The news: Kraft Heinz is betting on product innovation to revive its struggling US business. The company expects new products to account for 5% of US retail net sales next year, up from 3% this year, per Bloomberg.

Half of those products will be so-called “better-for-you” products, such as Jell-O pudding with 10 grams of protein and Crystal Light with extra fiber and protein, per The Wall Street Journal. The other half will put a fresh spin on some of Kraft Heinz’s most recognizable brands, such as Kraft Mac & Cheese Cheesy Ramen and Oscar Mayer Sandwich Bacon.

Why this matters: Kraft Heinz hasn’t posted positive organic sales growth since Q3 2023, a slump that reflects years of underinvestment in its brands. To reverse course, the company is spending $325 million on marketing this year, $250 million on lowering prices, $75 million on personnel, and $50 million on improving existing products and developing new ones. The company expects organic net sales to be “relatively flat” in 2027 before returning to consistent growth in 2028, per Bloomberg.

Kraft Heinz isn’t the only consumer packaged goods (CPG) company whose relevance has faded as upstarts like Goodles have leaned into nutrition and private labels into value.

While budget pressures are pushing many consumers to trade down at the grocery store, health and wellness remains a spending priority. In a January CivicScience survey, half of US consumers planning to increase their health and wellness spending said they would prioritize healthy groceries, nearly double the share focused on beauty and longevity (26%).

To stay relevant, legacy national brands like Kraft Heinz need to adapt to consumers’ shifting eating habits rather than relying on brand recognition or lower prices alone. By adding protein and fiber and cutting sugar, the company can appeal to health-conscious shoppers while building on the familiarity and trust its established brands already enjoy.

Implications for marketers: Brand loyalty is fragile when budgets are stretched, especially as more shoppers see private labels as matching national brands on quality and private label products become more distinctive.

To fight back, national brands need to invest in innovation that makes their products worth choosing over cheaper alternatives. For example, Kraft Heinz’s Restaurant Edition lineup, which features flavors such as pesto parmesan and Romano Cacio e Pepe, has helped its mac and cheese business return to growth.

The bigger opportunity is for CPG brands like Kraft Heinz to aim that innovation at health and wellness, where shoppers remain willing to spend. Better-for-you products give budget-conscious consumers a reason to choose a national brand, as long as the price feels justified. Kraft Heinz’s stable of familiar brand names can make those new products an easier sell, assuming the products meet consumers’ expectations.

But with new products accounting for just 5% of the company’s US retail net sales next year, Kraft Heinz can’t count on innovation alone. The core lineup will need continued support while new launches build momentum.

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