Indeed, for the second quarter of this year Kraft Foods Inc. reported a healthy 11-percent rise in quarterly profits from a year ago, with net income rising to US$827-million from US$745 million during the period—a remarkable performance at a time when costlier national brands are expected to be taking a beating from the onslaught of lower-priced, private-label competitors.
For Bianco, however, the whole premise is an outdated notion, at least when it comes to Kraft.
“I think that every brand has a role to play in the marketplace,” he remarks, “but to play a really important role those brands must add value to the consumer, and our focus at Kraft is all about adding value—ensuring that our brands provide consumers with both product innovation and product quality.
“The interesting thing is that when we see our [Kraft] brands grow,” Bianco reflects, “the categories in which those brands compete also tend to grow overall, and that applies to all the private-label brands as well.
“So in effect we raise the tide that lifts all boats, if you will,” he states. “Because we’re such a big player, often a market leader, and fully committed to investing it our business, whenever we build up peanut butter, frozen pizza, a cookie or some other new product line, we tend to build up an entire category … so that everyone ultimately tends to do well.”
Like most major CPG (consumer packaged goods) players in recent years, Kraft has been challenged by the evershifting landscape in the North American retail markets—including the rapid ascent to dominance by the likes of Walmart, Costco and other Big Box retailers—as well as the emergence of a new breed of a better-informed, more health-conscious, and more environmentally-sensitive North American consumers raising the bar of expectations for their grocers and food producers.
“You need to keep the consumer happy, whether they shop at Walmart, Sobeys, Loblaws, Metro or any other grocer—the main thing is for
the consumers to be happy with our products that they buy from our [retail] customers,” Bianco relates.
“We and our customers may at different times agree or disagree on how we get our product there, how much it costs to make it, how to support it … but ultimately it’s all about making the right decision about the consumer,” says Bianco. “It’s not really about who’s calling the shots, but rather keeping eyes focused on the consumer.
“If the consumer is happy, we are both happy.”
Bianco says he sees nothing wrong with low-pricing specialists like Walmart using their marketplace clout and reach to challenge its suppliers to continuously improve their customer service performance and supply chain efficiencies—much in the same way that Kraft consistently challenges its own suppliers to rise to the occasion.
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