Efficiency Is No Cure for Phony Baloney

The Wall Street Journal: “Over the past 2½ years, thousands of workers lost their jobs, and iconic Kraft buildings, including the original Oscar Mayer headquarters in Madison, Wis., have been shuttered and sold. The cost-cutting project is now wrapping up, giving Kraft Heinz Co. the highest operating profit margin among its peers in the U.S. food industry.”

Troy Shannan, Kraft Heinz’s head of North America supply chain, comments: “We look at pretty much any opportunity we have to drive efficiency. And we use the savings from those efficiencies to reinvest in our brands and our businesses and back into our supply chain.”

“Still, Kraft Heinz is grappling with a problem that can’t be solved by increasing efficiency: U.S. sales of cold cuts and other processed meats slipped to $21.3 billion last year, from $21.9 billion in 2015. Oscar Mayer’s market share dropped to 17.5% from 18% five years ago, according to Euromonitor. Natural and organic brands, as well as small labels buying from local farms, have nibbled away at sales. ‘Consumers are looking for something they think is handmade or looks handmade,’ said Chris Fuller, a consultant to meat processors.”

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