MARKETINGESSENTIALSCASE STUDY

How Kraft Retooled Its Mac & Cheeseand Then Ran aReal-Life BlindTaste Test

CATEGORYReformulation andreintroduction

VERTICAL MARKETConsumer packagedgoods–food

AGENCIESCP&B, Olson andStarcom

CAMPAIGN‘It’s Changed. But It Hasn’t.’#didntnotice

TIMING OFCAMPAIGNMarch 2016 topresent

SUMMARY Kraftsecretly changed itsformula for the bluebox Macaroni &Cheese and thenboasted when no onenoticed.

CASE STUDYKRAFT MAC & CHEESE

MARKETING ESSENTIALS

THE MARKETING CHALLENGEKraft Macaroni & Cheese has been a pantry staplefor decades. It is easy to keep on hand for last-minute meals and requires only boiling water, butterand milk. It continues to have a commanding lead inthe market as it prepares to celebrate its 80thanniversary in 2017.

But these days, people want to feel betterabout their meals, especially ones they pre-pare for their children. Kraft Heinz, thebrand’s parent company, watched salessuffer at the expense of much smallerbrands including Annie’s Homegrown,which sells organic bunny-shaped maca-roni and cheese and is owned by rivalGeneral Mills Inc.

“People were telling us that they want tofeel better about the ingredients in the foodthat they eat. We saw some of the trendsthat we needed to address with our ingredi-ents, and saw opportunities there, but did-n’t want to make a change before we hadthe right recipe,” said Greg Guidotti, Kraft’sVP-meal solutions.

Kraft felt it was time to change the formula ofits iconic Macaroni & Cheese to remove artifi-cial preservatives, colors and dyes. But had to doso in a way that would not alter the taste, consis-tency and color of the product.

The original style of elbow macaroni and dry pow-der mix, the main variety sold in the signature bluebox, accounts for roughly one-third of the total U.S.sales of dry macaroni and cheese mixes, accordingto market research firm IRI. Add in other flavors andshapes and other Kraft lines such as Velveeta, andKraft Heinz controls more than 75% of the market.

In April 2015, Kraft announced through interviewsand a press release that it planned to change therecipe of its original product. It said that starting in

January 2016, it would no longer use artificialpreservatives and would eliminate the use of syn-thetic colors, instead using ones derived from natu-ral sources such as paprika, annatto and turmeric.The change was an extension of changes made toremove such ingredients from its shapes lines, suchas SpongeBob, in 2014 and 2015.

THE INSIGHTWhen Kraft announced the plan to changethe recipe of the Original Elbow variety,the public reaction was swift. Somepraised the idea but others expressedconcerns that the overhaul would makethe product taste and look different.

Kraft knew it had a big fan base that it didnot want to disappoint. It knew that high-lighting the changes on the box or in itsadvertising would lead to feedback fromshoppers, both negative and positive. Italso had an opportunity, in announcingthe ingredient changes, to win back

lapsed fans who were no longer buyingboxed macaroni and cheese or hadswitched to other brands.

Agency CP&B suggested that Kraft runwhat could best be described as the world’s largestblind taste test.

As Mr. Guidotti recalled, CP&B VP-ExecutiveCreative Director Adam Chasnow presented a boldidea. Kraft would produce the new version andchange the ingredients listed on the side of the boxbut would not highlight the changes. Then it wouldwait and see if people noticed the change. Aftersome time, Kraft could announce that the changehad already happened and that no one noticed.

“It took a lot of doing and it took a lot of convincing,and it was a big, bold bet,” said Mr. Guidotti. “I wasreally sweating bullets for four months.”

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Kraft was losingshare to organicbrands like Annie’sHomegrown.

ADVERTISING AGE SEPTEMBER 2016 | 3

CASE STUDYKRAFT MAC & CHEESE

MARKETING ESSENTIALS

THE CAMPAIGNThe new boxes of Original Elbow made with theupdated recipe began rolling off production lines inDecember. Kraft sold more than 50 million boxesafter the switch was made and waited to see ifshoppers noticed. Few did.

In early March, its campaign kicked in and it begancalling out the changes with wording on the front ofthe box.

The first TV commercials in the campaign showedpitchman Craig Kilborn standing in a grocery storediscussing how no one noticed the changes. Thespots showed adults, kids and even a dog eatingthe product without recognizing that it was different.

Since “the news is only newsworthy for the firstshort time,” later versions showed Mr. Kilborn inpeople’s homes talking about the product change,Mr. Guidotti points out. “We specifically had launchcreative and sustained creative.”

The majority of the media budget was spent duringthe first two months.

Print ads and social posts includ-ed lines such as “It’s changed. Butit hasn’t” in large letters on a bluebackground reminiscent of thecolor of the product’s box. Postson social media began includingthe hashtag #didntnotice.

“We went from silent to scream-ing,” Mr. Guidotti said. “As we say,we really painted the world blue.”Along with CP&B, Olson andStarcom worked on the campaign.

THE RESULTSOriginal Elbow sales: +9.2% (March-Sept. 2016)Total dollar sales: +6.8% (March-Sept. 2016)Earned media impressions: 1.2 billion, 94% positive

“It’s probably one of the best things I’ve ever workedon in my career, to be honest,” Mr. Guidotti said.Kraft has seen sales that were declining turn posi-tive. The campaign has helped bring shoppers backto the category.

Kraft said Nielsen data showed product sales fororiginal elbow Mac & Cheese rose 9.2% from thecampaign launch in early March through earlySeptember on a base dollars basis, which excludespromotional pricing. On a total dollars basis, productsales rose 6.8% over that period, the company said.Sales of Kraft Macaroni & Cheese, along with overallcategory sales, continue to be up months later.

Looking at the whole year, sales were down. In the52 weeks ended Aug. 7, sales of the productdeclined 4.9% to $372.8 million, according to IRIdata. But in the time period of the campaign,

Craig Kilborn is featured in TV ads lettingconsumers know they’ve been buying thechanged Mac & Cheese for months.

CASE STUDYKRAFT MAC & CHEESE

MARKETING ESSENTIALS

specifically 12 weeks ended Aug. 7, sales were up2.3% to $90.7 million. In the four weeks endedAug. 7, sales were up 2.9% to $30.9 million, givingthe product a 33.1% share of the total category’ssales.

Kraft said it had almost 1.2 billion earned mediaimpressions as a result of the campaign and that94% of them were positive.

Among the impressions Kraft did not buy, StephenColbert joked about the change during his mono-logue on “The Late Show With Stephen Colbert”for about two minutes.

“You’d think you’d pay for this kind of stuff,” said Mr.Guidotti. “It felt like we were able to create a bigsplash and get the positivity.”

Along with the positive sentiment came some nega-tive responses.

“I think the overall sentiment from consumers isexactly where we expected it to be,” Mr. Guidottisaid, adding that the level of negative responseshas been within the company’s expectations.

The brand is now scoring higher in Kraft’s con-sumer research. The most material improvementhas been in consumers agreeing this is a productthey feel good about serving.

NEXT STEPSAfter the back-to-school season, fourth-quarterspending is typically lower on the brand. Digital andprint ads will continue, with less TV spending.

Kraft is just in the beginning of its 2017 planning.Now that the product change news has been outfor months, it will start shifting the messaging a bit.

The idea of using no artificial colors, flavors orpreservatives will continue to be mentioned, “butwe still want to lead with taste,” Mr. Guidotti said.

MARKETING LESSONSDon’t rest on your laurels. Kraft macaroni andcheese has been around since 1937 and has beenthe market leader for decades. But it was not grow-ing.

Recognize consumer trends. Kraft knew it hadto respond to calls for foods without artificial ingre-dients, and that its best-selling brand was fallingout of step with parents’ expectations.

Take risks. Kraft changed the product withoutdrawing attention to it and few people complained.

Prepare for some negative reactions. Thecompany continues to respond to negative feed-back in forums such as Facebook.

Keep the momentum going. The campaigncontinues with new videos and posts to appearfresh, months after the switch was publiclyannounced.

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Kraft Macaroni & Cheese got a shout-out from Stephen Colbertonce the news of the all-natural formula broke.https://www.youtube.com/watch?v=TT6A0tsxTyc