Kraft Heinz CEO
Before being named CEO of Kraft Heinz, Miguel Patricio was born in Portugal, then moved to Brazil during his childhood, and eventually went on to graduate with a degree in Business Administration from Fundacao Getulio Vargas in Sao Paulo.
The Career of Miguel Patricio
Early on in his career, Patricio held positions at and moved up the ranks of several global consumer packaged goods (CPG) companies including Philip Morris International, Coca-Cola, and Johnson & Johnson.
Anheuser-Busch Inbev SA/NV (AB InBev) is a multinational drink and brewing company based in Leuven, Belgium. They have a global functional management office in New York City, and regional headquarters in Sao Paulo, London, St. Louis, Mexico City, and others.
From local brews to beloved classics to historic recipes, AB InBev is responsible for brewing well over 500 brands and countless beer varieties such as Budweiser, Corona, Modelo, Stella Artois, Cass, and many more!
Miguel Patricio served in various roles for AB InBev and its predecessor Companhia de Bebidas das Americas S.A. (“AmBev”) since joining AmBev in 1998, including as AB InBev’s Zone President Asia Pacific for four years, Zone President North America for two years, Vice President Marketing of North America, and Vice President Marketing.
“I was in marketing. But I wanted to manage a business and a zone that gave me the experience to manage a big business and the necessary qualifications to become a CEO one day,” he said on the Institute for Real Growth podcast.
Developing AB InBev Zones
In 2004, Interbrew and AmBev merged, creating the world’s largest brewer, InBev. The deal was valued at $11.5 billion and combined the 3rd largest (Interbrew) and 5th largest (Ambev) brewers into the world’s No.1 beermaker. The deal consolidated the top brands from Belgium, Canada, Germany, and Brazil.
Four years later, the acquisition by InBev of Anheuser-Busch was completed, creating Anheuser-Busch InBev, expanding on InBev’s previous status as the world’s largest brewer and creating one of the top five consumer products companies in the world. Under the terms of the merger agreement, all shares of Anheuser-Busch were acquired for $70 per share in cash, for an aggregate of $52 billion.
As President of Asia Pacific, Patricio set the foundation for the growth of the China business by defining a long-term strategy focusing on the premium market, growing Budweiser to become the leading brand in China, and expanding the growth of local brands such as Harbin.
This led to the transformation of AB InBev Asia Pacific, which grew from revenues of $1 billion in 2008 to $2.7 billion in 2012, making it the number one beer company in China. As of 2019, Asia Pacific represented approximately 15 percent of the company’s global revenue and 18 percent of global volumes.
The Importance of Marketing
In 2012, Miguel Patricio was named Chief Marketing Officer of AB InBev. During his run, he oversaw brands including Budweiser and Stella Artois, accelerating their organic sales growth up to the high single digits, accounting for nearly a third of the company’s organic growth in 2018 and more than 20 percent of AB InBev’s 2018 year-end global revenues.
“I think, in a consumer goods company, marketing is a must for any CMO to become a CEO. It is the natural path,” he says. “Because marketing is the part of the company that really thinks and understands the future, that sets and drives the strategy of the company. Marketing is a big part of the work of a CEO in a CPG company. Even at ABI, for a long time, I was the only person with a marketing background on the leadership team.”
In his final year as chief marketer, AB InBev was the most awarded brand owner at Cannes Lions 2018, the global benchmark for effective creative marketing communications.
The company scored two Grands Prix: one for Budweiser in Brazil, which won in the Print & Publishing category for “Tagwords”, a campaign that tracked different musicians who had been pictured with a Budweiser over the years and encouraged viewers to Google certain terms which would lead to vintage images of iconic rockstars drinking Budweisers – AB InBev could not afford to license these images outright, so found a clever loophole.
“We were able to organically direct people to each desired result/photograph, with no need of any SEO investment,” the Brazilian creative agency called Africa, who created the ad, said.
Furthermore, Carling, a South African beer, won the top prize in Radio & Audio for Ogilvy Cape Town’s “Soccer Song for Change.” The anti-abuse ad features a choir performing a rendition of Masambe Nono at the Soweto Derby.
Leveraging the sponsorship of the Soweto Derby, a highly-anticipated football rivalry between Premier Soccer League’s Kaizer Chiefs and Orlando Pirates in South Africa, Ogilvy Cape Town and Carling Black Label had a female choir hijack the national football anthem, Masambe Nono. Fans sang along with gusto, until about halfway through, writes WPP, when the choir changed the lyrics to highlight the issue of gender-based abuse.
Creativity Drives Growth
Several years before his leaving the company and the aforementioned artistic accolades, Patricio can recall taking part in a meeting with AB InBev’s CEO, marketing executives, and advertisement agencies. For about a week, the group gathered to reflect on how they had so many amazing brands but were terrible regarding creatively framing them.
“We came out of that meeting with four things to do,” he says. “First, we were afraid of being creative, because our leaders didn’t like creativity. As marketing leaders, we had to promote people from within or go to the market to change that. Second was that we were “safe.” We had “safe” agencies, so we changed agencies. The third was our processes. We were so process-oriented as a company that the processes were killing creativity. And the fourth was that we were not rewarding creativity. So we built a program that we call “Creative Acts” that has been a way to reward people for being creative.”
Since 2015, the company has also been scaling its global investment and innovation group, ZX Ventures, which in 2020 delivered its best year of performance with 50.7% growth in net revenue year over year.
“The truth is, according to Cannes, the number three company in creativity in the world is ABI [AB InBev]. Number one is Burger King and number two is Nike,” he stated from his marketing mountaintop in 2019, whilst reflecting on how far the company had come since 2008. “But that didn’t happen overnight. Five years ago, ABI was not even in the rankings.”
In a moment where creatives need to think beyond advertising and focus on building consumer solutions, AB InBev’s in-house creative agency, Draftline, has enabled them to move at the pace of culture and respond rapidly to consumer needs. Launched in May 2019, Draftline uses data-driven insights to produce creativity that is more local and personalized – with greater agility.
Between January 2019 and June 2019, Miguel Patricio served as Chief of Special Global Projects-Marketing at Anheuser-Busch InBev.
Kraft Heinz Chief Executive
In April 2019, Kraft Heinz board members announced their next CEO would be Miguel Patricio, effective that upcoming July 1. Kraft Heinz is one of the largest global food and beverage companies and registered 2018 net sales of approximately $26 billion. Their portfolio is perhaps most known for its namesake condiments (Ketchups, Mustards, Mayos, etc.) and boxed macaroni cheeses, as well as, a diverse mix of iconic and emerging brands including Oscar Meyer, Ore-Ida, Philadelphia cream cheese, JELL-O, Lunchables, Maxwell House coffee, and more!
“Miguel is a proven business leader with a distinguished track record of building iconic consumer brands around the globe, driving top-line revenue growth through a focus on consumer-first marketing, innovation, and people development,” said Alex Behring, Chairman of Kraft Heinz’s Board of Directors.
Another board member echoed Behring’s sentiment, adding, from attracting and nurturing the best talent to leading the turnaround of the AB InBev China business into the phenomenal success it is today, “Miguel has one of the best brand-building minds in the industry.”
The newly appointed chief executive’s approach to taking Kraft Heinz to new heights appears multifaceted, with particular emphasis on the premiumization of products, implementing a cutting-edge marketing strategy, and of course, fostering a culture of greater creativity within the company.
A Turnaround in Motion
Kraft Heinz – along with much of the food industry – has been bent on producing healthier products for some time, and according to an interview with Forbes, Patricio is determined to demonstrate that the company’s brands are the highest quality, have the best taste, and offer the best fit in customers’ busy lives.
This commitment to excellence even taps into environmental responsibility, as recently as July 2021, Kraft Heinz announced more sustainable caps for its squeezy sauce bottles, made to be 100% recyclable and reduce the waste of an estimated one billion plastic lids annually. Moreover, the company has pledged to aim to make 100% of its packaging recyclable, reusable or compostable by 2025.
On the marketing front, the executive team at Kraft Heinz is breathing new life into iconic labels like Oscar Meyer. “I’d like to use the fact that many of our brands have been around for generations to our advantage,” Patricio says. “Nostalgia is powerful among all age groups, but in particular among younger generations. We have brands that stand the test of time and enjoy vast name recognition. Now it’s a matter of making them move.”
Which also requires, you guessed it, creativity! “I will encourage people to take risks, not small ones around the margins, but meaningful ones,” he continues. “The importance of building this culture cannot be overstated. It will allow Kraft Heinz to be ahead of its time, and to position itself as a leader in the consumer packaged goods industry. Creativity is crucial to understanding and anticipating the future.”
By September 2020, seven months into the pandemic, organic sales were up 7%, marking the food giant’s first inklings of growth in years. At the very least, since Kraft and Heinz merged five years prior, when each company, whilst operating separately, was hauling in combined sales of $28 billion, around 11% more than in 2020.
Selling off Cheese and Nuts Businesses
Warren Buffett’s Berkshire Hathaway owns about 26% of Kraft Heinz, and Buffett’s team, in cahoots with fellow substantial Kraft Heinz owner 3G Capital, helped orchestrate the merger of Kraft and Heinz back in 2015. A year after Patricio became chief executive, as the combined entity finally found some financial footing, Forbes reported the marketing guru from AB Inbev sparked a “revolution that has won over Warren Buffett.”
In one transaction scheduled to close by mid-2021, Kraft Heinz entered into a definitive agreement to sell its Natural, Grated, Cultured, and Specialty cheese brands to a U.S. affiliate of Groupe Lactalis for a purchase price of $3.2 billion USD. The only cheese-related businesses they now retain are Philadelphia Cream Cheese, Kraft Singles, Velveeta Processed Cheese in the U.S. and Canada, the Kraft, Velveeta and Cracker Barrel Mac & Cheese businesses worldwide, and the Kraft Sauces business worldwide.
“We believe these cheese and dairy businesses will thrive in the hands of a global dairy company like Groupe Lactalis,” said Kraft Heinz CEO Miguel Patricio. “At the same time, the transaction will enable us to build sustainable competitive advantage in businesses where we have stronger brand equity, greater growth prospects and can use our manufacturing scale and consumer-based platforms approach. This is a great example of agile portfolio management at work.”
In June 2021, Kraft Heinz completed the sale of its nuts business to Hormel Foods Corporation in a cash transaction for $3.35 billion. Under which, Kraft Heinz would divest most products sold under the Planters brand, including single variety and mixed nuts, trail mix, Nut-rition products, Cheez Balls, and Cheez Curls, as well as Corn Nuts branded products.
“The sale of our Nuts portfolio is another important milestone in our transformation,” Patricio said, echoing similar sentiments to those expressed following the cheese deal. “The divestiture is a great example of our agile portfolio management and will help Kraft Heinz enhance our overall growth profile while enabling our strategic focus.”
Growth Under Miguel Patricio
Kraft Heinz stock was hovering around $30 a share when Miguel Patricio took over in July 2019, precipitously down from a record high of $96.65 in 2017, and as of October 25, 2021, the stock is being traded at $36.14 per share.
For the year ended December 26, 2020, Kraft Heinz’s annual report documented annual net sales of approximately $26 billion.
Organic sales, a key industry metric that strips out the impacts of acquisitions, divestitures and currency fluctuations, rose 6% in the fourth quarter of 2020 from a year earlier, compared with analyst expectations for 4.8% growth, according to Visible Alpha. This follows growth of around 6% to 7% over each of the prior three quarters as consumers ate more at home amid the coronavirus pandemic, boosting the entire sector.
Following 2020s stellar financial performance, Berkshire Hathaway Vice Chairman Greg Abel said he feels “comfortable” with Kraft Heinz, voicing confidence in the leadership of Patricio and his new management team. Abel is on the Kraft Heinz board along with fellow Berkshire Hathaway executive Tim Kenesey.
Likely due to economies reopening and people eating out more, almost to be expected, Kraft Heinz’s second-quarter 2021 earnings took a stumble as net sales decreased 0.5 percent versus the year-ago period to $6.6 billion. However, net sales versus the comparable 2019 period increased 3.2 percent
“Our second-quarter results serve as a strong indicator that our Kraft Heinz team will not only deliver a stronger 2021 than we initially anticipated, but will come out of the global pandemic much stronger than we entered,” said Kraft Heinz CEO Miguel Patricio. “We continue to drive our transformation program forward, modernizing our brands and better connecting with our consumers.”
If you enjoyed this story on the inspiring rise of Kraft Heinz CEO Miguel Patricio, be sure to check out our biography of Albertsons CEO Vivek Sankaran!