Kraft Heinz Joins AB InBev’s BEES Digital Platform
Kraft Heinz is partnering with AB InBev as part of its BEES e-commerce platform in order to grow its reach within emerging markets — leveraging the beverage giant’s distribution network for a presence in regions where it has little or no activity.
Kraft Heinz also provided more insight into its proprietary trade promotion technology and supply chain investments, the latter of which enables it to forecast sales down to the SKU and daily level.
The AB InBev partnership is another component of Kraft Heinz larger emerging market strategy, said Rafael de Oliveira, Kraft Heinz EVP and president of international markets, at the Consumer Analyst Group of New York (CAGNY) investors conference last week, noting they aim to reach more than 1 million potential new points of sales in Latin America alone.
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They will initially launch on the BEES platform in Colombia, Mexico, and Peru. Kraft Heinz is also exploring more than 70 countries in its overall emerging markets strategy, according to its presentation materials.
The BEES technology enables AB InBev retail partners, many of which are small, independent shops, place orders for hundreds of manufacturers, as well as manage their invoices, schedule deliveries, and earn rewards. Participating suppliers not only receive access to these new retailers, but also AB InBev’s tech platform, logistics, and route-to-market.
Kraft Heinz CEO Miguel Patricio served as chief marketing officer for AB InBev prior to joining the company.
Trade Promotion Investments
Kraft Heinz also shared details on its proprietary trade management system during the conference, which is designed to provide real-time data for about 100,000 of the company’s promotional events in the United States.
Using in-house-developed technology, the system provides insights and recommendations in a simple manner, said Andre Maciel, Kraft Heinz EVP and global CFO, while the company’s own elasticity model accounts for cannibalization between products and among retailers, as well as pantry loading.
“These new elasticities review a whole set of new opportunities for us to better deploy our promotional dollars, as events that we thought were good for us and will tell us they were actually not,” he said.
The tech helps Kraft Heinz define which items should be promoted, when, and which discounts and promotional tactics to use. As a result, the No. 20 publicly owned consumer goods company improved from a negative ROI from promotions in 2019 to a positive, and subsequently improved ROI by about 20 percentage points in the last two years.
A caveat by Maciel: “We still have a meaningful number of promotions with negative ROI, so there is a significant opportunity still ahead of us to redeploy our promotional dollars to drive growth.”
Supply Chain Investments
Kraft Heinz said its investments in supply chain efficiency have saved an average of $435 million for the last three years. This stands to reach an average of $500 million between 2023 and 2027, according to Maciel.
While it’s expected to result in efficiencies of approximately $2.5 billion by 2027, the company will still fall short of its benchmark, he acknowledged. As a result, Kraft Heinz will focus on improving overall equipment effectiveness (OEE), a metric that’s improved from the sub-60% mark in 2019 to the mid-60s. Kraft Heinz ultimately aims to reach the mid-70s in the next five years.
Its supply chain control towers are leveraging factory-installed sensors tapping into real-time data to detect disruption and then receive predictive alerts to correct as needed. The company is currently piloting two large factories with these capabilities and intends to expand the tech to its largest factories, to account for about 65% of its business by the end of 2024.
Kraft Heinz, which has been exploring digital twins, touted its implementation of a new logistics network, as well as investments in supply planning through a partnership with OMP and demand planning using AI with o9 Solutions.
The KH Hive demand forecasting technology can forecast sales at the SKU, location, and down to the daily level, according to the company. Seventy percent of its customers leverage the platform, and since going live, Kraft Heinz has improved distribution forecast accuracy by 5 percentage points, which it expects to double again this year.
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