He described the charges levelled by analysts as a “misconception”, and blamed the food giant’s poor financial results instead on a range of other factors, including an increase in costs of raw materials, and transportation.
Eduardo Luz, who is also the company’s chief marketing officer in the US, told The Drum that the plunge of 27% in the company’s share price on the day results were announced (Feb 22), had “nothing to do with brands”.
The company had invested “hundreds of millions of dollars” in “cleaning up” the portfolio over the past three years, he maintained, and investment in the Heinz brand was now “five-fold higher” than it was when the merger between Heinz and Kraft took place in 2015.
“Some ... brands will take more time to be stabilized or turned around, and that’s not always an easy job,” he added.
“But it doesn’t mean we’re not taking care of them. We have work to do on some brands and that’s what we’re doing.”
The poor financial performance would have no impact on planned brand strategy “in the slightest”, Luz insisted.
“There are a lot of people commenting on the sidelines without the data,” he said. “I’m very confident with the approach and I’m confident in where the investment is going.”
His comments stood in contrast to those from observers who blamed cost-cutting by the Brazilian private equity firm 3G Capital that runs the company for the poor performance. They argued that the cuts had severely hit innovation and marketing investment, and that the company was now paying the price.
According to Martin Sorrell, CEO of S4 Capital, the write-down, “indicates investment in innovation and branding is essential”.
“In addition to being frugal, you have to invest in product or service innovation and marketing. You’re throwing the baby out with the bathwater if you do one without the other,” Sorrell told Ad Exchanger.
Luz stressed there would be an emphasis on innovation and speedier marketing in the future. He described a policy of “200 CMOs for 200 brands”, designed to empower brand marketers to make braver decisions and to reduce bureaucracy across departments.
Sourced from The Drum, Ad Exchanger, Fortune; additional content by WARC staff