In this article, we chow down on cross-basket receipt data for two titans of the food industry and see how they’re battling it out: Kraft Heinz vs. Hormel Foods.
How Veryfi compared Kraft and Hormel brands
Veryfi analyzed line items in millions of consumer shopping receipts from major U.S. supermarkets to identify which Kraft Heinz and Hormel Foods brands appeared most frequently in the data. The receipts were captured over the last two years.
Kraft vs. Hormel sales volumes
Kraft outsold Hormel overall, by a wide margin. Hormel meats were the most popular line item for Hormel, as expected. However, even Kraft brand A.1. Sauce outranked any Hormel product. Nine of the top 10 items were Kraft Heinz brands, including iconic products like Lunchables, Heinz Ketchup, Velveeta, Cool Whip and Kraft Mac & Cheese.
The mad genius of Kraft Heinz
Apparently, Kraft Heinz has unlocked the elusive secrets of brand strategy. Its ability to maintain leadership positions across categories is impressive. For example, Lunchables is far more popular than any Hormel meat product.
Kraft Heinz sold off its successful Planters brand
In early 2021, Kraft Heinz actually sold its Nuts business (mainly Planters) to its competitor Hormel Foods, to achieve greater focus in its portfolio. In a “nutshell”, Kraft Heinz sold the business to a competitor without significant fear of losing market share or compromising its strategic growth prospects.
Kraft Heinz sold off its powdered cheese business
Where Kraft Heinz is really showing its mad genius is in selling off the natural cheese and powdered cheese businesses. Wouldn’t it potentially trade in-house ingredients for more expensive 3rd-party ingredients? Does the strategic focus on the strongest brands justify higher production costs?
This change in strategy was carefully considered and intentional, and caught the attention of CNN, who interviewed Kraft Heinz CEO Miguel Patricio. In the interview, Patricio explains how he brought the company back from the brink by selling off peanuts and natural cheeses and embracing our nostalgia for its iconic brands.
Velveeta > Peanut Butter
When researching Veryfi Insights articles, we’re usually surprised by some of our findings. One shocking result was the popularity of Velveeta. Incredibly, it’s more popular than peanut butter, arguably a classic American food category. Skippy from Hormel Foods was the #1 peanut butter in our analysis, and it didn’t even crack the top 10 brands, falling just below Oscar Mayer from Kraft.
Spam > Applegate and Columbus
A Hormel surprise was the popularity of Spam. Within the Hormel portfolio, Spam outranked both Applegate and Columbus, by nearly 2x. It was also ranked just below Skippy, another iconic Hormel product. Some may argue that the 85-year-old Spam was in its heyday decades ago. However, it’s clearly enjoying a renaissance with a growing cadre of “Spambassadors” around the world.
Kraft Heinz brand affinities
Kraft vs. Hormel: the opportunity for Kraft Heinz is cross-basket insights
Based on our view into Kraft and Hormel sales volumes, we think there’s ample opportunity for Kraft Heinz to use similar cross-basket receipt data insights to drive brand affinities throughout their product portfolio. They could also find additional ways to streamline their portfolio, and identify new marketing campaigns to drive customer loyalty and fend off competitors.
Kraft customers prefer Skippy over Planters
When looking at Kraft vs. Hormel brands purchased alongside Kraft products, we saw that Kraft customers prefer Skippy vs Planters, and Justin’s is nearly nonexistent. We also saw that the purchase frequency for Planters dropped when bought alongside Kraft products. Perhaps that’s another reason why Kraft felt it would be safe to sell off the Planters business: Kraft didn’t see affinity between Planters and its other brands.
Planters: was Kraft Heinz “nuts” to sell it off?
Regardless of how much Planters contributed to Kraft Heinz sales volumes, it’s now one of the strongest products in the Hormel Foods lineup. We found that Planters outranked Kraft Heinz brand Oscar Mayer, and was placed right behind Kraft Mac and Cheese. Clearly, Hormel Foods saw an opportunity to gain a leading position in the processed nuts category, and its $3.35 billion Planters acquisition is likely paying off.
Okay, now we’re hungry….
When we examined Kraft vs. Hormel sales volumes, we learned that the former is a “mad genius” when it comes to brand strategy, and the latter has a handful of strong brands that could be even stronger.
Read the full article by Veryfi here.
