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July 16, 2020updated 23 Nov 2021 6:11am

Kraft Heinz shifts focus on sustainability in a bid to drive growth

By MarketLine

Recent years have seen consumer trends shift to more sustainable and ethical packaging. Consumers are becoming increasingly interested about the effects this is having on the environment. As a result, brands are tapping into the market and looking at ways to introduce sustainable features to their products.

In 2018, Kraft Heinz announced it was expanding its environmental stewardship strategy and aimed to make 100% of its packaging recyclable, reusable or compostable by 2025. Moreover, Kraft Heinz Europe is working to make the recyclable Heinz Tomato Ketchup PET plastic bottle fully circular by 2022, by using recycled material that can be made back into food-grade packaging.

Furthermore, in January 2020, Kraft Heinz launched a limited edition range of ‘Beanz Meanz Vegan’ cans in a bid to gain the attention of a huge number of Brits undertaking Veganuary 2020.

Kraft Heinz isn’t the only major food manufacturer who is investing in new sustainability initiatives; Nestlé USA joined Danone North America, Mars Inc and Unilever to create a new sustainable food lobbying group called the Sustainable Food Policy Alliance.

Nestle also announced in 2020 that the company plans to spend $2.1bn to shift its packaging from virgin plastics to food-grade recycled plastics and increase its development of more sustainable solutions. Taking this a step further, Nestle will also launch a sustainable packaging venture fund with $260 million to invest in start-up companies focusing on these areas.

Kraft Heinz has been slower than its competitors in communicating its sourcing and sustainability efforts. Although many of its products are plant based, this selling point has not been leveraged to its full extent and for 2019 the company reported a 2.2% drop in organic sales. Nestle on the other hand, highlighted a 3.5% organic growth and 1.2% sales increase for the same year.

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DTC provides growth opportunities for Kraft Heinz

The coronavirus pandemic is having widespread implications for a range of markets and industries across the globe. Online food retail saw unprecedented demand with supermarket websites crashing and delivery slots being continuously booked up. As a result, food manufacturing companies have turned to the direct-to- consumers (DTC) channel, with Kraft Heinz joining the likes of PepsiCo and Nestle, in setting up DTC services.

Kraft Heinz opened its first ever online shop in April 2020 and has successfully created a DTC business line, selling affordable shelf stable food items such as beans, spaghetti, soups and condiments for home deliveries in the UK for just £10 (approx. $12.5).

While DTC platforms are not expected to replace existing channels it does provide an additional revenue stream for Kraft Heinz. However, the company has received backlash by wholesalers and independent retailers because of the supply constraints they have experienced during the pandemic for Kraft Heinz products.

It is crucial for Kraft Heinz to keep up with consumer trends as well as continue to implement the DTC way of business and appeal to mass consumers while maintaining relationships with retailers and other partnerships.

If the company does not invest in growth strategies, then it risks losing market share to its competitors.

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