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For food giants, rising tide of e-commerce means sink or swim

Greg Trotter, Chicago Tribune on

Published in Science & Technology News

Have you ever plucked a bottle of ketchup from a grocery store shelf after remembering your kids finished the last bottle the night before?

Or perhaps you've indulged in a box of cookies that wasn't on the grocery list but still somehow ended up in your cart?

These spontaneous purchases are a challenge for some of the largest packaged food companies as they try to appeal to shoppers staring at their screens instead of wandering the aisles.

Already faced with declining center-of-the-store grocery sales in recent years, food companies like Deerfield-based Mondelez International and Kraft Heinz, co-headquartered in Chicago and Pittsburgh, are pouring resources into figuring out how to succeed online as a growing number of people shop there instead.

In recent earnings calls, executives acknowledged the accelerated pace of change now underway.

"What is new is the frequency and the speed at which the market is changing," said George Zoghbi, strategic adviser for Kraft Heinz, on the company's earnings call last week.

The vast majority of retailers now offer in-store pickup or delivery, said Zoghbi, who was formerly the company's chief operating officer for its U.S. business. And, he noted, people shop differently when buying groceries online versus walking down the the aisles.

In response to this shift, Kraft Heinz is investing "to build our capability for the pull factor" in online sales, he said. Kraft Heinz recently promoted Nina Barton, former marketing chief, to be the company's first president of global online and digital growth initiatives.

"Our job is the same as it's ever been -- to adapt quickly and keep our brands relevant for all customers and channels," spokesman Michael Mullen said in an email.

Total global retail e-commerce is expected to grow by 20 percent to become a $4 trillion market by 2020, far outpacing the growth rate of traditional retail, according to Nielsen research. But so far, online sales of groceries has lagged behind other consumer goods like clothes and electronics.

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