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Kraft Tony Vernon

What did you get over the holidays? It probably doesn’t compare to what the CEO of Kraft received – a golden parachute and a chance to “spend more time with his family.”

If you’re a couponer, though, that just means you may find yourself on the receiving end of an even better gift – a little bit of Schadenfreude.

This past Saturday was the official last day on the job for Tony Vernon, who had led Kraft Foods Group for the past two years. Vernon’s relatively short tenure will be remembered for his work to refresh older brands and launch new products, but ultimately failing to lift sales and pull the company out of a financial slump.

And to coupon users, he’ll be best remembered for some recent foot-in-mouth moments, in which he managed to annoy and alienate some of the very customers who were still purchasing his products.

“If we’re not careful, the consumer is getting a discount that’s more than they need,” Vernon infamously told investors in July. He was attempting to explain how overaggressive couponing and discounting was hurting the company’s bottom line. But he wound up disparaging couponers in the process – chastising them for their savviness in combining coupons, sales and other offers to buy Kraft products at the lowest possible price.

“The most important dynamic in couponing today is the stacking that’s going on, enabled by the internet,” Vernon told investors. Too many shoppers were apparently getting too good at going online and researching the deals, and ultimately paying less than full price for Kraft products. It’s “a promotional trap,” Vernon said, “that’s bitten many in our industry.”

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A few months later, despite slumping sales, Vernon insisted that he was making progress – by making shoppers pay more for his company’s products. “Cents-off matters” to cash-strapped consumers, he conceded. “But I think we’ve imposed good discipline and I think you’re going to continue to see it improve.”

“Improve,” as in, dialing back on the deals and discounts, so more of those cash-strapped consumers end up spending more for Kraft products.

That kind of talk might have pleased investors, but Vernon’s comments did not exactly go over well with coupon enthusiasts. “The nerve of this person, I will not purchase any more Kraft products,” one reader commented on Coupons in the News. “Who are they to say how much I can or cannot save when I go grocery shopping?” asked another. “I hope the whole company goes under and one day he is subjected to using coupons to feed his family,” a third commenter added.

The company may not have gone under, but Vernon’s tenure as CEO did, after his efforts failed to improve the company’s lagging performance quickly enough to suit Kraft’s board of directors. So earlier this month, the board announced the 59-year-old’s “intention to retire as CEO,” effective December 27th. “The board and Tony agree that we need to accelerate the pace of change,” the lead independent director Mackey J. McDonald said in a statement.

New CEO John Cahill is promising to “take a fresh look at the business,” and is widely expected to consider selling off older unprofitable brands, and/or acquire new ones. No word on how he feels about Kraft’s current level of couponing and sales.

As for Vernon, who earned more than $9 million last year, he’ll spend the first two years of his retirement getting paid – and handsomely. He’s set to receive a severance package consisting of two years’ salary (at $1 million a year), plus stock options, performance awards and other compensation.

Good thing he’s not getting “more than he needs.”

Image sources: Kraft Foods Group

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2 Comments

  1. happy happy joy joy – I’m going to be buying Kraft once more – this is what I have to say about it

  2. The problem with a CEO like Vernon is they are unable to look past their product and see the whole picture. None of Kraft’s items are a main food staple and most of the products are highly processed condiments or snacks. In addition they don’t have any particular item that people have strong brand loyalty(like Tide for example) and Kraft has priced many of their items into a premium price category.

    So people either do without the items or they buy a cheaper alternative. The market has plenty of cheese and dressing choices, with many being cheaper and better than Kraft.

    Vernon thinks couponers were the bane of Kraft’s problems, now he has plenty of time to discuss it with the former CEO of JCPenney.

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