‘Surprise CEO Change’ at Kraft May Shift Focus Toward Deals and Cost-Cutting, Away from Marketing

In favor of budget cuts, Kraft has chosen a new CEO who will likely shift focus away from advertising

Photo Sasabune Omakase Modified: Flickr/erin/CC 4.0

Kraft’s new CEO indicates a potential change in business strategy that will focus less on innovation and advertising and more toward deals and acquisitions. 

Kraft’s new CEO indicates a potential change in business strategy that will focus less on innovation and advertising and more toward deals and acquisitions.

Last week, Kraft’s board of directors announced that Tony Vernon, the company’s CEO since 2012, would be replaced by John Cahill, a chairman of the board. AdAge speculates that the change in CEO is not just a name swap but a sign of a new age of Kraft business strategy that will focus more on cutting costs and, potentially, less on the company’s marketing and advertising.

“The company might reduce spending on underperforming brands like Jell-O, or enter a new phase of deal-making that could lead to mergers or acquisitions of other food companies,” according to AdAge.

Vernon, who reportedly took time during earnings meeting to call attention to his favorite campaigns, favored a strategy of increasing advertising spending in order to better compete with other companies. However, as Kraft sales have struggled in a market that has opened to include more small brands, Vernon’s approach has failed to pan out.

In a statement, his successor John Cahill promised to "take a fresh look at the business to prioritize our investments and focus on sustainable profit growth."

In a note to investors, AllianceBernstein noted that while Vernon had been more focused on marketing and innovation, Cahill was “likely to be a more operationally focused CEO, potentially focused on more cost-cutting or more deal-making."

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