Kraft Heinz puts ad agencies on alert with pledge to cut roster from 36 to 19

Kraft Heinz is following in the footsteps of Unilever and Procter & Gamble with an overhaul of its marketing operations that will see the number of "creative/design" agencies it works with slashed from 36 to 19, while media spend will get a significant boost at the expense of areas such as research.

Speaking on an analyst call as the food giant revealed its full-year results for 2019, chief executive Miguel Patricio said the company had "closed the year with a much firmer handle on the business", despite a fall in organic sales. 

Patricio said that, in the coming year, Kraft Heinz would be "redirecting dollars disproportionately towards support for our flagship brands". Part of this means a change in its approach to product innovation, with a shift towards "fewer, bigger, bolder initiatives". 

"It’s a key driver of our marketing efficiencies we expect this year," he said. "We have to find optimal media spend by portfolio role.

"We’re also finding efficiencies in non-working marketing, such as fewer research dollars necessary for the more concentrated innovation pipeline, as well as cutting the number of agencies we employ in half.

"As a result, we plan to increase working media—what consumers actually see—by 30% in 2020, with ever greater increases behind the brands that are the biggest drivers of our profitability." 

A slide shared during the results webcast shows that the number of agencies the company works with is expected to be cut from 36 to 19.

Kraft Heinz’s organic net sales for the 52 weeks ending 28 December 2019 fell by 1.7%. Reported sales, which include the impact of divestitures and currency impacts, fell 4.9% to $25 billion. 

However, Kraft Heinz made an income before tax of $2.66 billion—compared with a massive loss before tax of $11.3 billion in the previous year.