Kraft heinz group20

Kraft Heinz
Consulting Report
Product category: Frozen Vegetables

Editorial
Valerio Vindigni
     valeriovindigni19@gmail.com
Student #2641768
Gorkem Guneser
          gguneser@ku.edu.tr
Student # 2641402
Daniel Petcu
         danielpetcu.mail@gmail.com
Student # 2644958
Vitalii Katargin
katargin.vitalii@gmail.com
Student # 2645066
Samuele Quarta
samueleq@hotmail.it
Student # 2640834
Mikhail Bilak
           mihail.s.bilak@gmail.com
Student # 2644641

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TABLE OF CONTENTS
EXECUTIVE SUMMARY ...................................................................... 1
CHAPTER 1 - COMPANY BACKGROUND ......................................... 2
KRAFT HEINZ ENVIRONMENT & STRATEGY .................................................................3
SCQ ................................................................................................................................4
CHAPTER 2 – COUNTRY CHOICE ...................................................... 5
CPA.................................................................................................................................5
CAGE ANALYSIS..............................................................................................................6
PESTEL ANALYSIS.........................................................................................................7
CHAPTER 3 – ENVIRONMENTAL ANALYSIS .................................... 8
PORTER’S 5 FORCES.......................................................................................................8
SWOT ............................................................................................................................9
MARKET OVERVIEW .................................................................................................... 10
CHAPTER 4 – COMPETITORS ANALYSIS ........................................ 11
THE BLUE OCEAN CANVAS MODEL .......................................................................... 11
COMPETITOR ANALYSIS - HUNGARY ........................................................................ 12
COMPETITOR ANALYSIS – THE CZECH REPUBLIC..................................................... 13
COMPETITOR ANALYSIS – THE SLOVAK REPUBLIC................................................... 14
CHAPTER 5 – MARKETING & FINANCIAL PLAN ........................... 15
SEGMENTATION........................................................................................................... 15
VALUE PROPOSITION .................................................................................................. 16
MARKETING MIX – HUNGARY................................................................................... 17
MARKETING MIX – THE CZECH REPUBLIC................................................................ 19
MARKETING MIX – THE SLOVAK REPUBLIC.............................................................. 21
FINANCIAL PLAN ......................................................................................................... 23
CONCLUSION.................................................................................... 24
REFERENCES ..................................................................................... 26
APPENDIX......................................................................................... 29
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The Kraft Heinz Company is the fifth-largest
food and beverage company in the world,
with the mission of aligning people, products
and partnerships in order to eliminate
hunger around the world. (Kraft Heinz
Company, 2017). The company is currently
selling its products in more than 200
countries, but in Q3 of 2018, Kraft Heinz's
EMEA net sales decreased by 3.3% versus the
year-ago period, dropping to $629m. This
report is created for the purpose of
developing a market entry strategy for Kraft
Heinz, allowing the company to achieve $3m
of revenue in EMEA by 2021 and become less
dependent on the USA market. In order to
identify the most attractive white spaces in
the EMEA segment, several quantitative and
qualitative tools (CAGE framework, CPA
analysis, PESTEL) have been employed.
Consequently, the countries with the highest
financial potential resulted to be the Czech
Republic, the Slovak Republic and Hungary.
Moreover, the market trends of each Kraft
Heinz product segments (frozen vegetables
and/or potatoes, canned tuna, concentrated
drinks, meal mixes and pickles) in the
identified target countries were analyzed. As
a result, the frozen vegetables product
segment resulted to be the one with the
highest potential, registered a market
growth of 2.2%
in the Czech Republic, 3.8% in the Slovak
Republic and 7.7% in Hungary 2018 vs 2021.
The prices were set based on competitor's
analysis developed for each target country. In
addition to that, the CANVAS strategy model,
Porter’s 5 forces and the environmental
analysis were employed to have a better
understanding of Kraft Heinz’s position in the
Food industry and competitive advantages
compared to the main competitors in the
target countries, such as Bonduelle, Tesco,
Iglo and Nowaco. Eventually, the 6P
Marketing analysis related to each country
was performed; supermarket and
hypermarket chains resulted to be the best
distribution channels for the chosen
“Premium” product, while several
promotional activities such as consumer
promotions, target marketing, outdoor and
in-store ads in supermarkets and digital
advertising in social media have been
calculated and developed.
Based on the analysis of market, competitors
and prices set for the chosen product,
revenue in each country have been projected
to be € 1.9m in 2019, € 3.6m in 2020 and €
5.1m in 2021, while the total promotion
costs in the 3 years period has been
forecasted to be € 1,05m.
EXECUTIVE SUMMARY
1

Company Background

Kraft Heinz Company was founded in 2 July 2015
by merging of Kraft Foods Group and Heinz. Even
though Kraft Heinz was founded 3 years ago, they
are third largest beverage and food company in
North America and fifth largest beverage and
food company in the world. (Kraft Heinz
Company, 2017) Kraft Heinz selling their
products in nearly 200 countries and its
employees are located in more than 40 countries.
(Kraft Heinz Company, 2017)

Company Foreing Operations

Kraft Heinz is selling its products in more than
200 countries. Company’s operating segments
consists of American Consumer Products, North
American Consumer Products, US Foodservice,
Europe, Asia/Pacific and Rest of World. North
American Consumer Products department
responsible for operations in US and
Canada. Asia/Specific Department of the
company operates in Australia and Singapore. US
Foodservice department is responsible for sales
and customized products such as ketchup
History Timeline
condiments, sauces etc. to commercial and non-
commercial food stores in US.
Lastly, Rest of World unit of the company
operates its business in Africa, Latin America and
the Middle East.

Company Mission and Vision

Kraft Heinz mission is aligning people, products
and partnerships in order to eliminate hunger
around the world. (Kraft Heinz Company, 2017).
Kraft Heinz company provides high quality, great
taste foods to its customers for all occasions
whether at home, at work or at restaurants. Kraft
Heinz is dedicated to sustainable health of
people. Kraft Heinz mission statement has a huge
impact on company’s employees and 18% of
employees state that company mission is the
main reason why they stay in Kraft Heinz.
(Comparably, 2017) Kraft Heinz vision is to
become the best food company in world.
Furthermore, consumer preferences, innovation,
integrity, ownership and quality creates
company’s values. (Kraft Heinz Company, 2017)

1869

H.J. Heinz
Company was
founded in
Pittsburgh,
Pennsylvania
by Henry John
Heinz.
1876

Heinz Tomato
Ketchup first
introduced.
1903

James Lewis
Kraft started
to sell cheese
to small stores
in Chicago.
1945

Kraft Cheese
Company
changed its
name to Kraft
Foods
Company.
2015

Kraft Group
and Heinz
merged.
Chapter 1
Company
Backgroud
2

Kraft Heinz Environment & Strategy
Kraft Heinz is a multinational enterprise in the
Food industry. Following Ghoshal and Nohria’s
(1993) theoretical framework for describing a
company’s environment, Food MNEs operate in
the Multinational Environment, characterized
by high forces for local responsiveness, and
relatively low forces for global integration.

On the other side, It’s also true that the the
external environment in which MNEs operate
does not pre-determine the strategy that they
decide to employ in order to achieve their long-
term goals. This is the case of Kraft Heinz’s
transnational strategy. Forces for local
responsiveness, indeed, are enhanced by
offering different brands according to
differences among local consumers’ tastes and
preferences.

Moreover, different adapted marketing
strategies are used, taking into consideration
both the level of brand awareness and products’
perceived quality in different countries.

For example, in the case of baked beans, the
marketing strategy for UK was boosting
awareness that the product was low in fat, but
high in ﬁbre and protein. This makes it a suitable
choice for a range of dietary regimes, from the
traditional to the trendy (Simon Gwynn, 2018).

At the same time, Kraft Heinz leverages forces
for global integration by exploiting economies
of scale and scope. In order to do so, Kraft Heinz
aggregates its distributing, promotional and
manufacturing activities by developing a
country-cluster division, achieving in this way a
more effective organizational design.
3

In order to become less dependent on the USA, Kraft Heinz is
investing in EMEA markets. Doing so, Kraft-Heinz can
achieve risks and revenues diversiﬁcation.
Situation
In Q3 2018, Kraft Heinz's EMEA net sales decreased by
3.3% versus the year-ago period, dropping to $629m.
As a consequence, EMEA segment adjusted EBITDA
decreased 11.7 % versus the year-ago period to $161
million (Kraft Heinz, 2018).
Complication
Which are the most interesting white-spaces to exploit
in order to improve the ﬁnancial performances in the
EMEA segment ?
Question
$2,393
$18,353
$2,190
$3,296
Net Sales in million U.S.
dollars (2017)
Europe $2,393
USA $18,353
Canada $2,190
Rest of the
World
$3,296
SCQ
4

The best six countries are : Israel, Croatia,
The Czech Republic, The Slovak Republic,
Greece
Chapter 2
Country Choice
Through theanalysis of GDP and consumption per capita,
weareableto establish which arethemarkets with the
highest potential.
CountryCountry
PortfolioPortfolio
AnalysisAnalysis
5

CAGE Analysis
Since CPA does not consider risks related to
distance (Ghemawat, 2001) CAGE framework
has been applied to each country. The analysis is
based on examination of cultural,
administrative, geographic, and economic
characteristics of each country.

The CAGE analysis shows that the Czech
Republic, the Slovak Republic and Hungary
would be the best countries choice as potential
new markets for chosen product category. These
three countries can be considered as a one
cluster in terms of cultural, administrative,
economic, and geographical closeness. Indeed,
all the countries taken into consideration are
members of the European Union which
guarantees a free movement of goods, capital,
and people.

Second, they are close to each other
geographically, which allows to
establish efﬁcient product distribution.

Finally, all three countries belong to the same
East Europe cultural cluster (Ronen and
Shenkar, 2013). That means that habits, tastes
and preferences in all these three countries have
a lot in common, and as a result there is no need
for any product adjustment or modiﬁcation for
each country. That also means that the same
marketing tools can be used in these countries.

Based on CAGE analysis, Israel was excluded
because of administrative distance – the
country is not a member of the EU- and the
geographical distance – the country is in
different region. Greece was excluded because
of economic challenges and logistics problems
related to its large number of islands. Moreover,
Greece and Israel belong to different cultural
clusters. Finally, Croatia was excluded because
of the low GDP per capita, and its internal
logistic problems related to its low density of
population.
6

PESTEL Analysis
PESTEL analysis confirms that the Czech
Republic, the Slovak Republic and Hungary
would be the best option for Kraft Heinz.

Growing economy and purchasing power of
Czech consumers among with strong legal
system provide plenty opportunities for Kraft
Heinz in the country. That also means that the
company is not likely to face any political or
economic risks there in the nearest future.

The Slovak Republic is another central European
country with growing economy. Considering the
favourable economic, political and social
conditions, Kraft Heinz should be able to market
premium brand vegetables successfully.

Finally, Hungary represents a promising
economic environment with steadily increasing
GDP and purchasing power of consumers.
Furthermore, due to its central position in
Europe, Hungary has good transportation links
with other EU countries. Hungary has an
extensive railway and motorway network that
makes internal logistics within the country
efficient.
The both unstable political and economic
situation of Greece suggest that the option of
launching our new product in the country can be
risky. The deep economic crisis in which the
country has been falling during the last 10 years
still represents a risk for our possible expansion
initiative.

Considering the relative political stability that
Croatia is experiencing and the ability to take
advantage of the European Union benefits, the
country can be an attractive market for further
expansion.

Advanced economy along with constantly
growing population makes Israel an attractive
market. However, social problems and high-
income inequality between different social and
ethnic groups might create some challenges
while targeting consumers and marketing its
products. The country is situated in unstable
Middle East region, and it is not a member of the
EU, meaning extra costs related to custom
duties and transportation.
7

Porter's 5 Forces
All three markets are attractive. Indeed, the
model of the 5 forces indicates how much
potential there is in a market in terms of
profitability.

Each country has a moderate level of existent
competition. Despite this, Bonduelle reaches
more than 10% on each target country, making
it Kraft Heinz's main competitor. The other
competitors are Tesco (8,1%) and Iglo (2,2%) in
Hungary; Tesco (10,2%) in the Slovak Republic;
Nowaco (9,6%) and Dione (2%) in the Czech
Republic.

The suppliers should not be a real threat,
considering that Kraft Heinz have already them
and they do not need to hire new ones in the
country where they are willing to export.
However, due to the easy processes required in
order to obtain the final product, (blanching,
sorting, quality controls) the threat of forward
integration and the one of new competitors'
entrance are still present.

On the other side, the customers will have high
contractual power, due to the null switching
costs and the opportunity to buy the
corresponding fresh product in the same
supermarket. Moreover, the ''simple'' flavor of
the products will further increase their price
sensivity.

Finally, the potential subsitutes are limited,
because of their unique nutritional
values. Moreover, due to the higher concern in
terms of quality life, market growth is
prosperous in two of the three countries
selected within 2021: Hungary (ca. +5%), the
Slovak Republic (ca. +3%), the Czech Republic
(ca. +1%).
Chapter 3
Environmental
Analysis
8

SWOT Analysis
Kraft Heinz is among the most valuable and well
positioned food and beverage
companiespossessing a strong portfolio with
over 26 brands among which 8 most popular are
valued to US$1Bn.

The recall of products in 2015 and the
advertising controversy in 2016 affected the
brand image and company reputation. It can
also be observed that the high perishability of
the products is limiting the product shelf
lifetime, while the huge raw materials
expenditure it’s a burden to bear.

For our country choices the position create the
opportunity for efficient logistics links, while the
low inflation and unemployment rates should
boost their revenues. Also the high level of
internet penetration allow the company to
conduct extensive marketing strategies.

On the Czech Republic market the political
stability can be a stable point for a long-term
strategy. The company can suffer loss of
revenues due to the price war with competitors.
On the Slovak market the political stability and
lack of import duties would enable long-term
strategy implementation.

Another particularity is the increasing
innovation expenditure which could boost and
expand the research strategies. On the
downside, the low purchasing power of the
population can discourage the company to
display aggressive prices, while the strong
competition and inequalities among the
country’s regions can lead to loss of revenues.

In Hungary there is the opportunity to acquire
special know-how from skilled labor, while the
primary threat is the pull out of shareholders
given the market's financial instability.

Based on our analysis it was acknowledged the
lack of skilled labor can slow down the acquiring
of local knowledge for the Czech and the Slovak
Republic, while the continuous increase of
wages expenditure can add a strain on the
Kraft Heinz margins for all the selected
countries.
9

Market overview
The Czech Republic
The Slovak Republic
Hungary
Trend for healthy and convenient to
cook food and increasing purchasing
power supported the demand for
frozen vegetables in the Czech
Republic. This trend is expected to
continue. Even though the
consumption of frozen vegetables in
term of volume is projected to grow
only by 0,5% by 2021, the market
growth in terms of value will increase
by 2,2% and will reach 55,7 million
EURO. The bestselling products are
Vegetable Mix, Peas, Broccoli, Corn,
Spinach, representing 76,4% of all
frozen vegetables (Euromonitor, n.d).

Sales of frozen vegetables in the
Slovak Republic saw a stable growth.
The trend for healthy food supports
frozen vegetables consumption. The
further sales are forecast to grow by
3,8% by 2021 in value term and by 3%
in volume term. The best selling types
of frozen vegetables that are available
in Kraft Heinz portfolio are
Vegetables Mix, Peas, Broccoli, Corn
and Spinach, that represent 50,8% of
all frozen vegetables sold in the
country (Euromonitor, n.d). The most
popular type of frozen vegetables
Vegetable Soup Mix is not in Kraft
Heinz portfolio.

The frozen vegetables reputation in
Hungary was affected by a Listeria
contamination scandal. However, the
market of frozen vegetables is
projected to recover and show further
solid growth. The sales are forecast to
grow by 4,8% by 2021 in value term
and by 7,7% in volume term. The
bestselling products are vegetable
Mix, Peas, Broccoli, and Spinach,
representing 80,6% of all frozen
vegetables sold in the country
(Euromonitor, n.d.). The sales of
frozen Corn are extremely low.
10

It is remarkable how Kraft Heinz, Bonduelle and
Tesco have different product characteristics.
This suggests us that a relevant product
competitive differentiation among the three
companies in the target markets exist. The Blue
Ocean Canvas model is a very useful strategic
tool that provide a simple way of visualizing
how differently the main competitors attract
customers, and how customers choose the
product or service they buy in the same product
category (Kim, W. Chan, 2005).

This will allow Kraft Heinz to differentiate
frozen vegetables product category by choosing
a different combination of factors on which to
compete. For a start, we identified Bonduelle
and Tesco as our common main competitors in
the target markets, considering the frozen
vegetables industry. After that, we set the
factors of competition on which to develop the
analysis.
Factors of competition are all those factors that
potential customers may value before
purchasing a product. Food market trends are
strongly related to the evolution of lifestyle and
consumption values, behaviors and habits.

For this reason, we identified speed of cooking,
quality, price convenience, diversified product
range and brand awareness as the most
important factors to be taken into
consideration.

More specifically: for speed of cooking we
considered the average time needed to cook the
frozen vegetables; for quality, we considered the
vitamin content and added preservatives; for
price convenience, we looked at the prices.

We noticed that Bonduelle’ s frozen vegetables
price is the double of Tesco’s; for diversified
product range, we considered how many
different categories of frozen vegetables are
offered by our competitors in their portfolio; for
brand awareness, since there are no specific
available data regarding brand power in the
three different target markets, we considered
the year in which Bonduelle, Tesco and Kraft-
Heinz entered in the target markets. After
collecting the available data in the public
domain, we ranked frozen vegetables of Kraft-
Heinz, Bonduelle and Tesco in a 1 to 10 scale for
each factors of competition.
The Blue Ocean Canvas Model
Chapter 4
Competitors
Analysis
11

Competitor Analysis - Hungary
Bonduelle, Tesco and Iglo are Kraft-Heinz’s top
competitors, covering respectively a 10.1%,
8.1% and 2.2% of the market share related to
the frozen vegetables product segment in
Hungary.

Bonduelle set foot in Hungary in 1992, while
Tesco and Iglo started their business activities in
the country in 1995.

Bonduelle represents the most dangerous
competitor for Kraft Heinz, since both
companies operate through the same
distribution channels (hypermarkets and
supermarkets), set similar prices for their
premium frozen vegetables products, have the
same target market (households) and exploit
similar competitive advantages (high product
quality and widely diversiﬁed product range).
Moreover, Bonduelle is capable to achieve cost
advantages thanks to its local warehouse and
processing plant built in Békéscsaba in 2008.
Moreover, in order to further increase cost
efﬁciency and boost output the company has
further investment plans lined up.
Also Tesco presence in Hungary is very massive.
Tesco, indeed, operates over 200 stores across
the country, which together directly contribute
over 1% of GDP to the country’s economy, being
the third largest employer (Tescoplc.com, 2019).

These data suggest that Tesco's brand
awareness in Hungary is more consolidated
compared to that of Kraft Heinz, Bonduelle and
Iglo. In addition, Tesco’s brand awareness
together with its low-price strategy, represents
the company main competitive advantage,
through which its marketing and
communication campaigns are developed.

Eventually, even if Iglo’s market share can be
considered relatively small, there are some
factors that Kraft Heinz should consider. Iglo is
planning to produce 100 % of its frozen
vegetables in sustainable way within 2020. This
means that the company is expected to achieve
a considerable level of growth for the frozen
vegetables segment in Hungary
(Undercurrentnews, 2014).
Market share, %
(frozen vegetables)
Bonduelle 10.1 Tesco 8.1
VOG 7.1 Iglo 2.2
Others 72.5
12

Competitor Analysis -The Czech Republic
Bonduelle, Bidfood (brand Nowaco) and Ahold
(brand Albert Quality) are the main competitors
in the Czech Republic, respectively covering
11,3%, 9,6%, and 8,1% of the frozen vegetables
market (Euromonitor, n.d.).

Bonduelle promotes its vegetables as grown in
sustainable way. The company conducted
several in-store price promotions and some
prize competitions in the last view years. As a
result Bonduelle secured the leading position in
the Check Republic and increased its market
share in frozen vegetables category from 11% in
2016 to 11.3% in 2018 (Euromonitor, n.d.).

Bidfood Czech Republic Ltd. is the leading
distributor of food in in the Czech Republic,
therefore the company has efﬁcient distribution
channels.

Previously known as Nowako, the company in
2009 become a part of one of the largest global
distributors Bidfood group. (bidfood.cz, n.d.).
Furthermore, the company has its own factories
and emphasis sustainability and organic
ingredients.

The third largest competitor Ahold (brand
Albert ) is a division of Dutch Ahold-Delhaize
Group. Albert is a well-known brand in the
Czech Republic, and with its over 320 stores
Albert is one of the largest food retail chains in
the country (aholddelhaize.com, n.d.). The
company has an excellent own distribution
channels, which is its main competitor
advantage. However, products under Albert
brand, mainly compete in lower price category.

Another company Hame is also increasing its
share in frozen vegetables market, especially
after the acquisition of Agrimex Vestec and
Dione brand in 2017 (Euromonitor, n.d.).
However, Hame also competes in lower price
segment and does not have one leading brand in
frozen vegetables category. As a result,
Bonduelle remains the main competitor for
Kraft Heinz in the Czech Republic. In order to
successfully compete, Kraft Heinz should
leverage its strategy aimed at sustainability and
using organic ingredients in vegetables
production. The well-known Heinz brand in turn
will allow to emphasize premium quality and
excellent taste of the products.

Market share, %
(frozen vegetables)
Bonduelle 11.3 Bidfood 9.6
Ahold 8.1 Hame 8.8
Others 62.2
13

Competitor Analysis - The Slovak Republic
Market share, %
(frozen vegetables)
Bonduelle 12.1 Hame 11.3
Tesco 10.2 Others 66.4
To further increase the popularity they sealed
sponsorships with the slovakian Biathlon while
they also improved their products line by
securing an alliance with Panzani in 2015. In the
ﬁrst year, since the sales for refrigerated goods
increased considerably , and as the Slovak
Republic is the second biggest market for the
Hame Group, they intend to strengthen their
position by further modernizing their plant and
take over more products.

Tesco operates the largest retail chain in
Slovakia with over 136 hypermarkets,
supermarkets and convenience stores with
revenues valued at US$1.37Bn. Tesco is
continuously expanding in the Slovak Republic
building the biggest distribution centre in
Central Europe near Galatana. Tesco have a high
brand awareness thanks to their massive
presence in the market and exercise a low price
strategy as main competitive advantages of the
company.
Kraft Heinz have several competitors in the
Slovak Republic with Bonduelle as the main
competitor with 12.1% of the market share,
followed by Hame with 11.3% and Tesco with
10.3%. Bonduelle entered the Slovakian market
in 1993, Hame in 1993 while Tesco in 1996.

Through their subsidiary Bonduelle Slovensko,
the company was providing products in the
country by importing the processed food from
France, Poland and Hungary’s factories.
Although in 2006 the company entered in
liquidation on the Slovak market, all the
activities in the context of optimizing the
business were transferred to Czech company
Bonduelle based in Prague.

Hame has recently bought a plant in Doma
Presov and by shelling more than US$600K
modernizing it they managed to increase the
production by a third in its efforts to get a
strong grip on the Slovak market.
14

Segmentation
The segment household has the biggest
potential than the other two ones for several
reasons.

First, it is the segment which counts the highest
level of income per month and, most of the
cases, it counts the largest size. So, Kraft Heinz
can aim its products to a higher number of
persons.

Second, because of their busy lives, families are
looking for healthy food with a fast preparation
and the products could satisfy these needs.
Indeed, busy mothers are tending to ﬁnd new
ways for cooking more fast, without renouncing
to the quality. On the other side, older couples
will have more free time to cook and their
conservative attitude will push them to buy
fresh vegetables.

[1] The Slovak Republic: Students - $ 400; Household - $ 1700 (OECD, n.d.); Old couples - $ 800
The Czech Republic: Students - $ 350; Household - $ 1760 (OECD, n.d.); Old couples - $ 750
Hungary: Students - $ 250; Household - $ 1400 (OECD, n.d.); Old couples - $ 550
Finally, students are looking for tasty foods and
they may be not seeking for vegetables after a
long day of university. Moreover, their turbulent
behavior makes the product placement even
more difﬁcult.
Looking to the data of consumers' behavior in
each target country, we can deduce that our
main target buy frozen food regularly. Indeed,
65% of families in the Slovak Republic (Dagmar
et. al., 2013), 68% in Hungary and 59% in the
Czech Republic (ECDC Report, 2018) buy
frozen food at least once per week.
Chapter 5
Marketing &
Financial Plan
15

Value Proposition
The value proposition will be: Your healthy
choice!; Vaša zdravá voľba! (the Slovak
Republic); Vaši zdravou volbu! (the Czech
Republic); Az egészséges választás! (Hungary).

After observing our main competitors,
Bonduelle presented a value proposition in the
Czech and the Slovak Republic: Mrazená je
skvelá (Frozen is great). However, despite these
two, no other competitor had a clear value
proposition which could improve the positive
perception of their product or to distinguish
themselves from the others. For this reason, the
value proposition could be the key to gain an
advantage over our competitors.

This proposition refers directly to our main
target (households), without excluding the
other two (students, older couples). Indeed,
busy mothers will tend to pursue an ‘’healthy
choice’’ for their family. At the same time,
considering that the concern for a healthy life is
increasing for both old and young people,
students and old couples will
take in consideration our product when they
want to cook something fast.

Kraft Heinz should use this occasion on
promoting its value proposition, so to
distinguish itself from the other ones and to
make its product unique. To do so, we should
engage several influencers on Instagram and
start a viral hashtag with our quote:
#yourhealthychoice. Doing so, Kraft Heinz will
increase its visibility on the most used social
network in the world and, consequently, it will
increase the internet traffic on its Instagram
page and official website.

Considering the limited amount of budget for
promotion, it would be ideal to engage
influencers with ca. 5k followers. However, Kraft
Heinz unfortunately does not have an
Instagram page yet. So, it will be necessary to
create one. Posting frequently on the social and
replying to the question or comments of our
(potential) customers will increase the
engagement with them.
16

Marketing Mix Hungary
Place3
Price2
The best distribution channels for chosen product category would
be supermarket and hypermarket chains, which are most suitable
for selling “A” brand products. These distribution channels cover
52,4% of vegetables and fruits sales in the country.

Supermarkets
Spar, Coop, CBA Prima, Tesco . These are the largest chains covering
99% of the supermarket sales in the country.

Hypermarkets
Tesco , Auchan, Spar.
Heinz is an A-brand and consumers in Hungary are
already aware of high premium quality of the brand,
prices are going to be higher than average on the
market, and pricing strategy is based on analysis of
prices set by other A-brand competitors.
Product1
A tasty combination of carrots, peas, green
beans and sweetcorn.
Vegetables Mix
Premium quality spinach leaves, cut, then free-
ﬂow frozen so they're easy to use in many
meals.
Spinach
Broccoli has a delicate, piquant taste, which
makes it a good side dish for meat and ﬁsh
dishes.
Broccoli
Picked during the peak of the season and are
snap frozen to lock in their great taste and
texture.
Garden Peas
17

Marketing Mix Hungary
Promotion4
People6
Performance5
Considering limited advertising budget the
following marketing activities would be the
most efficient:
1. Consumer promotion (“Price off” offer)
Reduced price to attract customer
attention, stimulate demand on Heinz
products, and therefore, increase sales.
2. Target marketing
Through collaboration with supermarkets,
customers buying frozen vegetables and
other premium-brand products will be
identified (bonus card systems) and will be
offered free one of the promoted Heinz
products on a one-time basis.
Advertisement
1. Outdoor and instore ads in
supermarkets.
2. Ads in weekly supermarket magazines
and websites.
3. Digital advertising in social media with
influencers engagement.
In-store BTL promotions, such as Food
sampling is not appropriate for frozen
vegetables.
Even though the television ads and
traditional ATL marketing tools might be
effective for food promotion, they are very
costly.
4,6%
Marketshare, 2021
The expected revenue in the first year is 0,98
million EURO, with a market share in chosen
product category ca 1,6%, the second year
1,97 million EURO, with the market share ca
3,2%. In 2021 the revenue reaches 2,89
million EURO, the market share is 4,6%.
Kraft Heinz considers people as a major asset of the company, and
implements different programs aimed at attracting talents and further
personnel development thought formal trainings and informal couching.
Therefore, KH has a professional D&E team based in Amsterdam HQ,
including Marketing and sales Managers. In addition, the company has an
established trustworthy distributers partners in Europe, that will ensure
effective supply chain and marketing support.
18

Marketing Mix The Czech Republic
Product1
Vegetables Mix
meals.
Spinach
dishes.
Broccoli
Place3
Golden super sweet corn kernels are great as
a supplement in salads or as a separate side
dish.
Sweet Corn
texture.
Garden Peas
Price2
The best distribution channels would be supermarket and
hypermarket chains, which are most suitable for selling “A” brand
products. These distribution channels cover 62,9% of vegetables and
fruits sales in the country.

Supermarkets
Billa, Albert Heijn, Tesco, and Coop Tip. These are the largest chains
covering 98,2% of the supermarket sales in the country.

Hypermarkets
Kauﬂand, Albert Heijn, Tesco , Globus , Tesco Extra.
Since Heinz is an A-brand and consumers in the
Czech Republic are already aware of high premium
quality of the brand, prices are going to be higher
than average aon the market, and pricing strategy is
based on analysis of prices set by other A-brand
competitors.
19

Marketing Mix The Czech Republic
Promotion4
People6
Performance5
most efﬁcient:
2. Target marketing
4,4%
Advertisement
1. Outdoor and instore ads in supermarket.
and websites.
vegetables.
costly.
Marketshare, 2021
product category ca 2%, the second year
20

Marketing Mix The Slovak Republic
Place3
Price2
The best distribution channels for chosen product category would
be supermarket and hypermarket chains, which are most suitable
for selling “A” brand products. These distribution channels cover
56,6% of vegetables and fruits sales in the country.

Supermarkets
Coop, Billa, Tesco, Terno Plus, CBA . These are the largest chains
covering 87,9% of the supermarket sales in the country.

Hypermarkets
Kauﬂand, Tesco , Hypernova, Carrefour.
Since Heinz is an A-brand and consumers in the
Slovak Republic are already aware of high premium
quality of the brand, prices are going to be higher
than average on the market, and pricing strategy is
based on analysis of prices set by other A-brand
competitors.
Product1
Vegetables Mix
meals.
Spinach
dishes.
Broccoli
Golden super sweet corn kernels are great as
a supplement in salads or as a separate side
dish.
Sweet Corn
texture.
Garden Peas
21

Marketing Mix The Slovak Republic
Promotion4
People6
Performance5
most efﬁcient:
2. Target marketing
Advertisement
1. Outdoor and instore ads in
supermarkets.
and websites.
vegetables.
costly.
3,5%
Marketshare, 2021
product category ca 1,8%, the second year
22

Financial Plan
Based on analysis of market and competitors,
and prices set for chosen products, revenue in
each country have been projected. The biggest
market for Kraft Heinz will be Hungary that will
generate revenue in amount of 0,98 million
EURO in 2019, 1,97 million EURO and 2,89
million EURO in 2020 and 2021 respectively.
The Czech Republic will generate revenue in
amount of 0,82 million EURO in 2019, 1,39
million EURO and 1,87 million EURO in 2020
and 2021 respectively.
The Slovak Republic will generate revenue in
amount of 0,19 million EURO in 2019, 0,28
million EURO and 0,38 million EURO in 2020
and 2021 respectively. Thus, an accumulated
revenue in all three countries within three years
will be 10,75 million EURO. Vegetables Mix,
Peas, and Spinach will be main drivers delivering
over about 85% of the revenue.
The total promotion costs in three years period
will be 1,05 million EURO. In-store price
promotion will include selling of 15% of all
product with 30% discount, and 3% of all
products will be sold with 50% discount.
Furthermore, target marketing will be deployed
through free sampling of products for High
Value consumers (1% of all products). Digital
advertising in Social Media will cost 0,1 million
EURO per year.
23

Moreover, model of the Porter’s Five Forces has
been applied and it is found that all three
markets are attractive for Kraft Heinz’s
internationalization. Also this model indicates
that each country has a low level of existent
competition which will be in behalf of Kraft
Heinz product launch. When the country
selection is made, market overview has been
done and it is found that frozen peas, frozen
mixed vegetables, frozen corn, frozen beans,
frozen spinach and frozen broccoli have the
biggest market share in selected countries.

After analysis for choice of country, target group
for each country has been searched. Amongst
students, household and old couples, segment
of household has been chosen as the biggest
potential target group. High level of income per
month, time spending on cooking and family
sizes are the most crucial factors while
determining target group. At the end, it is found
that 65% of families in the Slovak Republic
(Dagmar et. al., 2013), 68% in Hungary and 59%
in the Czech Republic (ECDC Report, 2018) buy
frozen food at least once per week.
This report has developed a business plan in a
White Spaces category to reach $3M of revenue
by 2021. This report analyses frozen vegetables
as a chosen product category which includes
peas, mixed vegetables, corn, beans, spinach and
broccoli. Before all, SWOT analysis has been
applied to see strengths and weaknesses of
Kraft Heinz brand. Main strengths lie in
branding, powerful and range product portfolio
and efficient distribution channels. There are
few weaknesses such as limited shelf life of
products or advertising controversy as it was
happened back in 2016 while advertising Heinz
Beanz, but all these weaknesses can be
prevented and will not affect hugely business
plan in launching frozen products. As for
opportunities, due to inflation in Hungary and
the Czech Republic, external funds are
becoming more attractive and low level of
political stability in the Slovak Republic, would
allow Kraft Heinz to create long term strategies.
But the most important opportunity would be
increase in the health trend. The most
noticeable threats would be strong competition
and due to low GDP in Hungary and the Slovak
Republic, Kraft Heinz may not able to display an
aggressive pricing strategy.

Before determining markets for entry, Country
Portfolio Analysis has been made to see
markets with highest potential. By obtaining
data in consumption per capita and GDP for
each country, Israel, Croatia, the Czech Republic,
the Slovak Republic and Greece are chosen as
the best six countries. Furthermore, CAGE and
PESTEL analysis has been applied to get more
specific results. These analysis shows that the
Czech Republic, the Slovak Republic and
Hungary would be the best countries choice as
potential new markets for chosen product
category. Taking into consideration that all
chosen countries are members of European
Union and belong to the same East Europe
cultural cluster, it results in ease of
transportation of products and product
adjustment.
Conclusion
24

In sum, this report includes detailed analysis to
achieve revenue of $3M by 2021. It is expected
to reach €1,9M, €3,5M and €5,1M revenue
respectively until the end of 2021. Moreover,
until 2021, it is expected to have 4% market
share in Hungary, 4,4% market share in the
Czech Republic and 3,5% market share in the
Slovak Republic. Additionally, the investments
during in three years of process will amount to
€1,05M which are mostly due to promotions. If
everything goes like as it is planning, achieving
revenue of $3M by 2021 will not be a vision
anymore but it will become a reality.
After choosing countries and target audience,
Blue Ocean Canvas Model has been applied.
This model provides information about how
customers choose their products and how
competitors attract their customers. Bonduelle
and Tesco are found as main competitors in
target markets for chosen product category.
Factors of competition has been developed and
set and thanks to Blue Ocean Canvas Model,
customers’ value before purchasing a product
has been determined.

In international expansion, Kraft Heinz places in
the transnational environment. Local
responsiveness is indeed crucial for Kraft Heinz
since Kraft Heinz adjusts its products according
to local customers’ demands and tastes as it
should be in the food industry, but at the same
time Kraft Heinz is exploiting economies of scale
and scope which increases its global integration.

Lastly, 6P has been applied for each country and
based on competitor analysis, price of frozen
vegetables has been set differently in each
country. Since Kraft Heinz is an A-brand and
consumers in all selected countries are aware of
high premium quality brand, all these facts took
into consideration while setting price. As for
Place, supermarkets and hypermarkets chains
have been targeted as distribution channels in
each country since they are most suitable places
for selling A-brand products. For Promotion,
two different ways have been set. The ﬁrst one
is ‘‘price off’’ offer, which aims to reduce prices in
order to increase sales and demand on Heinz
products. Secondly, bonus card system has been
thinking, which helps to identify Kraft Heinz
customers and will be offered free one of the
promoted Heinz products on a one-time basis.
Digital advertising and social media have been
focused mostly for advertising. Even though
television ads are the most effective way for
food promotion, it is neglected since it will be
costly. Also, in-store BTL promotions such as
food sampling is not possible for frozen
vegetables.
25

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28

CAGE - The Czech Republic
Cultural distance: The US and the Czech Republic do not share the same language. However, the Czech
Republic is ranked #20 out 88 countries in English Proﬁciency Index, approximately 60% of the population
speak English. According to the Hofstede dimensions countries differ in several characteristics. the US scores
much higher on Individualism and lower on Uncertainty avoidance (91 vs. 58 and 46 vs. 74) (Hofstede Insights,
2018). Americans prefer to live independently and concentrate more on their close family only, but in the Czech
Republic people also care of their large family members.

Administrative distance: The countries have different currencies, American dollar in the US and the koruna in
the Czech Republic. The USA is the main trade partner of the Czech Republic after EU allies. Both countries the
USA and Czech Republic belong to several international organizations such as Euro-Atlantic Partnership
Council, Organization for Economic Cooperation and Development, International Monetary Fund, World
Bank, and World Trade Organization, which regulate the relationship between countries. The administrative
distance between countries can be considered as low.

Geographical distance: The countries are in the different continents, and the distance between the countries is
very large more than 8 thousand kilometers. The Czech Republic is located in the center of Europe has
advanced extensive transport network and good transport connection with neighboring countries (Czech
Business web portal, n.d.). The country does not have access to sea.

Economic distance: In terms of GDP per capita, the USA and the Czech Republic differ greatly. The GDP per
capita in the US is almost three time higher than in the Czech Republic $59532 vs $20368 (World bank, n.d.).
The Czech Republic has the lowest unemployment rate in the EU at 1,9% (Eurostat, n.d.) and year inﬂation at
2%. The main industries of economy are motor vehicles, metallurgy, machinery and equipment, glass (CIA, n.d.).
Appendix
29

CAGE - The Slovak Republic
Cultural Distance: Despite English is not the native tongue of the Slovak Republic, according to the EF EPI
(2018), the country is ranked 24th out of 88. So, establishing communication will not be a problem. After
comparing the two country’s culture dimensions (Hofstede Insight, n.d.), it is remarkable the similar values on
uncertainty avoidance and the high level of long-term orientation. Thus, we can deduce that the Slovak
Republic tends tend to take risks but in a conscious way. This fact suggests us that if we propose in the right
way our plan, we may be able to introduce our product in the country.

Administrative Distance: Since 2009, the currency in the Slovak Republic is the Euro (€). The United States and
the Slovak Republic have a bilateral investment treaty. Moreover, both countries share the membership in
several International Organizations such as the World Trade Organization (WTO), International Monetary
Fund (IMF), World Bank etc. this will facilitate the eventual contractual agreements between the countries.

Geographic Distance: Despite the distance between the Slovak Republic and the USA is 8545 km, the
presence of a distribution center in Europe will optimize the costs. Indeed, we will not incur in extra import
duties and the transportation costs will be reduced. According to the Logistic Performance Index (LPI) (World
Bank, n.d.), with an above-average result, the country scores 3,19 in terms of International Shipments. This
should facilitate our logistic activities.

Economic Distance: The difference between the two countries in terms of GDP per capita is quite remarkable.
USA counts almost four times more the GDP than the Slovak Republic (59.531.7 $ vs 17.605 $). This difference
in the purchase power suggests us that we cannot adopt high prices.
30

CAGE - Hungary
Cultural Distance: Language is different in both countries where Hungarian and Magyar are national language
in Hungary whereas English is the national language in U.S. In Hungary, 59.51% of the people can speak English.
(EF EPI, 2018). According to Hofstede’s cultural dimensions, the biggest gap between Hungary and United
States is uncertainty avoidance. (Hofstede Insights, 2018) It shows that people in Hungary don’t like to take
risks and instead of spending money they prefer to save it for their future. Since people with high uncertainty
level will not spend money on unknown products, advertisement will be vital for KraftHeinz if they choose
Hungary as ﬁnal location.

Administrative Distance: There is difference in the currencies in both countries. U.S. government greatly
invested to Hungary in between 1989 and 1993. Goal of that investment was to restructure economy in
Hungary. U.S. investment did a positive impact on Hungary’s development and since then there is a bilateral
relation between Hungary and U.S. Furthermore, today U.S. is still assisting to Hungary through foreign
military ﬁnancing in order to ensure regional stability (state.gov.tr, 2018).

Geographic Distance: Distance between Hungary and U.S. is 8661.75 km which takes around 9 hours by
airplane. Besides this huge travel distance, there is also time difference between those two countries. Hungary
is six hours ahead of United States which can lower the communication performance. However, since
KraftHeinz has its own distribution centers also in Europe, this will not be a huge problem for transportation.
Furthermore, there is 9.67 million people live in Hungary which makes 0.13% of the world population. 74.2% of
population live in urban so it will not be a problem for KraftHeinz to reach its customers in Hungary
(Worldometers, 2019).

Economic Distance: There is a huge economic gap between Hungary and United States. Annual GDP in
Hungary is 139.14 billion U.S. dollars whereas GDP in U.S. is 19.4 trillion U.S dollars. (countryeconomy.com,
2017) Additionally GDP per capita in Hungary is around $14.317 whereas GDP per capita in U.S is around
$59.792. (countryeconomy.com, 2017) Lastly, local purchasing power in Hungary is 55.0% lower than in United
States which creates a huge distance. (Numbeo, 2019) Overall the economical distance between Hungary and
United States is high.
31

CAGE - Israel
Cultural Distance: The Unites States and Israel have different languages, and there are some cultural
differences between two countries. In particular, the USA scores much higher than Israel on Individualism
dimension (91 vs 54). That means that American society is rather loose where people are used to looking after
themselves and their immediate relatives only, while in Israel people tend to have close ties also with extended
family members and in general people care what other member of the society might think about them. Another
difference lies within Uncertainty avoidance dimension (81 in Israel vs 46 in the USA). As a result, American
people tend to be ready to take risks and try something new, while people in Israel tend to avoid any risks. That
means that people might be rather resistant to try new products. According to cultural clusters classification,
Israel belongs to Latin Europe, while the USA belongs to Anglo cluster and most Eastern European countries
belong to East Europe cluster (Ronen and Shenkar, 2013).
Administrative Distance: The USA and Israel have different political systems and different currencies.
However, both countries are close political and military allies and close trade partners. The US is the largest
trading partner of Israel. Strong economic and cultural ties between two countries are also supported because
the US is the country with the largest Jewish community outside Israel. There are between 5 and 7.5 million
Jews in the USA (Guskin E., Washington Post, 2018). This number is almost the same (or might be even larger)
as number of Jewish people living in Israel itself. Two countries have free trade agreements aimed at reducing
barriers and promoting flow of goods and investments (The US Department of States, 2018). In addition, Israel
is a member of World Trade Organization. Moreover, since 2000 Israel has had an Association agreement with
the European Union that serves a basis for trade relations between Israel and Europe (European Commission,
n.d.).
Geographic Distance: The geographic distance between the USA and Israel is about 9100 km. The travel time
from New York to Tel Aviv by air is about 10 hours. The distance between Tel Aviv and Amsterdam is about
4500 km, travel time by air is 4h.25min. Israel has also access to sea since the country is located on Meditation
sea shore. That makes transportation costs low. In terms of internal logistics Israel is ranked 37th in the Global
Logistics Performance Index (The World Bank, 2018).
Economic Distance: Both countries the US and Israel have a high GDP per capita, the US $59532 and Israel
$40 270 (World Bank, n.d.). Israel GDP per capita is higher than average GDP per capita in the EU which is $33
715 (World Bank, n.d.). The main industries of the economy of Israel are high-technology products including
aviation, communications, computer-aided design and manufactures, medical electronics, fibre optics, wood
and paper products, chemicals etc. (CIA World Factbook, n.d.).
32

CAGE - Croatia
Cultural Distance: The main language of Croatia is Croatian, but according to English Proficiency Index
60.16% of the population is able to speak English, ranking 17th in the world out of 88 countries. Croatia scores
33 on individualism while US scores 91, meaning that Croatia is putting the emphasize on group relations and
tend to be more ashamed for their mistakes, while US emphasizes the proactiveness and the employee as an
individual with his own set of skills. When we compare uncertainty avoidance Croatia 80 vs 46 US we can
observe that Croatia relies more on facts and proven successes, making innovation a bit difficult and perhaps
accepting new products while US has a relatively low uncertainty avoidance meaning they tend to accept and
tolerate new ideas.
Administrative Distance: The currency of Croatia is Kuna which is 0.1537 dollars. The country is a member of
the European Union therefore is exposed to a vast and free market. According to OEC, Croatia does not have
any significant trade arrangements with US, but they collaborate through EU market.
Geographic Distance: Croatia is located south of Europe with a vast opening to the Adriatic Sea. The distance
between USA and Croatia is 8.575Km, but the distance to The Netherlands is 8 times shorter. As Croatia has a
vas coast line (526Km) to the Adriatic Sea the logistics communication it’s more diversified as both USA and
Netherlands can be reached by sea/ocean.
Economic Distance: Croatia GDP amounts to US$55.2 billion compared to the USA US$19.39 trillion while
the GDP per capita is 13,383 vs 53,129. Life expectancy 77.4 vs 78.7 years and the unemployment rate is 9.4%
for Croatia and 3.9% for US (tradingeconomics,2018). Inflation rate 1.3% vs 1.9%, main industries for Croatia
chemicals and plastics, machine tools, fabricated metal, US petroleum, steel, motor vehicles. Croatia- The main
economy driver is service-based accounting for 70%, while tourism is also a force to recognize in the Croatian
economy (18.5 mil tourists in 2018).Croatia vs USA important facts:-Corporate tax: 18% vs 21%-Government
debt 78% vs 105%-GDP annual growth rate: 2.8% vs 3%
33

CAGE - Greece
Cultural Distance: The countries both have a different national language, which is Greek in Greece and English
in the US. As 58.9% of the people in Greece speak English it creates a smaller language gap (EF EPI, 2018).
Looking at Hofstede’s factors of cultural differences, the US scores much higher on Individualism and much
lower on Uncertainty avoidance (91 vs. 35 and 46 vs. 100) (Hofstede Insights, 2018). This means that in the US,
individuals tend to look at society much more in an “I” view than “we” and, more significantly, in the US people
are more propense to risk, while Greeks tend to avoid it, maybe due to the recent debt crisis that hit the
Country in 2010. Regarding the other factors, the countries are quite similar.
Administrative Distance: Even though Greece and US have a different currency, the trade relationship
between Greek and US is regulated by the legal framework between the United States and the EU as a whole
and lie within the context of multilateral regulations of the WTO (World Trade Organization). During the last
years, the high efforts of the Greece-US Economic & Commercial Cooperation Committee (ECCC) have
encouraged bilateral economic cooperation and trade flows between the two countries (MFA, 2019).
Geographic Distance: There is a great geographic distance from Greece to the US. Greece, indeed, is in South-
East Europe, 9.430 km away from the US. Next to that, the US is almost 75 times the size of Norway
(mylifeelsewhere, 2018). Also, Greece has a long coastline (13.600 km) which enables sea transport to the
country (World Atlas, 2018).
Economic Distance: This distance is dependent on the differences in consumer incomes. In terms of the
financial resources, there is a large distance between the countries. The US generates an annual GDP of $15.7
trillion which is much more compared to the $245 billion GDP of Greece (Nationmaster, 2018). However, the
US is a much larger country with 319 million inhabitants compared to the 10.8 million inhabitants of Greece
(mylifeelsewhere, 2018). The numbers per capita differ greatly, creating a large distance. A summary of Greece
vs. US:- GDP per capita: $23.400 vs. $53.000;- Government debt: 178% vs. 105% of GDP;- Unemployment:
18.6% vs. 3.9% (Trading Economics, 2018a)
34

PESTEL - The Czech Republic
Political: After the collapse of Communist Bloc and subsequent “Velvet Revolution”, CzechoSlovak Republic
split into two countries Czech and Slovak republics. Both countries took a course toward market economy and
in 2004 the Czech Republic joined EU. Nowadays the Czech Republic is a parliamentary republic with a stable
political system. The level of corruption is higher than in Western European countries, but it performs much
better than a lot of eastern European countries (Transparency International, 2017).
Economic: The Czech Republic has the stable macroeconomic situation and the relatively low governmental
debt 34,7% of GDP well below EU average (81,7% of GDP). (Eurostat, n.d.). In 2017 GDP per capita amount
$20,4 thousands, with an annual growth 4,3% relative to the previous year. In purchasing power parity terms,
GDP per capita is 88% of the EU level (World Bank, n.d.). Strong economy and high rate of GDP growth mean
that purchasing power of Czech consumers is likely to rise as well, that indicates favourable conditions for
Kraft Heinz expansion to the Czech Republic.
Social: The unemployment rate at 1,9% is lowest in the EU (Eurostat, n.d). This demonstrates that the Czech
Republic has strong economy. However, it also indicates that the labour market is tight and there are might be a
shortage of skilled workers. Moreover, like most European countries the Czech Republic faces aging population
problem. Out of the total population 10,6 million people, there are 2 million people older 65 years. Most of the
population speak Czech 95,4% (CIA, n.d).
Technological: The Czech Republic is ranked #27 in the Global Innovation Rating 2018. The penetration of the
internet is high, more than 87% of the country population use internet.
Environmental: The Czech Republic is committed to sustainability and solving of environmental issues. The
governmental focuses toward environmental protection are sustainable use of resources, climate protection
and improvement of ambient air quality, protection of nature and landscape (European Environment Agency,
n.d.). The country is ranked #33 out 180 countries in Global Environmental Performance Index.
Legal: The Czech Republic has a strong legal system. And since the country is a member of EU, all regulations
and laws also apply to the Czech Republic. It means that Kraft Heinz should not face any extra-legal challenges
since the company is already operating in the EU and meet all EU rules and requirements regarding food
quality, ﬁnance or environmental standards.
35

PESTEL - The Slovak Republic
Political: The Slovak Republic is based on a parliamentary democracy, and the level of political risk is low
(TheGlobalEconomy.com, n.d.). However, the perceived level of corruption is medium compared to the other
nations (Transparency International, n.d.). Nonetheless, political matters should not be a problem for exporting
there.

Economic: in 2018, the GDP per capita had a value of $ 17.605, with a growth of 4.0% relative to the previous
year (World Bank, n.d.). Despite the growth, the GDP per capita is low compared to other nations. So, it is
necessary to level the prices with the local ones, and not pursue a differentiation strategy.

Social: The Slovak Republic is individualist society with a high degree of long-term orientation and a medium
level of uncertainty avoidance (Hofstede Insights, n.d.). Moreover, the level of English is above the average (EF,
n.d.). So, these conditions should favorite the establishment of relations with the foreign retailers.

Technological: In 2017, the index of internet penetration was of 85% (Internet World Stats, n.d.). This result,
which mirrors the average worldwide, suggests us that we can create our product awareness through internet
channels.

Environmental: According to the Environmental Performance Index (n.d.), the Slovak Republic is ranked 28th
out of more than 180 countries. This fact could increase Kraft Heinz reputation, considering their commitments
towards a more sustainable production (Kraft Heinz, 2018)

Legal: Considering that the Slovak Republic belongs to the EU, it respects all its rules in terms of quality of
product, packaging etc. This simpliﬁes our potential expansion. Indeed, it will not be necessary to have extra
certiﬁcate or quality control for our products. Moreover, due to the null import duties, the costs will be
optimized.
36

PESTEL - Hungary
Political: Hungary’s political system is multiparty parliamentary democracy where Prime Minister is the head
of the government and President is the head of the state. According to The World Bank data, Hungary has a
score of 0.81 between -2.5 and +2.5 for political stability. Hungary is ranked as 48th out of 195 countries for
political instability (World Bank, 2017). Moreover, Hungarian government increases its control over media
sector. Lastly, according to Corruption Perception Index 2017, Hungary is ranked as 66th out of 180.
(Corruption Perceptions Index, 2018) Overall, political environment seems not very stable in Hungary and
companies might have confront some barriers while internationalizing to Hungary.
Economic: Economic environment of the country is promising. The gross domestic product (GDP) of Hungary
is worth 139.14 billion U.S. dollars in 2017 and GDP growth rate is 1.3 %. (Trading Economics, 2018) Inflation
rate in Hungary dropped from 3.8% to 3.1% in 2018. (Trading Economics, 2018) Prices slowed for food &
beverages sector. The unemployment rate in Hungary dropped to 3.6%, which is the lowest unemployment
rate in Hungarian history, in 2018. (Trading Economics, 2018) Moreover, Hungary is a member of various
international organizations such as EU, UN, IMF, WTO, and NATO. According to Hungarian Central Statistical
Office, Hungarian people spend 25% of their incomes to foods and beverages. (HKTDC, 2014) The foreign
investment index determines the attractiveness of the country for international investment flows. According
to Country Watch, Hungary has a score of 8/10 (Foreign Investment Index, 2018) which means Hungary might
be a good option for Kraft Heinz.
Social: In 2018, 9, 67 million people live in Hungary, which makes Hungary 89th in the world. (World
Population Review, 2018). However, Hungary has the second worst population growth rate amongst EU
countries. Additionally, one of the most important characteristics of Hungary is literacy rate. Literacy rate
explicates adults (+15) who can with understanding read and write. Hungary has a 99.4% literacy rate which is
one of the highest literacy rates in the world. (World Data Atlas, 2018)
Technological: According to Eurostat data, Hungary is listed as second highest country in research and
development expenditures with the rate of 74%. (Eurostat, 2018) With the developing technology, 80% of the
population in Hungary are internet users (Internet Live Stats, 2016) which means not it is not too complicated
to reach people for marketing or any other purposes. Moreover, Hungary has its own national office, which is
named as National Office for Research and Technology, for technological developments and innovations.
Hungary might be a good option when technological factors are considered.
Environmental: As it is all over the world, Hungarian consumers also became aware of consuming healthy
foods. Demand for healthy, delicious and convenient food increases day by day. Kraft Heinz has to consider
consumer demands for product advertisements. By doing that they can establish customer base in Hungary.
Legal: Since 2016, corporate tax rate dropped from 19% to 9% in Hungary. (Trading Economics, 2018) In 2018,
in most products Value Added Tax (VAT) is around 27% however it reduces to 18% for food and beverages
(Trading Economics, 2018).
37

PESTEL - Israel
Political: Israel has a parliamentary democracy. The local politics, however, is always affected by the conflicts
with Palestinians and other Arab neighbours. Since the country creation in 1948, Israel has had several war-
conflicts with its neighbouring counties (BBC, 2018). Israel is somewhat involved in Syrian civil war and over
the last years has carried out multiple airstrikes on Syria (Reuters, 2017). Security issues are among the major
concerns for the government, but in general it is believed to be safe for foreign companies to do business in
Israel. In terms of corruption index Israel is ranked out of 180 countries (Transparency International, 2018)

Economic: Israel has a diverse and technologically advanced economy. GDP per capita was $40270 in 2017,
and the growth rate was 1.4% relative to previous year, and inflation rate was 0.2% (World Bank, 2017). Israel’s
currency, shekel, is rather stable, although it experiences rate-exchange fluctuations it avoided any dramatical
rises or falls in several past years. With strong developed economy and rather high consumers’ purchasing
power Israel might be an interesting market Kraft-Heinz to expand export of selected products.

Social: Israel society is characterised by lack of social cohesion and relatively high-income inequality (OECD,
2018). The unemployment has dropped over past years and was at 4.1% in 2018 (Central bureau of Statistics
of Israel). Rising employment boosted consumers’ spending. However, workers from disadvantaged
communities, mainly Israeli-Arabs and Haredim, remain in low-paid jobs due to lack of professional education
and skills. Most Israeli-Arabs and Haredim families live isolated from other groups (OECD, 2018). Israel’s
population is growing rapidly (from 7,6 million people in 2010 to almost 9 million in 2018) (World Bank, n.d.).

Technological: Israel is a country number one in the world in terms of R&D expenditure relative to GDP. The
country spends 4,27% of its GDP on research and development (World Bank, n.d.). Moreover, Israel is ranked
11th in the Global Innovation Rating 2018. A lot of leading technological companies including Google,
Facebook, Intel, Samsung, Apple and many others, opened and operate R&D centres in Israel (Forbes, 2018).
The internet penetration rate is almost 80% (Internet World Stats, n.d.).

Environmental: About half of Israel’s territory lies in arid zones. As a result, the country has to deal with lack of
water resources. The country demonstrates its commitment to sustainable development and strengthened its
environmental policies, joined Paris agreement, and adopted several national plans aiming at reducing air and
water pollution and promoting renewable energy plants (Israel Ministry of Environmental Protection, n.d.).
Israel is ranked 19th in Environmental Performance Index (EPI, 2018). Kraft Heinz’s values and commitment to
protecting environment create positive perception of its products by consumers in Israel.

Legal: Israel has a strong legal system, and it is considered easy to do business in Israel in terms of legal rules
and regulations (www.doingbusiness.org, 2018). However, international companies might want to avoid any
economic and financial activities Israeli settlements in Golan Heights and West bank, including East Jerusalem,
because those occupied territories are not recognised by international community and economic activities
there may have some reputational and legal consequences.

38

PESTEL - Croatia
Political: Croatia have a parliamentary, democratic republic framework where the president is the chief of state
and the prime minister is the head of Government. Since proclaiming the independence from Yugoslavia in 1991
Croatia continuously adopted sets of laws that culminated by entering the European Union in 2013. The
political situation of Croatia it’s on uprising trend as they have managed to overcome the dire political situation
from 2016 when the entire Government was dissolved due to a no-confidence vote that threw the country in
chaos (Katarina Peovic, 2018), but the country is still plagued by high levels of corruption and unemployment.
For the moment Croatia show signs of political improvement and stability.

Economic: After six years of recession Croatia returned to growth and by 2017 the GDP per capita reached
US$13,500, corresponding in purchasing power to US$22,000. Upon entering the EU Croatia gained access to
the European internal market, enabling tourism to register historic highs. In the first part of 2018 growth
remained solid to 2.4% while poverty continued to decrease to 4.6%. (Worldbank, n.d.). Another aspect to take
into consideration is the inflation rate which decreased to 1.3%, making the country attractive for Kraft Heinze
to invest.

Social: Croatia has a population of 4.2 mil people and the average unemployment rate dropped to 12.4% in
2017, its lowest point since 2000, lower than the 13.9% rate forecasted by the IMF. Citizens are passional with
high notes of nationalism and the Croatian is the main language of the country. While the country long escaped
the war they still lag behind neighboring countries in terms of social and economic development and one good
example being the ill treatment towards the Muslims and Serbs. From social point of view KH might encounter
some resistance in terms of establishing the brand in Croatia, given the relative hostility registered towards
foreigners.

Technological: The internet is available to 72.7% of the population, making the internet penetration one of the
highest in the neighboring area. This would allow KH to take advantage of the market and implement with
relative ease the marketing strategies.

Environmental: According to the Environmental Performance Index Croatia ranks 41 out of 180 countries
(Environmental Performance Index, 2018), meaning that Croatia tends to keep health in relatively high regards,
with accent on healthy bio organic foods. Also given the 77th rank in environmental health, KH might find it
difficult to raise awareness on the benefits of their products.

Legal: Croatia heavy bureaucracy and lack of governmental transparency contributes to an unfriendly business
climate, while on a positive note there is no significant interference of the government policies with the foreign
investment. The process of entering the country for KH might be a process of duration but a steady one.
39

PESTEL - Greece
Political: The political situation of Greece during the last 10 years can be considered very unstable. Since 2009,
indeed, the country has changed 7 Prime Ministers and, consequently, 7 Governments, carrying out five
Parliamentary Electoral Processes, a Nationwide Referendum (2015) and two Local Governance Electoral
Processes (Georgios Kyrikos, 2016). In addition to that, the level of corruption is one of the highest in Europe
(Transparency International, n. d.). All those political circumstances should result in a strong sense of
unreliability and mistrust cultivated by Kraft-Heinz regarding Greece.

Economic: The economic situation of Greece during the last decade has been characterized by a period of deep
crisis. In 2017 the GDP per capita had a value of $23 thousand, with a growth rate of 1.49% relative to the
previous year (Trading Economics, n.d.). Both the Tax of Added Value (ΦΠΑ) and the corporate taxation are
progressively increasing (Georgios Kyrikos, 2016). Under those economic circumstances, Kraft-Heinz does not
have any incentives to expand its operations in Greece.

Social: The social environment of the country is marked by a high unemployment rate (18.6 % in 2018) and a
strong immigration wave caused by the wars in the M. East and in Syria (Country economy, n.d.). Greek is the
official language, and 97% of the population follow the Greek Orthodox Church. Greek people are also well-
known for their friendliness and openness to foreign culture (Business Culture, n.d.). Kraft-Heinz should not
encounter any problem regarding communication campaign in Greece, and the liability of foreignness can be
considered relatively low.

Technological: Company use of social media in Greece is in line with the EU average. Anyway, in 2017 the
percentage of the Greek population using the internet on a regular basis (67 %) was one of the lowest in the EU
(the EU average is 81 %) (European Commission, 2017). This index may not help Kraft-Heinz for its online
marketing development of the new product.

Environmental: According to the 2018 Environmental Performance Index, Greece ranks 22nd among 180
countries (Environmental Performance Index, 2018). This means that Greek consumers pay attention to
sustainable development and environmental issues, preferring organic and healthy food. Kraft-Heinz may
benefit from this environmental context for its launch of frozen vegetables.

Legal: During the last years, several actions have been taken for the reduction of bureaucracy in the
establishment of new businesses. Nevertheless, reforms of public management have been encountered
difficulties to be implemented at the macro-level (FORSEE, n.d). Kraft-Heinz should consider encountering
some difficulties and operational delays if entering in the Greek market with the new product.
40

Porter's 5 Forces - The Slovak Republic
Rivalry among existing suppliers: According to the Herfindahl-Hirschman Index, the level of industry
concentration is 758 out of 10000. So, this suggests us that the market is competitive and there is no brand
which prevails other ones. However, considering that the best three companies (Bonduelle, Hamè and Tesco)
count together a market share of 33,5% (Euromonitor, 2018), Kraft Heinz may take marketing decisions based
on their products.

Bargaining Power of Suppliers: The power of suppliers is low. Indeed, even if the threat of forward integration
could be concrete, due to the simply main processes to prepare the final product (blanching, sorting, quality
controls), the existence of current suppliers buffers this risk. So, it will not be necessary to find additional
suppliers, considering that Kraft Heinz do not need one in the region where it is exporting. Finally, because of
the abundance of these resources, switching partner would not be a problem.

Bargaining power of Buyers: We can consider high the power of buyers. Indeed, people are seeking
continuously to the best quality/price product, which makes the brand loyalty weak. Moreover, the absence of
switching costs, and the ‘’simple’’ flavor of our product increase the price sensitivity of the potential customers.
Finally, considering the facility with which customers can obtain the raw material, specifically in the same
supermarket, increases the threat of backward integration.

Threat of substitutes: The potential substitutes of the vegetables are limited. Indeed, vegetables are considered
as one of the healthiest foods in the world and their use is as side dish with meat or fish. Moreover, due to the
higher concern in terms of quality life, we forecasted a growth about their consumption of around 4% and
according to Euromonitor (2018) their volume sales of 5,2% within 2021. Apart from the competitors which sale
the same products, only fresh vegetables can accomplish the same need.

Threat of new entrants: As we stated already in the previous sections, the production of frozen vegetables is
not problematic, the competition is limited, and the market is growing. This suggests us that the risk of new
entrants is relatively high. However, our advantage on new entrants is the brand. Indeed, Heinz is known in the
Slovak Republic for the ketchup and barbecue sauce. So, we should leverage our brand in order to promote the
product’s quality.
41

Porter's 5 Forces - The Czech Republic & Hungary
Considering that the information about bargaining power of suppliers and customers would overlap, we will not
repeat them, and we only will talk about the differences between countries.

5 Forces Czech Republic

concentration is 628 out of 10000. So, we can deﬁne the market as competitive as there is no brand which has
higher than 25%-30% of market share. The three biggest players (Bonduelle, Nowaco, and Albert Quality) retain
the 29% of the total market, where only Bonduelle has a share higher than 10% (11,3%). As expected, this result
suggests us that the market can be attacked.

Threat of substitutes: As in the previous case, the potential substitutes of the vegetables are limited. However,
in this case the growth is slight in consumption and according to Euromonitor (2018) neither for their growth
sales (+1%) within 2021.

Threat of new entrants: The ease of producing the product and the limited competition make the market
appetible. However, the apparent absence of potential growth of the market could stop some initiatives. So, the
threat of new entrants is medium-high. In this region as the previous, Kraft Heinz is present with several
products such as the ketchup, Asian sauce and canned ready meals. So, we should leverage our brand as well.

5 Forces Hungary

concentration is 520 out of 10000. Moreover, the only company which reaches exactly 10% is Bonduelle
(10,1%). So, we can deduce how the market have a low level of competition. The total market share of the ﬁrst
three players is only 25,1%.

Threat of substitutes: As in the previous case, the potential substitutes of the vegetables are limited. The
growth in terms of consumption should be of 4% and according to Euromonitor (2018) the volume growth
should amount to 7,6% within 2021. So, it is a prosperous market.

Threat of new entrants: In this case the threat of new entrants is very high. Indeed, due to the ease of
producing the product, the limited competition and the high growth of the market, several companies will try to
penetrate the market. In Hungary, we are already well known thanks to various sauces such as the ketchup,
mustard, barbecue sauce, mayonnaise, canned ready meals and Worchester sauce. Especially in this case, we
need to leverage as much as possible our brand.
42

SWOT - The Czech Republic
Strenghts:
Market position
Kraft Heinz is among the most valuable and well positioned food and beverage companies in the world. The
company has leading position in many product categories which allows them to nourish competitive advantage
and also enhances the negotiation power. Has activities all over the world and is continuously investing in
research and development searching for the best quality in the products.
Product portfolio
Kraft Heinz has a powerful and valuable portfolio of over 26 products among which eight most popular are
valued to US$1Bn, while five labels are estimated to close to US$500. The company is best known for products
like Kraft, Heinz, Philadelphia, Planters, Oscar Meyer, Lunchables, Maxwell House and Velveeta. Furthermore
with increasing accent placed on growing and attractive product categories such as baby food, cheese or
ketchup are posed to gain advantage in emerging countries.
Distribution channels
The company is present in more than 190 countries and by nature to do efficient business in vast areas is
needed an efficient distribution channel. Kraft by merging with Heinz brought together two perfectly efficient
distribution channels and took advantage of the extensive platform existing in Heinz for international growth.
The company uses it’s own sales organizations in order to sell their products but also have contracts with
independent or cooperative grocery accounts, convenience stores, wholesalers, agents and distributors,
bakeries, convenience stores, drug stores, club stores, pharmacies, food service distributors and institutions
etc. while their biggest client is Walmart-Stores Inc.
Global footprint
The company has a high presence in developed markets as well as an increasing presence in emerging markets,
being present in North America, Europe, Asia or South America. With the wide presence all over the globe,
Kraft Heinz was able to mitigate the the business risk of over-dependence that appeared on several markets
and it’s also able to take advantage of any opportunity appeared on those markets.
Weaknesess:
Product recalls
The brand image and sales of the company were severely affected by the recalls of several products back in
2015 with Wrapped American Slices and continued in 2016 with the recall of Ready to eat Lunchables Ham
and American Cracker Stackers while later the company recalled a few cases of Heinz Homestyle Bistro Au Jus
Gravy mostly due to labeling mismatch that would have put the life of customers at danger. Strict audits and
quality checks are in place in order to make sure the life of the customers are not in danger and the high quality
of the products is maintained.
43

SWOT - The Czech Republic
Advertising controversy
The reputation of the company was affected by a major advertising controversy back in 2016 when the
advertising for Heinz Beanz displayed an unsafe use of the tin cans. The advertising campaign was called “Lean
the #CanSong” and it was reported the lack of instructions on how to use the cans.
Limited shelf life
The company encountered some issues with Cold Cuts, Natural Cheese and Dressing segment as the
perishability of the products is very high especially in the food industry as the products are both temperature
and time sensitive. Kraft Heinz had to optimize the inventory management process and assume the
responsibility to run quality checks on their products, resulting in increased costs.
Raw materials
Kraft Heinz is purchasing a wide variety of raw materials in large quantities from their agricultural cooperatives
or individual processors manufacturers, on a seasonal basis. Those raw materials such as tomatoes, potatoes,
meat products etc are required in order to manufacture the products so many people love, but the price of
those materials increase for one year to another. Another aspect is the increase in cost of other raw materials
like natural gas or packaging materials due to the fluctuation of cross-currency transactions rates.

Opportunities:
The central position in Europe can facilitate creating an effective logistics link from within the country to the
rest of Europe, making it a reference point for further expansion in the area. The drop of inflation and
unemployment rate may increase the attractiveness of the country, attracting more external funds and
increase the buying power of the citizens as well as creating a stable market for Kraft Heinz and boost the
revenues due to contracts with lower interest rates for the potential customers. The stable political and
economical environment would allow Kraft Heinz to commit more resources to the market and create a long
term growing strategy, providing the shareholders the possibility to to invest in a stable market.
Threats:
The shortage of skilled labour and the increasingly aging population would decrease and slow down the
opportunity of acquiring local know-how as well as further developing new opportunities within the country.
The country registered economic growth mainly based on the economical support from the European Union
allowing wages to increase constantly which increases the expenditure of the company lowering the profit
margins on long term. Kraft Heinz encounters strong competition on the market mainly from the leading
market company Bonduelle and Tesco, through their aggressive strategies thus leading to increasing costs on
promotions and enables a price war which affect the revenues as well as the profits. The policy instability and
high taxation are among the most worrying factors in the perspective of doing business in Czech Republic,
especially in payroll taxes. This problematic factors might lead to further loss of revenues.
44

Kraft heinz group20

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