Kraft Heinz Plans To Boost Working Media by $50 Million
Kraft Heinz will boost working media spend by $50 million in the United States and trim other costs this year, as it makes big bets on cleaner formulations of some of its iconic brands.
The spending plans, announced during the company's fourth-quarter conference call on Thursday afternoon, show Kraft Heinz is cutting some non-working media costs to free up funds for advertising.
"We expect 2016 will be a strong marketing year for us, including a further shift of our advertising spend from non-working to working media, with our goal of increasing working media to at least three-quarters of our marketing budget," Chief Operating Officer George Zoghbi said on a call with analysts.
Later, in response to an analyst's question, Mr. Zoghbi said working media, or what it pays for ads to be aired and shown, will grow by about $50 million this year in the U.S. He said the merged company is finding ways to cut other marketing costs, freeing up the funds for the working media increase.
Overall, the company's advertising spending should be in a mid-single digit percentage range of overall revenue.
Kraft Heinz, formed when H.J. Heinz acquired Kraft in 2015, already made a big splash earlier this month with its "Meet the Ketchups" Super Bowl campaign.
Along with the Heinz ketchup push, plans include advertising behind two cleaner versions of well-known products. Mr. Zoghbi pointed out that Capri Sun Organic is now in stores, with advertising set to hit later in the second quarter. The company also plans to promote updated formulations of Kraft macaroni & cheese with no artificial flavors, preservatives or synthetic colors, a product overhaul that was announced in 2015.
The legacy Kraft Foods Group brands spent $569.3 million on measured media in 2014 in the U.S., according to Kantar Media. Heinz brands, including the namesake ketchup and packaged foods such as Ore-Ida, spent just $44.2 million.