Kraft-Heinz CMO Reveals Strategic Thinking Behind That Free-Grocery Store in D.C.

When a brand does something noble, 'you see sales pick up'

Kraft-Heinz CMO Eduardo Luz (r.) shared insights with Bonin Ventures founder Bonin Bough. Sean T. Smith for Adweek
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Even in a town as shockproof as Washington, D.C., the store that opened at 1287 4th St. NE on Jan. 16 was an eyebrow-raiser—not just because it was set to close a mere four days later, but also because everything in it was free of charge.

The store—a grocery—was the contrivance of Kraft-Heinz, and the idea was uniquely suited to the times: Any federal employee going without a paycheck during the partial government shutdown could come in and, after showing a valid ID, take what she or he wanted.

As a gesture of response to what was, for many, a genuine crisis, the pop-up generated no shortage of media coverage. But only last week did Kraft-Heinz CMO Eduardo Luz—speaking at Brandweek’s Challenger Brands Summit in New York—open up about the broader strategic thinking behind the effort.

Though the aim was, Luz said, “to help parents in moments of stress”—an estimated 800,000 federal workers were going without a second paycheck at that point—the giving away of free groceries obviously had its benefits for corporate, as well.

Most obviously, the store boosted awareness of Kraft-Heinz, since it was Capri Sun juice pouches, Oscar Mayer Lunchables, and Kraft Mac & Cheese lining those plywood shelves. But the broader benefit, Luz stressed, was sending the message that Kraft-Heinz stands for something noble beyond its reputation in the category of packaged foods. Using the slogan “Kraft Now, Pay Later,” the company told shoppers: “Don’t worry about paying now. Once the situation gets back to normal, if you can pay it back we would ask you to pay it forward to your favorite charity.”

A company whose third-quarter net sales hit $6.4 billion (up 1.6 percent from the year prior) can obviously afford to give away some groceries for a few days, but the more obvious point, certainly in the minds of the general public, is that the company was under no obligation to be charitable—but was. And the CMO pointed out that such gestures are vitally important for a contemporary brand.

“Innovation is not enough,” Luz said. “You have to expose your values. A brand is a product with a point of view. [Ideally,] it does something better than something you can buy elsewhere.”

Giving away groceries was just such an exposure of values, and “when you do that,” Luz said, “you see sales pick up.”

Kraft-Heinz is by no means the first large consumer brand to explore the idea of doing well by doing good. Procter & Gamble’s Tide detergent brand launched its Loads of Hope initiative in 2005, sending mobile washer-dryer trucks to areas devastated by hurricanes, wildfires and floods, allowing displaced residents to do their laundry for free. More recently, Denny’s put its Mobile Relief Diner on the road, serving meals to those affected by natural disasters—again, for free.

Asked if he had any general advice for marketers, Luz said to “understand what [your brand] stands for”—not just in the store, but “in the culture.”

@UpperEastRob Robert Klara is a senior editor, brands at Adweek, where he specializes in covering the evolution and impact of brands.