Kraft Foods Group Inc. is taking cues from Silicon Valley as it strives to inject a startup vibe into its operations, a move it's betting will make it more nimble and help it better position its brands to appeal to millennials, Hispanic shoppers and those on limited budgets.
At the company's corporate campus in Northfield, the former CEO's wood-paneled office was torn out and replaced with an updated lounge, complete with a flat-screen television and a handful of massage chairs.
Two rooms dubbed the Looking Glass, each with six flat-screen TVs, enable account teams to monitor what's trending on social media.
Dozens of marketers also traveled to Northern California last year to find out how tech leaders think. The trip included visits to Twitter and Google, as well as a conversation with Facebook Chief Operating Officer Sheryl Sandberg.
"The whole objective of the trip was to up our digital savvy and to do it fast," said Beth Goeddel, director of the Kraft Brand Management Academy, the company's internal marketing training program.
The remake comes less than two years after Kraft spun off from its faster-growing snacks business, keeping a stable of well-known but slower-growing consumer brands such as Miracle Whip, Oscar Mayer and Kraft Macaroni & Cheese. And it comes as cash-strapped customers bypass pricier, top-tier brands in favor of store brands and discounts, developments that are pressuring Kraft and other big-name U.S. food-makers.
"Kraft was a complete reinvent and rebuild," said Deanie Elsner, a longtime Kraft executive who became its first chief marketing officer in February 2013. "We've got a portfolio that most people in the world would look at and drool. They're just fantastic brands that have been around for a very long time."
The challenge, Elsner said, is making the brands relevant to today's key consumers. As she sees it, Kraft needs to focus on three big groups.
Millennials, who are roughly 17 to 34 and make up about 25 percent of the U.S. population, "are very, very, very different from any consumer prior to this group," Elsner said. "They don't consume food the same way. They expect personalization and customization, and they want fresh, less-processed foods. So meeting their needs becomes tantamount to our success going forward."
Kraft is also focused on Hispanic shoppers, who Elsner said are having more influence in North America than any other group. That's leading Kraft to roll out new foods such as Hot Habanero Kraft cheese slices, something it says appeals to both groups.
The company is also keeping an eye on "strapped consumers," who often live paycheck to paycheck. The strapped shopper trusts brands but does not always pick them because of a tight budget.
"She likes our brands, she uses our brands. The challenge with our brands and her needs (is that) toward the end of the month, she gets more strapped and has to make more trade-offs to feed her family, and that's reality," Elsner said.
Kraft has responded with items such as single-use packets of Country Time drink mix, which sell for $1 or less, and it plans many promotions and coupons to hit toward the second half of the month.
To reach all three groups, the company is stepping up its efforts in digital and social media.
Each of the company's top 25 brands is spending "a decent amount of their budget" in social, and that percentage is rising, Elsner said.
According to eMarketer, overall digital spending is expected to account for a little more than 25 percent of all paid media spending worldwide in 2014, up from about 20.8 percent of spending in 2012.
Elsner said the food industry "is probably in the 23 to 24 percent range. We're well above that with an eye toward 50 percent by 2016."
In November 2013, Kraft opened its two Looking Glass rooms, where teams monitor social media trends in real time. It plans to add similar rooms in Wisconsin for Oscar Mayer and in Canada by the end of the year.
Kraft has been monitoring social media for over five years, but teams can now collaborate and use the data in a more powerful way, according to Wendy Kritt, the company's senior director of consumer relations, culinary and consumer insights.
"We get over 100,000 posts a day that mention Kraft brands. That's up from 25,000 a year ago," Kritt said.