Kraft Heinz at Barclays Conference: Strategic Business Split Unveiled

On Wednesday, 03 September 2025, Kraft Heinz (NASDAQ:KHC) revealed its strategic plan to divide its operations into two distinct entities at the Barclays 18th Annual Global Consumer Staples Conference 2025. The move is aimed at enhancing focus and performance, although it comes with challenges like managing dis-synergies. This strategic shift is expected to unlock shareholder value and position the company competitively in the market.

Key Takeaways

• Kraft Heinz plans to split into Global Taste Elevation Co. and North American Grocery Co.
• The separation is intended to increase focus and improve performance.
• Estimated dis-synergies of $300 million will primarily impact COGS, technology, and SG&A.
• Global Taste Elevation Co. will target emerging markets, while North American Grocery Co. will focus on stable cash returns.
• Both entities aim to achieve investment-grade ratings post-separation.

Business Split and Strategy

• Rationale for Separation: The division aims to simplify operations and enhance focus, which is expected to unlock shareholder value. The current complex structure is seen as a hindrance to achieving optimal performance.
• Two Entities:

- Global Taste Elevation Co. will concentrate on growth, particularly in emerging markets, which constitute 30% of its business.

- North American Grocery Co. will focus on ensuring stable shareholder cash returns.

• Competitive Landscape: The split positions Kraft Heinz to better compete with specialized competitors, responding to current consumer behavior rather than reversing past merger strategies.

Financial Details and Expectations

• Dis-synergies: Kraft Heinz anticipates $300 million in dis-synergies, mainly affecting COGS, technology, and SG&A, with 80% impacting Global Taste Elevation Co.
• Growth Projections:

- Global Taste Elevation is expected to drive top-line growth towards the upper end of the current 2-3% algorithm.

- North American Grocery will aim for very low single-digit growth.

• Emerging Markets: Nearly 20% of Global Taste Elevation’s business will be in emerging markets, contributing 2 points of growth.
• Investment Grade Target: Both companies are targeting investment-grade ratings.

Operational Updates

• Brand Growth System: Kraft Heinz is investing in product quality, communication, and marketing to address U.S. market challenges, such as consumer trade-down.
• Market Expansion: The company is exploring new channels like Dollar General and offering more price options, such as $1 mac and cheese.
• Efficiency Improvements: Manufacturing efficiencies are being enhanced through technology, like sensors for real-time visibility, and consolidating U.S. warehouses.

Future Outlook

• Transition Period: Kraft Heinz plans to maintain business as usual during the transition, with a dedicated separation office to minimize distractions.
• Separation Committee: Chaired by John Cahill, the committee will provide expertise in managing the separation process.
• Performance Focus: The separation is not merely financial engineering but a strategic move to enhance performance and operational excellence.

Q&A Highlights

• North American Grocery Company: Positioned as a consolidator of mature center store food categories with significant margin opportunities.
• Brand Investments: Continued investment in quality, communication, and marketing is expected to yield long-term benefits.
• Operational Excellence: Both companies will focus on procurement efficiency, logistics, and manufacturing as part of their operational DNA.

For a detailed understanding of Kraft Heinz’s strategic plans, refer to the full conference call transcript below.

Full transcript - Barclays 18th Annual Global Consumer Staples Conference 2025:

Operator: Welcome back, everybody. For our next session, I’m thrilled to welcome back The Kraft Heinz Company. With us today once again are Chief Executive Officer, Carlos Abrams Rivera and Executive Vice President and Chief Financial Officer, Andre Maciel. Thank you both for joining us. Welcome back.

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: Pleasure to be here. Thank you.

Operator: So we have some things

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: to discuss,

Operator: without question. How to throw out the old sort of fireside chat questions and come up with some new ones. But we appreciate you sort of being here even in the midst of all that you’ve got going on. Maybe to start off at sort of a basic level, right, yesterday morning, you announced you’re going to plan to split the business into two separate entities: Global Taste Elevation Co, North American Grocery Co. So to start, why do you believe the separation will lead to improved performance?

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: Yes. Well, first of all, thank you, and I appreciate you being flexible and working with us to I’m sure you’ve changed everything that you were going to ask us. Listen, I think ultimately, it all comes down to focus. And I think one of the things that it has we have seen and it has been proven now inside our company, then when we can dedicate focus, it actually leads to improved performance that ultimately will unlock shareholder value. If I go back, Andrew, to what I commented back in May that as a Board, we were looking at strategic transactions opportunities because we believe the company’s true devaluation didn’t reflect the potential of our company.

I think part of the reason we were doing those exercises because we inherently understood that the more we can drive focus, the better performance will have will happen, and then it will yield the kind of value that we want. You know, and I think for us, it’s not only a matter of us thinking about whether it’s possible, it’s a matter of fact that we have seen it work. You know, over the last two years, we have spent a lot of time and effort behind what we call the brand growth system, making sure that we are focused on driving improved performance in key brands. And when we have done that, it has paid off. We started this process working with our Heinz business in The UK, with our Philadelphia business in The U.

S. Both of them as we focus on driving better quality, better marketing, improving the communications, both in package and online, it actually yielded a reverse of those trends negative trends that we have seen in those business. So we know that’s worked. That gave us confidence for us to now do that broadly in our portfolio. Now today, if you look at, for example, our business like Lunchables, in which we have been able to, through the Bingo system, make sure we have innovation, improve our with PB and J, improve our quality in our product with the best cookies and crackers we ever had, talk about the communication to our consumers in store by highlighting the 12 grams of protein that our products have.

All that is actually has led now to seeing growth in that business as well, too. So we know that what we have been able to focus, hey, has driven growth. At the same time, the reality, I think, that both the Board and I agree is that the complexity of the business today is a hindrance to be able to drive that kind of focus that we need in the business to drive better performance. So with this move, it allows us to do both. It allows us to reduce our complexity and increase our level of focus to drive better performance.

Right.

Operator: Thank you.

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: And Sarek, there is also an aspect of the competitive landscape, right? Most of our competitors are very specialized. So you can argue somehow we are competing in even terms, right? Today, you have to spread two things, the time of CEO, zone president, head of sales, head of quality, so on and so forth across a very vast amount of categories. When our competing people are about, they’re thinking about this day in, day out.

So trying to really allow us to have a higher span of attention of senior people across the different functions and really have this focus and develop deeper expertise in certain domains should translate into better performance as well. Got it.

Operator: Got it. There are certainly plenty of investors that would say, hey, is this split really just essentially a reversal, right, of the original Kraft Hein merger from ten years ago? And I guess why is this not just an unwinding, if you will, of what was done ten years ago?

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: First, I would say no, it is not. The reality is that we have done the moves that we have made and the perimeter that we have actually put in each company responds to two things: how consumers are today behaving, which is very different than it was ten, twelve years ago. But it’s also about thinking about the future and where we want to be able to take these two companies going forward. So for me, even a fact is that both we have Kraft brands in both companies, we have Heinz brands in both companies. And what we’re trying to do is what is the right thing to do for Kraft Heinz.

And remember, Andrew, that a lot of these things were actually feeding into the strategy we laid out back in CAGNY in February 2024. This idea of us driving focus behind our accelerated platforms, defining what the Protecta platforms were and our balanced platform. That idea of us saying, we want to continue to drive the growth through both taste elevation, ready to eat meals and snacking, those were the places that we identified back one years point ago, and it actually has shaped how we think about the two companies. So it really is about how we are seeing consumers today, how do we continue to see the growth in the future and also the reality of who we are as a company that have really led to the way we kind of decided two perimeters.

Operator: Great. And you’ve talked about, obviously, the desire for increased focus. I guess what does this increased focus allow you to do going forward that maybe you couldn’t do in the current structure? Maybe there are even some examples that you can sort of point to.

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: Yes, absolutely. Listen, I think that I always think about in terms of how do you deploy your resources inside the company. When you have this greater focus, then it allows you to make sure that from the CEO down to the more junior person are all aligned both in terms of their KPIs and incentive before what that company is supposed to do. So it allows us to make sure that a company like a North America grocery company that is going to be focused on good margins, stable shareholder cash, return to shareholders, that allows us to make sure that all this incentive is aligned to that, that we make sure that we’re investing in R and D are helping us drive efficiencies in that company. Today, we’re having to then do both things.

We’re having to run a company we’re essentially having to run two companies inside this Kraft Heinz. So as we go forward, you’ll see us then be more intentional of where we put those resources, expertise and capability in each of those companies. I’ll give you another example. When we think about our global taste elevation, 30% of the business will be in emerging markets. That means that we should also be thinking around how internally we have aligned ourselves to make sure that we support on emerging markets from our operations to our procurement to our marketing to make sure we continue to drive that growth in the double digits that we have seen so far.

But I think we can do even more. So that idea of us creating opportunity for us to be thoughtful about the resource investment, the expertise, the alignment of the internal organization behind those KPIs along with the capital allocation as well, too. I think when you’re seeing those two companies, each one will have his own principle for how to think about the capital allocations that allows us to also be successful.

Operator: Sort of their own reason for being Okay. 100 Thanks for that color. You touched on this a bit on yesterday’s call, but many pieces of the global taste elevation business have had a challenging year, right, in terms of growth, even though historically, right, these assets have had a much better track record. Maybe you could put some context around what the specific challenges have been this year and why you don’t see them as sort of structural for the growth co, if you will, going forward.

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: No, great question. I guess maybe part of it, just to ground If I think about and I’m glad you said it, historically, this is business in Global Taste Elevation that have been growing, I think, of the last ten years. Even if we think about this year, we’ve been growing about flattish. So I think some of the pressure have been mostly in The U. S.

If you look outside The U. S, we actually are seeing already that most of that company is actually already a taste elevation company and are seeing kind of mid- to high single digit growth. And away from home outside The U. S, 3% to 5% growth as well too. So really the pressure have been in The U.

S. Because even in Canada, also have seen growth in our taste elevation business. And for me, what I’ll say is The U. S. Has a particular situation I think that we have been facing over the last one years point or so, and I think this affects many of us in food industry.

If I I guess, you have the context too, Andrew, but just for the audience here, I would say, in the last five years, I think of it as three different eras in The United States. There’s the COVID era, there’s the high inflation era, And there’s an era today where consumers are certainly trading down and more under pressure. Now we thought that era was going to be very short because interest rates were going to be going down. That hasn’t happened. So what ends up happening is that consumers are under pressure for longer than we expected, and that trade down happened for longer than expected.

People are having to do in families, having to manage their cash flow differently. So there is more of that push in the trade down. Now what I will say, too, is that our companies are also adapting to that. So if you look at one of the things we’re doing is, one, we rather than playing defense and try to get just a short term pop in volume, we actually invest in macro back in our business. We have mentioned this in every quarter of the earnings that we will continue to make investment as we see opportunities in the brand growth system.

So we are investing to make sure that our products are the best ever and always worth the price of the product. We are also making sure that we are giving more choices for consumers. So whether you see $1 mac and cheese or $1 bottle of dressings, but you also see a five pack product of mac and cheese in club, that idea of us expanding number of price architecture options for consumer is part of us responding to this era that is taking longer. The other thing I would say too is that we also have to be judicious in terms of how do we actually make sure that as consumers are going through still in this situation that we continue to invest back in our brands. So we haven’t shied away to say we’re investing in the quality of our product.

We are investing in promotional investment that have the right level of return and to make sure we get the best execution possible. The last thing I would say too is part of our response to this particular area has been how do we go into more channels where consumers are now shopping than maybe they were not shopping before. And let me give you an example of Dollar General. We’re now in we know consumers are looking for food now in the Dollar Channel. So if you go to Dollar Channel today, and I don’t know how many of the audience goes to shop at Dollar General, but I’ll tell you, you’ll find Oscar Mayer products today that weren’t there two years ago.

And it’s a way for us to make sure that we’re also providing options in new channel for consumers to make sure they as they are wrestling with how to manage their cash flow, that they have options, whether they’re going to a grocery store, a club store or a dollar channel. So that’s part of what we are adapting as well. I do think those are things that are cyclical in nature. And I think those are things that, over time we’ll see consumers better to be more stable. The last thing I would say though is we’re not sitting still.

I think that I mentioned that global taste elevation in The U. S. Is not where we want to be. We have been making investments that are not yet showing in the Nielsen data. But I’ll tell you, that it becomes a huge priority for us to continue to see the progress in that part of the business because we know what it can do, we know what it has done historically, and we know what it’s doing outside The U.

S, too. Yes. Great.

Operator: Thank you for that. Interestingly enough, oftentimes with separations like these, the asset that is less about growth maybe and more about consistent free cash flow and smart capital allocation can actually prove to be a significant value generator. On the call, said scale for scale sake perhaps isn’t the right way to go, and I think many of us would agree with that. But scale that comes with focus does. Right.

I guess what exactly did you mean by this? And could North American Grocery Co. Ultimately be a potential consolidator of, let’s say, other more mature center store food categories that might benefit from a similar sort of reason for being, if you will.

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: Yes. And just to give you add to the context of the question, I would say I’m old enough to know that there was a point in which food companies were just buying scale thinking that would be the answer for them to be able to have a stronger performance. And I think that those that has proven out not to be the case. I think that I do think the opportunity of us driving scale with focus can be opportunity. So for us, it was important that as we said both of those companies that they will have the right balance sheet and flexibility to do transactions in the future that support the strategy of that company and the thesis of that company.

So I believe that we’ll do it in a way that we feel like it will have that in a way that if those opportunities come along and support the strategy, that we will continue to look at exploring opportunities that help us do that.

Operator: Got it. Great. Andre, maybe you talked about $300,000,000 in expected dissynergies. Do we have a sense yet where sort of which where the split of that $300,000,000 is in these two separate entities? And does the dissynergy estimate include stand alone sort of public company costs for the split entities?

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: Yes. So the €300,000,000 which I explained yesterday in the call, roughly onethree is COGS, onethree is technology and then the rest is split between sales, marketing and other SG and A. We expected that most of the synergies should be on the global company, okay, so 80% or so. And we that does not include one off costs. We still are working through because now that this is public, we are working with quotes at certain vendors that will be supporting us along the way for certain specific tasks.

I’m going to be providing disclosure on that during future earnings calls There are numbers to report. Those will also be managed very tightly. But yes, that’s the answer.

Operator: Okay. Thanks for that. On yesterday’s investor call, you also mentioned that global taste elevation would likely post top line growth towards the upper end of the company’s current 2% to 3% top line growth algorithm, while North American grocery would be in the sort of very low single digit range. How does this growth for each of these entities compare to the growth of the categories within each entity plays? Trying to get a sense of whether those outlooks sort of require consistent market share gains?

Or is it more growing in line with your expectation for their respective categories?

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: Yes. What I’ll say is, first of all, we are not yet providing, obviously, long term algorithm for either company. I’m just speaking in the context of our current Kraft Heinz algorithm. With that said, the global company will have nearly 20% of exposure to emerging markets. So by growing double digits, like we have done for several years, that alone gives two points of growth to that company, away from home as well, growing mid single digits and being now also nearly 20%, give another very significant uplift.

And then if you go to The U. S, there’s television. As you said, historically, the industry grows a bit north than 2%. So we can be at flat market share and even you can argue, lose a little bit of share and still be within these ranges. And then on the North American company, the categories we play historically grow about 1.5% or so.

So we can we could afford potentially even to lose ten, twenty bps of share and still be within that range that I described. That’s really helpful. Thanks for the clarity. In North America grocery,

Operator: the company mentioned still significant margin opportunity going forward. Given the more recent performance, and it sounded like a disproportionate amount of the spend was going towards global taste elevation. I guess do you believe there needs to be sort of a onetime margin reset to sort of level set some of the brand investment spend that you may need? Or do you think the current sort of cost structure is sort of where you need that business to be and you can start with that margin ramp sort of sooner than later.

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: Yes. Listen, I think that there’s two ways to answer that question. I think, first of all, if I think about what investments we have made and in fact, all the incremental investments we have made, we have said disproportionately in this year have gone through to what is taste elevation and disproportionately have gone to The U. S. I do think there’s some opportunity when I think about the broader sense of investments of us thinking about North America grocery company as a place in which we can invest different type of expertise and capabilities.

So for example, in order for us to make sure we continue to drive efficiencies, there may be opportunity for us to say how do we actually improve the expertise of from how we manage commodities to how we manage the operations that today we are having to kind of make some choices across 55 different categories in The U. S. So us being able to then say, okay, given this is the type of thesis we have in this company, we’re going to make sure that we bring the kind of expertise that we need in order to make sure we can deliver on the margin and the continued drive on efficiencies. Today, I think if you think about our company as a whole, Taste Television is the most global platform that we have. So all the efficiencies that we take from whether it’s you’re in Brazil, whether you’re in The U.

K, you can transfer easily across the company. A lot of the things in North America grocery company are only in The U. S. So we don’t have the capability to scale in order that we all need as we go forward. So those are the kind of investments that I see us making in the future.

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: Got it. Yes. I don’t think and maybe to complement that. So we don’t necessarily see the need for any significant margin reset. Obviously, again, let’s wait until both companies can articulate their algorithms.

If you put as a reference, marketing investment, for example, compare what do we expect the peer sets for both companies, you can argue that there is still more room for reallocation from the North American company into the global company when it comes marketing levels given the baseline of current spend. Yes. Helpful perspective. And let me also give a perspective, take advantage of the forum because I know that there were a lot of questions about net debt and what exactly this means and who is Remenco, who is PIMCO. So look, baseline today is that the global deceleration will be the RemainCo, okay?

So if there is any circumstance that will be beneficial to shareholders to switch that, we will. But our current given everything we’ve done so far, the baseline will be that global deceleration should be Remenco. On a comment on that, we said very clearly that we are targeting both companies should be investment grade, and we were going to be working very close to the rate agencies to make sure that, that happens. And for us, the investment grade is not to be five times net debt and it’s not to be 4.5 net debt. So I don’t want to give a precise number right now, but it’s really is a net debt that is provides we want really to establish that both companies are set up for success and both have equal opportunity to succeed in their own with playing their own games.

Also and we want to make sure that both have enough excess cash to have flexibility to deploy.

Operator: Perfect. That’s really helpful color as well. Thank you for that. I’m sure you got a lot of questions on this over the last two days. But the rationale for placing mac and cheese, right, as part of global taste elevation, I think there’s an expectation, again, not because we had any hard facts on it, but that taste elevation would be the sauces, the condiments, right, the piece that sort of we’ve all seen has had some pretty healthy growth over the last ten years.

I guess how does a business like Mac and Cheese fit in there? And what was the rationale behind that?

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: Yes, Andrew, I’ll go back to the strategy we laid out one years point ago. We talked about our accelerated platforms, and that included taste elevation, included our ready to eat meals and snacking. Let me start with the easy one. Snacking, I think part of the reason we moved Lunchables with North America grocery is for two reasons: one, there is some operational synergies we have in meat and cheese in that business and secondly, there’s also the opportunity for us to think about how do we actually are more focused on refrigerated space in North America, and supply chain and our go to market. If I go to then mac and cheese, one of the Mac and Cheese was always in our accelerated platforms.

And the reason it was there is because we have seen category growth above 3%. We have a market share of about 70% share with very strong margins. That was true then and is true today. So those the parameters by which we decided that that’s a place that we want to continue to invest were true at that time and are true today, which is why it fits within what we can do in Global Taste Television. And in fact, if you look at some of our businesses in meals that are also not only in The U.

S. But outside The U. S, whether it’s the Katie dinner version in Canada have been growing, growing two points of share this year. If you look at some of the business outside of The U. S, whether it’s a Heinz that also has a Heinz beans component to it, it’s a meal that is shelf stable that also fits into the global taste elevation.

So to me, what I think the question might be more is, right now, we see some challenges of mac and cheese. I can tell you that we have put that our business in The U. S. Through the lens of brand growth system, and we have invested in improving the quality of the product that you’re going to be able to actually taste as you think about going to a store today. We’re making sure that we bring innovation to marketplace, which you’ll see in the next six months as well, too.

We improved the communication of the products. We really have new marketing out there. And you’ll see that when you pick up a box of mac and cheese now, it talks about the fact that we have no artificial colors, ingredients or preservatives right in front of the label. So I think we have done a number of things that actually have improved the business in mac and cheese to make sure it goes back to the historically growth that we have seen. But the conditions behind it are true then and are true today.

The last thing I would say too that maybe some people who write about it may not be as aware of it is that there’s also some operational synergies internally. So actually, we make some of our sauces in the same place that we make mac and cheese as well too. So that also is there’s some synergies actually by having those businesses together.

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: Yes. So there are growth considerations, the scale considerations and synergies or the synergies minimization considerations. Got it. Great. Thank you.

That’s helpful.

Operator: This move is partly about reducing complexity. North American grocery co will still have a number of different categories, channels, temperature states. I guess what gives you the confidence that this business, as it will ultimately be set up, isn’t still ultimately overly complex? And then could there be potential for further asset optimization moves down the line, if that were the case?

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: Well, let me start with the last part, which is I think we have the opportunity to make sure we have a flexibility in our P and L to both to drive focus, and we have said that in our balance sheet, however that may be. Secondly, though, if you look at the total categories in The U. S, we have about 55 categories that we’re working with. As we go into North America grocery company, that number goes reducing in about half. So there’s a significant amount of reduction in terms of complexity.

The fact that we will all be focused in one geography, huge opportunity in terms of driving focus. From the CEO to all the way to the lower parts of the company, the reality that we’ll be focusing on a very small geography in a way we’ll still be very relevant to our customers and our partners. The last thing I would say, too, on this is that if I think about how you run the company, that focus is also on the fact of the capabilities and expertise that I mentioned earlier. When we all understand how to run a meat business, how to make sure that in those categories that are truly important, and by the way, five categories will comprise about 50% of the business, then it allows you to just have better communication, better expertise, better understanding of the choices you have to make and some to be a much more agile company to move in different ways. We are today competing, and I think Andrew mentioned this, competing with companies that this is all they do.

If you are in Oscar May, where for us today, it’s a $2,000,000,000 company, it is within that $27,000,000,000 company is a small part of our portfolio. Within that $10,000,000,000 company, it’s a much larger part of our portfolio. So it gives us opportunity to create a different level of focus on those areas that are going to be paramount for us to succeed and continue to drive the thesis of the company.

Operator: Great. That’s helpful. Before we move away from just separation related questions, I just want to make sure to say, is there any are there any other topics along those lines that you want to make sure to sort of get out to the audience here? And if not, we’ll if we can move on.

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: No. But maybe both related to today and related to the future. You know, I think what is important too is that we don’t believe that just separating the company is a with that it’s financial engineering method for us to create value. That’s not our philosophy. Our philosophy is we believe that by separating the company is going to drive better performance with the additional level of focus.

And I think for us, it’s important that over the next until the moment of separation, we continue to make sure that we may see the progress in the company that ends make sure that by the end of the exit of the separation, we’re in a better place than we are today. So while we are not waiting one years point into SecoHal twenty twenty six to make sure we start living into those principles, we start operating that way now. You see that in Q2, we basically did what we set out to do, and our goal is to continue to see progress in the craft science of today to make sure it’s a stronger company by the time we come out.

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: Good segue into think based on some questions we got also this morning is we during this period of transition, one, we will continue to operate as business as usual. We’re going to continue to increase investments if they are appropriate to do so as we are deploying the brand growth system. So business as usual and focus on the performance. And we have because we have been working on this for a period of time already, there is a lot of work that has been done already. And we have already a separation office in place, very well defined streams.

We are carving out people dedicated for that to minimize distraction from people managing day to day. So we are very mindful as well on taking the right execution steps to ensure that we can really focus on the performance. Yes.

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: I think that’s a great point, Andre, because I think from the outside, it feels like could this be a distraction for management? Listen, I actually feel very privileged that I have people around me in our board that have experience on going through this. So the fact that we also announced yesterday that we’ll have a separation committee chaired by John Cahill, who has done this three times in his career, huge benefit for me, that allows me then to continue to stay focused in business. The fact that our Chair is now stepping in as Executive Chair to help also bridge between the Board and management during this time, huge support for me as well, too. So Anders and

Operator: I focus continues to be making sure we do the right performance for Great. Thank you. So maybe moving away from the separation. Carlos, it was a tougher start for the year, really for the entire food industry.

And those significant challenges remain, right? Kraft Heinz second quarter results were broadly in line, I think, with your revised full year expectations and did show some sequential progress. It can be hard sometimes, I think, for investors to see this when, like, in absolute terms, performance isn’t where you want it to be yet. But maybe you can sort of start and you touched on a little bit of this earlier, but level setting us in terms of where the consumer is currently, and then what in your recent results sort of gives you the confidence that you’re on the right track?

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: Yes. Listen, I think that there’s a few things that are happening, particularly in The U. S, where you can see that consumers are, as I mentioned earlier, under pressure probably longer than originally what expected coming into this year. I think what I feel great about is that in this moment in which companies can be tempted to just buy short term volume by doing deep discounts, we’re not doing that. We’ve been continuing to be diligent on whatever we make investment, we feel like it has to be the right return on that investment.

In the short term, obviously, it’s a little painful, but in the long term, it’s the right thing to do, which means too that when we are investing in quality, when we’re investing in better communication, we’re investing in better marketing, the result of that takes a little longer. But listen, I think the fact that we did that in Lunchables and now we’re seeing growth. We did that in Capri Sun, we’re seeing growth. As we continue to apply the model of a brand growth system, I think that’s something that we’ll continue to see the progress as we go forward. And I think we’ve been pretty agile of making sure that we have, again, better solution for consumers independent of where they’re shopping, whether you’re in e commerce, whether you are going to the Dollar General, whether you’re going to a club store, we’ll have an option for you as well, too.

So I think we’ve been solving both a channel expectation by us being able to be more expanding our point of distribution, but also making sure that we continue to invest behind our brands because ultimately, that’s what makes the consumer feel like they’re having a great value. Yes.

Operator: Great. You’ve talked a lot recently about the brand growth system as a sort of proprietary way, right, the company is using to examine what the right level of sort of quality, packaging, marketing, benefits to put in a product. All of these things are part of the sort of the value equation for consumers. What is it that’s truly unique about, I guess, this approach by Kraft Heinz versus, let’s say, other staples names that examine brand superiority in various ways?

Carlos Abrams Rivera, Chief Executive Officer, The Kraft Heinz Company: Yes. I’ll say two things. I think first of all, it clearly is a we come at it with an agile mentality, meaning we dedicate teams. We make sure that approach it in terms of a with a level of forensics almost analysis of the opportunity, not just for today but for the future. So when we think about how we are going to improve the quality, it’s not just about how consumers are thinking about our products today, but what are the things that are relevant for them for the future so that we can then make sure that we have the best products not only for what their expectations might be, but anybody else who may be coming into the category.

The second part of that, too, is we want to make sure we invest that guides our investments. So it leads to better ROI every dollar that we put behind it. And the third part of it is once we have the mapping of what we want to do with those brands, the way we actually execute those things are very unique to us. We have had this opportunity to spend now for the last two point five years a lot of effort behind what we call agile scale on how we actually then deploy agile methodologies against our biggest priorities. We’re using the same level of methodology against these priorities to make sure that when we execute, we do it with agility.

So it’s a combination of this forensic analysis, more investment, thinking about the future and the agility in which we execute the learnings behind But I’ll say, Andrew, that more important than being unique or not, the important thing for us is that there is an opportunity for us to systematically do a deep dive on our brands, and this is very clear an opportunity for us to unlock value. We are

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: seeing lots of places where more marketing was necessary, better product investments was necessary, be more focused on certain type of innovations. And that’s the priority for us, is how we can unlock value with that more than being unique.

Operator: And then maybe Andre, just to close it out. The company has put a tremendous amount of effort and resource into productivity that is sustainable, right, rather than sort of one off in nature. Can you give us an overview of some of the most important investments you’ve made and maybe what kind of returns you’ve seen on those investments? And how do you ensure that you don’t sort of lose some of that productivity mindset as the company ultimately

Andre Maciel, Executive Vice President and Chief Financial Officer, The Kraft Heinz Company: separates? Being efficient and focused on operational excellence is going to be part of our DNA and for sure will be part of DNA of both companies. So we are convinced on that. Look, we feel proud that we have been now for five consecutive years should be delivering efficiencies like well ahead of the 3% that we have externally outlined. And we have lots of things happening across procurement, logistics and manufacturing.

Our manufacturing efficiencies, they are mostly focused on variable COGS. The technology has been helping us on that. Why don’t you expect that decision makers? We’ve made a lot of investment in adding sensors across several of our factories nowadays, pretty much the entire U. S.

And most of Europe at this point, give us real time visibility when things are in that moment, we are overfeeding an equipment, a certain component, and then we can already push information to the shop floor immediately to have that immediate feedback. That’s one example. On the logistics front, there has been work in terms of consolidating the number of warehouses in The U. S. We have close to 70 distribution centers at this point.

It’s extremely complex, and we have like a line path that we have been executing now for two years to consolidate that. On the procurement front, our relationship with suppliers was very transactional in the past that we completely changed that. It’s not what we did with the retailers. It was lot more strategic. And we have we don’t have any problem to be getting inspiration from productivity ideas from our suppliers.

Go back to focus, like some of them live and brief that every day. And before, we were very close to those type of opportunities. And like we have now a supplier innovation week, where we bring a lot of suppliers to be discussing what’s coming in their pipeline so we can incorporate into us. So these are a few examples, and there is a lot Perfect. All right.

Operator: I think that’s a great place to cut it off. We’ve covered a lot of ground. We really appreciate the incremental thought process around the separation. Please join us for the breakout, and please join me in thanking Carlos and Andre for being here. Great.

Thanks

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