AM I NEXT? IS THE HANDWRITING ON THE WALL AT KRAFT HEINZ? (PART 2)

In February, I wrote a post questioning whether or not the handwriting was on the wall at Kraft-Heinz…

Am I Next? Kraft Heinz new CEO - Layoffs Ahead?

“2018 has not been kind to the 2015 merger between Kraft and Heinz companies, whose iconic brands are instantly recognized by almost everyone. As per the announcement of the 2018 yearly results, the outlook is clouded by unknowns.

Putting a happy face on a loss of $12.6 billion, Kraft Heinz CEO, Bernardo Hees noted, ‘Our fourth quarter and full year 2018 results reflect our commitment to re-establish commercial growth of our iconic brands, turn around consumption trends in several key categories, and expand into new category and geographic whitespaces. We are pleased with those actions, the returns on our investments, and the momentum built for 2019. However, profitability fell short of our expectations due to a combination of unanticipated cost inflation and lower-than-planned savings. Going forward, our global focus will remain on leveraging our in-house capabilities, developing our talented people, and delivering top-tier growth at industry-leading margins.’”

And now we find that things will be getting worse for employees …

The struggling Kraft Heinz has replaced CEO Bernardo Hees with Miguel Patricio who was formerly Leuven, Belgium-based Anheuser-Busch InBev’s global chief marketing officer and who will be assuming the CEO’s position on July 1, 2019. This is one executive who takes no prisoners and who has been known to say, “Great companies are the ones that have the costs in control, that grow the top line and grow the bottom line—it’s not one or the other. I have very good experience on that—on being more efficient every year, which doesn’t mean cutting costs. It means to be more efficient.” Code words for top-to-bottom reviews and ruthless reorganization.

It is likely that Patricio’s hiring came at the suggestion of Kraft Heinz’s second-biggest shareholder, Brazilian private equity fund 3G Capital, whose holdings at Anheuser-Busch provided a window on Patricio’s performance as a marketer and cost-cutter. Warren Buffett’s Berkshire Hathaway Inc. also owns a chunk of the company and together they hold almost a veto-proof near 50% of the company. A powerful position that cannot be ignored by Kraft Heinz’s Board.

As with most new CEO’s, the most dramatic way to realign revenues and costs is with a massive reduction in force, outsourcing activities that are not a part of the company’s core competency, and by increasing automation on both the front and back ends.

Definitely the handwriting is on the wall for massive changes after July 1, 2019.

Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life, or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere ... are you now wondering, Am I Next?