Aug 21, 2020
Over my lifetime, I’ve learned that prices rise, people age, crises come and go, but there are some things that never change—like breakfast is always in the morning and dinner at night.
Or is it?
Kraft recently announced that their blue box macaroni and cheese product, typically on the dinner menu, is now “approved” as a breakfast food. Maybe I’ve been living in the South too long, but this seems to me almost heretical. Here in Georgia, mac and cheese comes with black-eyed peas, a big rack of barbecue ribs, and a glass of sweet tea to wash it all down—no exceptions.
But mac and cheese with my pancakes? My stars!
I was surprised by this choice. But why would Kraft do it? And more importantly, is it a good decision?
In fact, as I thought it through, I decided that I do think it’s a good decision—but for all the wrong reasons. To understand exactly what I mean, you’ll need a little backstory.
Kraft v. Frito Lay
Over the past several years, we’ve watched Kraft Heinz Company, under the watchful eye of 3G Capital, attempt to cut their way to profitable growth. Rather than invest in new ideas, they’re squeezing out costs and starving brands. A generation ago you couldn’t turn on the TV without seeing a Kraft ad, but today their market presence is depleted and they’re at risk of irrelevance (just one of the consequences of unwisely choosing to cut the marketing budget in tough times).
At the same time that Kraft is reducing their marketing investment, the Frito Lay division of PepsiCo decided to launch a line of macaroni and cheese products under the Cheetos brand. If you’re following me, Kraft is now faced with a competitor (Cheetos) who is as big (or bigger!) with arguably the best distribution system in retail grocery and touting a way more hip and cool brand.
What is Kraft to do? They can’t roll over. They can’t instantly make their brand popular with kids. And they aren’t going to convince their board to pivot from being brand harvesters to brand investors overnight. They’re caught between a rock and a hard place—or between a breakfast buffet and a dinner party.
What they chose to do was create some noise, generate conversation, and become relevant again even if just for a moment. How to do that? Pretend you’re going after breakfast…
You see, Kraft isn’t actually interested in breakfast. Why do I believe this? They divested from their Post cereal brand years ago because they couldn’t compete with Kellogg or General Mills. To this day there is no sane person at Kraft interested in taking on those behemoths. Plus, nearly everything in their suite of brands, from A1 Steak Sauce to Shake ‘n Bake, represents an old-fashioned American family dinner table-centric brand proposition.
Kraft is simply trying to get people talking about their brand again. And if they’re very lucky, it will work. Some consumers may buy a box and give it a try for breakfast, but in the end that doesn’t really matter. They win when they get people talking about Kraft (in, say, a blog post!).
If they’re really lucky they can persuade consumers to stock up on all kinds of Kraft products, so that when Cheetos hits the grocery shelves there won’t be any consumers with “mac and cheese” on their grocery list at all.
The Takeaway
A change in the competitive landscape combined with a cost-cutting mindset is a recipe for disaster, and Kraft has their back to the wall. On the flip side, there’s no guarantee that anyone will actually go for Cheetos macaroni and cheese (though I do find the thought of Cheetos Flamin’ Hot Mac and Cheese Snacks intriguing).
But a sharp company and a smart, classic brand like Kraft should never turn away and hope their competitors fail—they will have to be proactive in the cheese wars. The battle for cheese supremacy in the food product world is just beginning. If they want to fend off Cheetos and defend their position as king of the category, Kraft is going to have to recraft (pun intended!) their story and their strategy to maintain relevance. And I hope they do. My breakfast is, literally, on the line here.
And it means, ultimately, that Kraft is going to have to invest in rebranding. Ensuring that your story is compelling to a new generation of grocery shoppers is not something you can just budget-cut your way to. You will have to do the work—the research, the creative, the execution, not to mention the story, strategy, and systems.
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