ve got to have our retailers recognize that, and I think that’s going to take us repetition and time.”

The desire to strengthen and diversify its portfolio comes months after the company acquired a minority stake in Good Karma Foods, which makes non-dairy, flax-based milk and yogurt.

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