The Hatchet Men And The Hot Dog

Let’s be frank. 3G Capital is known for doing exactly one thing well: Ruthlessly cutting costs. Will its reinvention of the Oscar Mayer wiener change that?

- Bryan Gruley and Craig Giammona

A year ago, Kraft Heinz Co. had a hot dog problem. Not only was it selling fewer Oscar Mayer wieners, not only was it losing sales to rivals, but the U.S. market was conspicuously contracting. Jokes about mystery meat are a given in the hot dog business, but this was different. Americans had actually grown uneasy about eating hot dogs and giving them to their kids.

This was unacceptable to Bernardo Hees, the boisterous Brazilian who had been chief executive of Kraft Heinz for barely a year, since ketchup king H.J. Heinz Co. and mac-and-cheese icon Kraft Foods Inc. merged in a $55 billion deal in July 2015. So Hees (pronounced “hess”) ordered a recast of Oscar Mayer’s signature product. The company would pour millions of dollars into getting the reformulated dogs ready for Memorial Day 2017, the unofficial summer kickoff.

It wasn’t quite Tim Cook demanding an overnight redo of the iPhone; more like Ford Motor Co. pushing a revival of the Taurus sedan. But Kraft Heinz is controlled by the private equity firm 3G Capital, which is known less for nurturing growth at the companies it buys than for firing people, shutting factories, and taking cost-cutting to exceptional lengths. Typically, 3G’s strategy for expansion when it buys a company is to purchase another and start in again with cost cuts.