The new boss for Kraft-Heinz has shelved plans to split the company and is instead implementing a plan he hopes will fix it.
Chief executive officer Steve Cahillane took over in January and said he believes many of its problems can be fixed.
“My number one priority is returning the business to profitable growth, which will require ensuring all resources are fully focused on the execution of our operating plan. As a result, we believe it is prudent to pause work related to the separation, and we will no longer incur related dis-synergies this year.”
The previous plan was to spin off some businesses, including Oscar Meyer and its lunchables brand,
He will invest $600 million across marketing, sales and research and development.
Ten years ago Kraft and Heinz were merged for $46 billion.
But then U.S. sales declined and it took writedowns on several iconic brands including Oscar Mayer.
The company has now reported fourth-quarter earnings that were down by nearly 60 per cent and sales down by 3.4 per cent.
Warren Buffet orchestrated the merger in which he holds controlling interest, but turned over management to partner 3G Capital from Brazil which had a track record or cutting costs immediately after purchasing a company. That would boost short-term profits, but then result in a decline in sales.
Tim Horton’s chain is another of its acquisitions and there, too, the leaders from Brazil cut costs by dismissing a majority of its top and mid-level managers.
Its Restaurant Brands Inc. also owns Burger King, Popeye’s and YUM! Brands which in turn owns KFC, Taco Bell and Pizza Hut.
