But we were at the bottom, and we are no longer at the bottom.
I don’t want to give you the sense that the job is done. We’re proud to say we were back to investment grade in two years. We started having a very good tailwind because of consumption at home, and we reduced our debt by $10 billion in the past three years.
We made two divestitures for which we got a pretty good price: the natural cheese business and the nuts business. We had a very, very complex portfolio, and we needed focus. I always say that you can do anything but cannot do everything. We said, “Okay, we need to reduce the debt, but we need to define the strategy first.” So after people, I went to strategy. The month I arrived, the company’s was downgraded to high yield. You also had to deal with a tough financial situation. I think actually that was a very important period for us because we could evolve a lot. I was like, “Oh, my God, what do I do now? I have to transform this company through Zoom and Teams? That’s impossible.” But we did it. After six months, I got desperate because something called COVID came to town. For the first six months, I was more of an evangelist than a CEO, visiting factories, teams, meetings, trainees, and MBAs, talking to people, trying to instill hope, a future, a vision, and especially optimism. My first priority was people and culture. When you arrived at Kraft Heinz in the summer of 2019, what was the situation you found? What were your priorities? I accepted the job because the company needed a big, big transformation, and I love that. “But we want to be great, and greatness is a different ball game.” This interview has been edited and condensed for clarity. We are proud of what we did,” he tells Fortune from a conference room at the firm’s Chicago headquarters. Since his arrival, Kraft Heinz stock has been up 30%, about matching the S&P 500. Patricio, 56, was born in Portugal and earned a business administration degree in São Paulo. That’s when the company brought Patricio from his post as a top AB InBev marketing executive to become CEO, with a mission to innovate, build brands, and grow. The company’s stock price peaked, drifted down, then plunged in 2019 when Kraft Heinz confessed its brands were worth $15.4 billion less than previously assumed. With takeovers off the table, Kraft Heinz had to focus on innovation and brand-building-about which the playbook said little. Buffett refused to participate in a hostile takeover, so Kraft Heinz looked elsewhere but couldn’t find attractive targets. Always seeking new acquisitions, the company went after Unilever, which resisted. Kraft Heinz ran that playbook until it hit a wall in 2017. Exhibit A is Anheuser-Busch InBev, which 3G built into the world’s biggest brewer. 3G’s management playbook after a takeover has long called for strict meritocracy, firing most top managers, cutting costs to the bone, then buying more companies in the industry. Berkshire and 3G remain Kraft Heinz’s largest stockholders, and while Berkshire holds more shares (27% versus 3G’s 8%), Buffett has publicly deferred to 3G on managerial matters. Warren Buffett’s Berkshire Hathaway and the Brazilian private equity firm 3G Capital created Kraft Heinz after buying Heinz in 2013 and merging it with Kraft two years later. But as Patricio observed on an early call with Wall Street analysts, many of those brands were “a little bit dusty.” Can he revive them? Or, as some analysts believe, should he focus on creating new brands? It’s a case study that owners of proud brands everywhere are watching. Kraft Heinz’s brands are among the most famous in food and beverages in addition to Kraft and Heinz, they include Oscar Mayer, Velveeta, Kool-Aid, Jell-O, Maxwell House, and dozens more worldwide. The company’s subsequent tomatoey efflorescence exemplifies the turnaround of a onetime corporate aristocrat that Patricio is directing, an effort he acknowledges is still a work in progress. There were only a few when Patricio became CEO in the summer of 2019. What else? Ketchup sweetened with honey…” A staffer later supplies the answer: There are more than 20 kinds of Heinz ketchup. There’s ketchup with less sugar, ketchup with less salt. “There’s ketchup organic, ketchup non-sugar.
“I don’t know,” says Kraft Heinz CEO Miguel Patricio.
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