It’s been a little over a year-and-a-half since the blockbuster merger of H.J. Heinz Company and Kraft Foods, and the Canadian division is just wrapping up one of the final steps of the deal: an office makeover.
At company headquarters in Toronto (Kraft’s old HQ), offices and cubicles are getting ditched in favour of an open concept.
The place certainly seems bright and spacious. As I wander, a manager explains that the switch is meant to spur creativity and communication among staff. “It’s designed to reflect a culture of ownership,” she tells me, adding it’s increasing our “speed of business.”
Employee buy-in and giving business a boost happen to be two chief goals of the man I’m here to meet: Carlos Piani, president of Kraft Heinz Canada. Piani was brought here a year ago by 3G Capital, the private-equity firm that engineered the merger.
Like 3G, Piani hails from Rio, Brazil. Piani isn’t what you’d call a “food guy”. His background is mostly in private equity and real estate. He started his career in investment banking. Before coming to Canada, he was CEO at Brazilian real estate giant PDG.
Piani’s time in Canada has been anything but slow. First came the nitty-gritty of the merger. “Cut-throat” is how Fortune described 3G’s takeover style last year, noting its penchant for quick lay- offs and cost cutting. Canada certainly hasn’t been immune to the 3G touch.
Then in March came the “ketchup wars”. On one side, Reckitt Benckiser’s French’s ketchup, made with tomatoes grown around Ontario’s tomato capital, Leamington. On the other, Heinz, which two years ago stopped making ketchup in Leamington. Social media lit up as buy-Canadian boosters swore off Heinz.
Four months later, in an exclusive interview with Canadian Grocer, Piani says Heinz’s business remains strong. Here are edited excerpts from the interview.
WHAT’S YOUR BACKGROUND?
I started my career in investment banking and later moved to private equity. I spent roughly half of my professional career investing capital and operating portfolio assets, which basically meant I was charged with transforming businesses, accelerating growth and restructuring. That’s more or less what I’m doing here—I’m transforming. I’m putting two great companies together.
WHAT APPEALS TO YOU ABOUT WORKING IN FOOD?
The story behind Kraft Heinz is fascinating. I was interested in becoming a part of the company’s global journey. My experience in the past led me to know some of the 3G Capital leadership team, and they invited me to be here.
WHAT’S REQUIRED TO TRANSFORM A BUSINESS?
There are five questions you need to ask from the get-go. First, you need to ask yourself where will your business play and how? Then, what structure needs to be set up so you can tackle the challenges and choices that come along with that? What positions and roles will you need? What processes and rituals are you going to put in place in order to execute this? And finally, how are you going to align everything? Those are the questions, no matter the industry.
THERE’S A LOT OF TALK ABOUT 3G CAPITAL AND HOW IT TAKES OVER AND RUNS COMPANIES. WHAT ELEMENTS OF THAT CAN WE SEE IN KRAFT HEINZ?
Every leader in every industry is out to seek efficiency gains. We’re focused on being more efficient, and that can be a long process. The decisions we made early on were tough—there’s no free lunch—but those choices that the external market saw were just the first steps.
Our shareholders are long-term investors, so we have the ability to make those hard decisions early on and look forward to long-term gains. The whole story around 3G is about being more efficient and investing where it makes sense. That’s what 3G is all about: being an owner and taking care of everything as your own. It’s not about cost cutting; it’s about being efficient with every resource we can.
WHY DO YOU THINK IT MADE SENSE TO MERGE KRAFT AND HEINZ?
Kraft was primarily a North American business while Heinz is an international business. So there was a good fit to become a global player.
WAS THE MERGING OF KRAFT AND HEINZ DIFFERENT IN CANADA THAN ELSEWHERE?
The roadmap was the same as the global template, but it was tailor-made to our environment. Canada’s importance after the merger increased. Canada became a “zone”, which means I was brought in, we have a senior leadership team, and we have a lot of autonomy in how we deal with the Canadian business. That’s not necessarily how it was organized prior to the merger. The business is bigger from a sales standpoint and a category standpoint. Given this, Kraft Heinz is investing more in people.
HOW DO YOU EXPECT KRAFT HEINZ TO SUPPORT RETAILERS GOING FORWARD?
We want to be the best food company in Canada while still supporting our community. We won’t achieve this if our customers, the grocers, aren’t successful. Their success is our success—that’s our mantra. Canada has been a leader in Kraft Heinz’s retail programs. [Kraft] Hockeyville, for example, is a Canadian event that’s been exported to the U.S. We’ve also expanded our Project Play initiative to help the people in Fort McMurray affected by the fires this summer. We support food banks, and on our global platform, we have a big focus on fighting hunger. Being part of the community is essential to our success, and partnerships with grocers help us do that.
THE “KETCHUP WARS” WAS A BIG STORY EARLIER THIS YEAR. HOW WERE YOU AFFECTED?
In the end, we didn’t change our strategy. Our position in ketchup is still very strong. In the past we made the hard decision to close our [Leamington, Ont.] plant. But Highbury Canco [which took over the Leamington plant from Heinz] is a co-manufacturer of ours, so it continues to be home to a number of Heinz products, such as beans, tomato juice and pasta sauces. In total, over 70,000 metric tonnes of our products are produced in [Leamington].
We also operate a Heinz tomato seed business out of Leamington, which supplies most of the processing tomato seeds used on farms in eastern North America [including southwestern Ontario]. We’re still looking to increase our investments in local production.
WHAT WOULD YOU LIKE THE FOOD INDUSTRY TO KNOW ABOUT THE NEW KRAFT HEINZ?
First, we’re in it for the long haul. We’re long-term investors and here to grow. Second, we’re increasing our commitment to Canada through an allocation of people and an allocation of capital. Third is our commitment to talent. It was a great surprise to find out who I was working with.
When it comes to sales and marketing, I think we’re the most talented team in Canada. We have people that want to win, and they have the ownership mentality that’s a key pillar of our culture. If everyone thinks they’re an owner of the company, there’s a higher chance we’re going to win.
This article appeared in the September 2016 issue of Canadian Grocer