Oscar Mayer difficulties continue for Kraft Heinz

BOSTON – For much of the past year, Oscar Mayer has been a drag on the Kraft Heinz Co.’s performance. The primary issue has been the brand’s Deli Fresh lunch meat line, which had packaging that failed to reseal properly, said Steven Cahillane, chief executive officer, during a Sept. 9 presentation at the Barclays Global Consumer Staples Conference.

“If you look at the share losses that we’ve had … through the first half of the year, 60% of them are in Oscar Mayer alone,” he said.

Kraft Heinz began rolling out updated packaging in early August.

“The declines have lessened,” Cahillane said. “You have to get to not as bad before you get to good. We’re kind of on that journey.”

The packaging issues also cost Oscar Mayer shelf space.

“We lost a lot of distribution, understandably,” Cahillane said. “But when we look at sales per point of distribution, it’s actually now growing.”

The turnaround is part of a broader effort to revive Kraft Heinz’s brands and make them more “alive, relevant and contemporary,” he said.

After taking the helm earlier this year, Cahillane pledged to invest $600 million across marketing, sales, and research and development, while shelving a previously planned corporate breakup. Buoyed by early signs of progress, the company increased that commitment to $700 million in August, including targeted investments in Oscar Mayer’s pricing, products and packaging.

Cahillane said Kraft Heinz already is seeing incremental improvements in its condiments, hydration and desserts businesses, while meat and meals remain priorities.

Consumer preferences also are shaping the company’s strategy.

“The consumer is increasingly going toward better-for-you,” Cahillane said, citing demand for higher protein, more fiber and cleaner-label foods without sacrificing affordability.

He believes Oscar Mayer is well positioned to evolve with those trends.

“A brand like Oscar absolutely has the right to go there,” Cahillane said. “Making Oscar less perceivably processed is not going to hurt the brand. It’s going to help the brand.”