The American giant Kraft-Heinz has posted an abyssal loss of $ 15 billion since the beginning of the year. This is the consequence of a social and societal blindness of management that has not seen the shift of organic but has been obsessed by the drastic reduction of costs. The Harvard Business Review has just published a study on the "Kraft-Heinz" case entitled "The Missing Ingredient".

The spectacular collapse of Heinz Ketchup. The company has a colossal loss of $ 15 billion since the beginning of the year, it has become a case study studied by academics.

Ketchup Heinz has become an example of what not to do in management. Two academics have just published an article in the Harvard Business Review on the case "Heinz".

In 2015, Heinz merges with his fellow American Kraft food to become a global food giant with Heinz Ketchup of course but also Maxwell coffee, Benedicta sauces and many US brands that are not known in the UK. Europe. During this merger, the company passes under the thumb of an activist financial fund that will impose a drastic austerity cure. They decide the closure of six factories, the abolition of 5,000 posts and, above all, the application of the dreaded "Budget Base Zero" method.

What is the "Budget Base Zero"?

That is, every year and in all departments, we put all budgets to zero to justify again the least expense, to the smallest business card.
It is spectacular to reduce costs but it is also spectacular to break a company and to annihilate all employees. This is what the two academics showed in their study. Kraft-Heinz has lost all capacity for innovation in a changing food universe towards organic, natural or salt-free. Kraft-Heinz has remained on its model of ready-made meals, ultra-transformed, like the 80's.
In stores, sales plummet and the value of brands collapse.

What lesson to remember about all this? Do not follow the "Ketchup" model?

Exactly and thankfully, there are counter-models that work. We find in France with Danone, for example, which on the contrary puts on the social in-house and bio on the shelf.
And bingo, we see that this soft strategy is also paying off on the stock market. Over the course of a year, the Danone share shows a 20% gain, compared to the 55% drop for Heinz ketchup.