Kraft Heinz Enters U.S. Spice Biz In Search of Incremental Sales

Seeking to add $2 billion in incremental sales from North American innovation efforts, Kraft Heinz Company announced plans to enter a new category in the U.S with the stateside launch of Just Spices.

The line, which is sold in Germany, Spain, Austria, the UK and Switzerland, will debut in the U.S. with 11 offerings including six “Allrounders” (Chicken, Vegetable, Pasta, BBQ, Salmon and Caprese), two “Toppings” (Egg and Avocado), and two seasonings (Fajita and Enchilada). Twenty-nine more spice mixes will be added next month. The line will debut at $6.99 per mix on the brand’s website before moving into retail in 2024, according to Nadja Francis, U.S. general manager for Just Spices.

Francis added that the brand’s digital-first mentality has been core to Just Spices’ success to-date. Overseas the company heavily utilizes Instagram, Tik Tok and SMS for marketing, and, at the time of Kraft Heinz’s acquisition in 2021, 70% of its sales were online. Furthermore, she added, the spice blends themselves are developed by using algorithms and analytics in order to identify unmet consumer needs.

By focusing on meal-specific blends, Kraft Heinz feels it has a real shot of taking on major legacy players such as McCormick and Frontier, as well as retailer private label offerings.

“The spice category is filled with single spices, blends for outdated meals, not to mention additives and fillers. U.S. spice brands have limited online presence and reach and little emotional or social engagement with consumers,” Francis told NOSH. “Our founders set out to eliminate the need for countless spice jars in favor of perfectly-crafted blends, and that’s still what we do best.”

The launch is evidence of a larger strategic shift for Kraft Heinz as well. The producer of Velveeta, Heinz, Oscar Meyer, Philadelphia, and Lunchables brands completed the combination of its U.S. and Canadian businesses into the North American Zone in 2022, subsequently creating three commercial units: Taste, Meals, and Away From Home; Fresh, Beverages, and Desserts; Canada and North American Coffee.

At the time of North American Zone announcement in December 2021, Kraft Heinz executives said the U.S. and Canadian businesses accounted for 80% of its net sales in 2020. Since then, Kraft Heinz leadership has promised shareholders an additional $2 billion in sales deriving from innovation in the North American Zone.

A significant part of that growth has come from existing brands, which have seen branding changes and new product launches aimed at a more health-conscious, younger consumer base. Packaging for Lunchables has been completely revamped, for example, while the company has also debuted reformulated, lower-sugar Capri Sun, Primal Kitchen Whip Dressing and Spread and alt-dairy Kraft Singles.

Though there’s focus on legacy brands, “sometimes you need to make acquisitions and augment your capabilities to accelerate growth,” Alan Kleinerman, Kraft Heinz VP of disruption told NOSH. When it came to entering the spice aisle, rather than look to an existing Kraft Heinz brand, the company chose to introduce Just Spices, even though it may require more marketing cost up-front.

The choice mirrors the branding strategy for new products created via its joint venture with The NotCo. In this partnership Kraft Heinz has used its own brands, such as Kraft Singles, only when it’s a category captain in that respective set. When the company’s name carries less weight, such as with its Kraft Mayo, the JV leads with the NotCo brand.

With almost all of Kraft Heinz’ legacy core brands “transformed” in the last three years, the company is turning its attention to innovation “to meet the future needs of our consumers,” Carlos Abrams-Rivera, Kraft EVP and president North America Zone, said at the Consumer Analysts Growth New York (CAGNY) February conference.

Executives have classified product development efforts as falling within two buckets: Taste Elevation or Meals Made Easy. Though Just Spices could perhaps cross over between the two, it resides in the former set, Kleinerman said, alongside brands such as Heinz, Grey Poupon and Primal Kitchen.

“As consumers look for new flavors and authentic cuisines to break from ‘routine,’ Just Spices is a critical driver for Kraft Heinz to accelerate share in the Taste Elevation category, which is focused on flavor enhancement, and is one of the company’s platforms for continued growth as outlined in our long-term strategy,” Kleinerman told NOSH.

In 2022 Taste Elevation products accounted for roughly $8.2 billion or 30% of the company’s $26 billion net sales, Miguel Patricior, Kraft Heinz CEO and chair of the board, told CAGNY audience members. Worldwide, two thirds of the company’s Taste Elevation classified products, he added, hold the number one or number two share position in their respective markets. Focusing on this subsegment will be key to Kraft’s success, Patricior said, with the company estimating its Taste Elevation products would see 25% industry growth by 2027.

“As strong as our portfolio is today, we are committed to optimizing it,” Patricior told analysts. “We are focused on opportunities that are aligned with our strategy and have the highest probability of success. We will focus on areas that enhance our geographic profile, align with our growth platforms, accelerate top line growth with strong growth margins and provide new capabilities.”