How Rafa Oliveira Turned Around JDE Peet’s

Speaker A: The most spectacular part of Rafael Oliveira's JD Pete's turnaround is hidden beneath the headline numbers. While the reported profit improvement looked modest, the source of Business P and L shows a radical cleanup of the commercial model with subsidization, stockpiling and cannibalization cut at scale during a 1.6 billion euro inflation shock. Welcome to FMCG M Weekly, an Acurus.com production. I am Mathilde, your AI host. This week we are looking at Rafael Oliveira's turnaround of JDE Pete's and what it tells us about pricing, promotions, portfolio discipline and the real source of growth in consumer goods. Oliveira's nomination as incoming Chief Executive of Heineken has brought renewed attention to his record at JDE Peetz. His time there offers a valuable case study because the company was under intense pressure. Coffee commodity inflation created around 1.6 billion euros of additional cost in 2025 for a branded manufacturer. That level of input cost inflation forces hard commercial choices. For a coffee company with exposure to grocery retailers, global brands, local brands, capsules, instant roast and ground out of home and appliance linked systems, the challenge was especially severe. The usual reaction in a mature FMCG business would be to protect volume for as long as possible, negotiate hard with retailers, delay price increases where possible, fund promotions to maintain shelf momentum and absorb part of the margin pressure. Oliveira took a more disciplined path under the strategy called Reignite, the amazing JD Peetz moved away from broad volume chasing and toward margin first execution behind fewer, stronger commercial engines. The full year 2025 numbers show the trade off clearly. JDE Peetz delivered 15.3% organic sales growth. The price effect was 19.5%. Volume and mix declined by 4.3%. Europe produced 8.3% organic sales growth driven by a 16.2% price effect offset by a 7.9% volume and mix decline. Larmia produced 39.7% organic sales growth with a 39.8% price effect and almost no volume decline. Peets in North America achieved a 6% price effect and positive volume and mix. The regional pattern matters. Pricing power differed sharply by market. Europe showed high elasticity and serious retailer friction. Larmia showed far greater price absorption. Peet's showed the benefit of premium positioning and a more resilient volume base. A global price average can explain the financial result, but it cannot guide local revenue management action. Elasticity has to be understood by market, channel, retailer, brand, pack and occasion. The deeper point is that Oliveira appears to have managed the business through a source of business lens. The Relevant question was not simply how much revenue was generated. The question was where the revenue came from, what it cost to obtain and whether it represented sustainable value. A UH promotion can lift sales while subsidizing buyers who would have paid full price. It can also pull demand forward, encourage pantry loading or switch shoppers from one pack in the same portfolio to another. Innovation can create excitement while cannibalizing the core. A new SKU can add sales while fragmenting the range and weakening price architecture. Pricing can protect margin while damaging penetration if it is applied too bluntly. Once performance is decomposed in this way, the JD Pete's turnaround becomes easier to understand. The first major lever was promotional de escalation. Many promotion heavy FMCG businesses underestimate the amount of trade spend that is spent on volume they already owned. A deep temporary price reduction can create a large scanner sales spike. But the spike often includes loyal shoppers buying more cheaply, households loading the pantry, consumers switching between internal packs and volume pulled forward from the next purchasing cycle. The gross uplift can look attractive while net incrementality remains weak. J.D. pete's moved away from broad deep blanket promotions and toward shallower, more targeted mechanics. That reduced subsidization. The margin handed to shoppers who would probably have bought anyway. It also reduced stockpiling. The artificial demand peak followed by a post promotion trough. This had operational benefits as well as commercial benefits. Promotional spikes create forecasting pressure, production pressure, service risk and working capital strain. Reducing promotional dependence usually creates short term volume pressure. Sales teams feel it quickly. Retailers feel it in traffic driving mechanics category. Teams worry about shelf momentum. Finance may see a cleaner margin, but the organization still has to live through the reported volume decline. That is why many businesses keep running promotions they know are weak. The cost of stopping is visible. The cost of continuing is often hidden inside the P and L. The second lever was portfolio pruning. This is one of the most underused revenue management tools in fmcg. Portfolio simplification is usually treated as an operational exercise. Fewer SKUs reduce complexity, simplify planning and improve supply chain efficiency. Those benefits are real. The commercial benefit can be even more important. Every SKU has a source of business. If a SKU mainly takes demand from another internal sku, it may create sales while weakening the total portfolio. JDE Peet's reduced European out of home cross sell by more than half. It reduced appliance part complexity by around 15%. It transitioned or discontinued long tail brands. It divested non core assets including the Turkish tea business, the Asian B2B food ingredients division and factories in the United Kingdom, Brazil and the United States. These moves concentrated management attention, marketing support and innovation resources on fewer, stronger platforms. They also reduced cannibalization. A UH portfolio with fewer dilutive SKUs has a better chance of turning innovation into genuine incremental growth. Many FMCG companies still suffer from range proliferation. They launch products to fill price points, respond to retailers, copy competitors, create novelty, defend shelf space, or signal innovation momentum. Over time, the portfolio becomes crowded with products that sell but do not necessarily create value. ASKU may generate revenue while stealing from a more profitable pack, blurring the premium ladder, fragmenting media spend, complicating forecasting, and giving retailers more negotiation leverage. The third lever was focus behind fewer brands. Oliveira concentrated capital behind Pete's, Loire and Jacobs, supported by a streamlined set of local icons. This was a brand strategy decision and also a revenue management decision. Strong brands support pricing power. Strong brands create repeatable baseline demand. Strong brands reduce the need to rent volume through discounts. This matters especially during inflation, when costs rise sharply. Weak brands have limited room to maneuver. They face faster volume loss when prices rise, and they often require more trade support to maintain shelf velocity. Strong brands still face elasticity, but they have more options. They can use pack architecture, premium tiers, loyalty programs, channel segmentation and product systems to manage the price transition. Europe showed the limits of this power. JDE Pete's faced retailer resistance and temporary delistings during the 2025 pricing disputes. That shows that pricing is not only a consumer elasticity issue, it is also a retailer power issue. In concentrated grocery markets, the first barrier may be the retailer's willingness to accept the price increase. A brand may have consumer pull, but the supplier still has to manage the retailer's view of category role. Private label alternatives Check shelf economics and negotiation precedent. Larmea showed a very different pattern. A much larger price effect was absorbed with almost no volume decline. That points to a different elasticity regime shaped by brand relevance, category role, consumer habits, competitive structure and channel dynamics. The lesson for revenue management is price strategy must be built locally. A uniform global increase is rarely the best answer. Let's go to Brian for this short commercial break.

Speaker B: Are your promotions actually growing the category or just shuffling volume you'd have sold anyway in today's market, it's not enough to track uplift. The real question is net incrementality. How much genuinely new demand did that price cut or promotion create? And how much was simply pulled forward, switched from another pack, or subsidized from loyal buyers who would have paid full price? ACARUS answers that question with Source of Business, a proprietary framework that decomposes every promotion, price and assortment. Change into its true commercial sources so you know exactly what your investment bought you. Stop funding volume you already owned. Start investing in real growth. Learn more@acurus.com that's a C-C U-R-I S.com welcome back.

Speaker A: The fourth lever was price pack architecture Many FMCG companies still rely too heavily on percentage based price increases across broad parts of the portfolio. That is administratively simple, but it misses important differences in consumer behavior. A strong price pack architecture manages affordability, pre premiumization, margin mix and consumption occasions at the same time. Entry packs can protect access without damaging the full price ladder. Larger packs can reward committed households while maintaining unit economics. Convenience formats can command higher price per unit. Premium systems can anchor the top of the portfolio. Channel specific packs can reduce direct price comparison and limit cherry picking across retailers. In coffee, this matters because the category contains many different occasions and formats. Roast and ground whole bean instant capsules ready to drink out of home and appliance linked systems each carry different elasticities and different consumer roles. A blunt price move risks leaving margin uncaptured in inelastic occasions while damaging penetration in elastic ones. The pete's North America result is therefore important. The business achieved a 6% price effect alongside positive volume and mix that suggests a healthier balance between brand strength, premium positioning pack mix and consumer demand. Price and volume can move together when the brand pack occasion and channel architecture support the decision. The fifth lever was baseline protection. The loyal base is the part of demand that returns without constant discounting. It is the part of the business that gives pricing actions a chance. It survives retailer disruption better than deal driven volume. It also makes brand investment more cumulative over time. During the 2025 delistings and pricing disputes, JDE Peetz saw volume pressure. Once negotiations concluded and ranges returned to shelves, demand recovered quickly. That suggests that the business still had meaningful brand equity. Some demand was interrupted by availability and retailer friction rather than permanently lost. For senior FMCG executives, this distinction is important. When volume falls after promotional withdrawal or price increases, the organization needs a clear diagnosis before restoring support. The key questions are how much of the lost volume was profitable baseline demand, how much was promotionally rented, how much was pantry loading, how much was retailer disruption and how much was genuine consumer rejection? Without that diagnosis, businesses often overcorrect. They put money back into the market to recover volume that may not be worth recovering. The Accuris estimate expresses the JDE pete's shift through an enhanced Source of Business P and L On the surface, the net profit index moves from 115.6 before Oliveira to 117 after Oliveira. That may sound modest, but the underlying improvement is far more spectacular. The reason is that Oliveira changed the quality of the P and L. The margin lost by discounting to shoppers who would probably have bought Anyway improves from minus 43 to minus 27. Stockpiling improves from minus 9 to minus 5. Cannibalization improves from minus 15 to minus 8. Retail switching improves from minus 5 to minus 3. Across these four areas alone, the model improves by almost 30 index points. That is a major commercial cleanup. It means JDE PEETS removed a large block of value destruction from the system. The business accepted a smaller loyal baseline after heavy pricing. It also accepted some pressure on competitive switching and category expansion as delistings, pruning and price increases worked through the market. Even after those offsets, the net profit index still rose. The reported EBIT improvement therefore understates the quality improvement inside the commercial model. For listeners who want to see the full enhanced source of business P and L for JDE Pete's before and after Oliveira's intervention, including the indexed view of loyal baseline, subsidization, stockpiling, cannibalization, switching and category expansion. You can find the full table in the accompanying blog post on accurus.com this is why the case is so important for FMCG leaders. Oliveira did more than pass through price in a difficult commodity environment. He rebuilt the profit architecture of the business. The company became more profitable on a smaller base because the value destroying components of growth were reduced faster than the value creating components were damaged. That is a difficult message for the consumer goods industry because scale is still treated as a sign of strength. Scale matters, but the quality of scale matters more. Low quality scale fills factories while draining margin. It strengthens retailer expectations of discount frequency. It trains consumers to wait for deals. It makes innovation look busy while weakening the distinctiveness of the core. It allows organizations to celebrate shipment volume while economic profit erodes. The J.D. peetz case suggests five lessons for FMCG leaders facing cost pressure. First, audit the source of your growth before you defend it. Do not only ask whether a brand pack or promotion is growing. Ask where the growth comes from. If the growth mainly comes from loyal buyer subsidy, pantry loading or internal switching, it should be treated with caution. It may have a tactical role, but it should not be mistaken for strategic progress. Second, replace flat pricing with local price pack architecture. Europe and Larmia should not be managed through the same pricing lens. Elasticity must be measured where decisions are made. Market, channel, retailer, pack, brand tier and occasion. The higher the inflation pressure, the more important this granularity becomes. Third, make premiumization prove incrementality. Premium innovation earns its place when it recruits new occasions, new users, new channels or meaningful trade up. If it mainly transfers existing shoppers from one internal SKU to another, the business may gain short term mix but lose portfolio clarity and long term pricing power. Fourth, prune the tale with discipline. Every underperforming SKU has internal defenders. Someone remembers the launch rationale. Someone has a retailer relationship attached to it. Someone worries about the shelf space impact of removing it. Mature portfolios usually carry too much complexity. Pruning helps concentrate resources on the parts of the portfolio that can create real growth. Fifth, protect the baseline. The baseline is the accumulated result of brand equity, availability, habit, trust, product performance and appropriate price architecture. It deserves more attention than promotional spikes because it is harder to rebuild once damaged. There is also a UH governance. Revenue management cannot sit in a narrow pricing function. The JDE Pete's case connects pricing, trade, spend, innovation, brand investment, SKU rationalization, channel strategy, retailer negotiation and supply chain complexity. When those decisions are made separately, the company risks optimizing individual levers while weakening the overall system. A promotion decision changes pantry behavior. A pricing decision changes retailer leverage. A pack decision changes price comparison. An innovation decision changes cannibalization. A delisting dispute changes consumer availability. A brand investment decision changes future elasticity. These levers are connected and they need to be managed as a system. The next generation of FMCG M revenue management will require stronger judgment about causality. The question is not only what happened to sales. The question is what caused the sales, what the sales cost and whether the source can be repeated at an acceptable margin. This also changes how executives should read performance reports. Organic Sales growth of 15% looks strong. A 19% price effect looks powerful. A 4% volume decline looks worrying. A Ah, 1% EBIT improvement looks modest. The full story only appears when the result is decomposed. In Europe, the pricing action protected revenue but exposed elasticity and retailer friction. In Larmia, pricing power was far stronger. In Peet's North America, premium positioning supported both price and volume across the portfolio. Pruning reduced cannibalization in promotions. De escalation reduced subsidization and stockpiling. At the baseline, some volume was lost, but the remaining business was economically cleaner. This is the kind of analysis FMCG leaders need. More often the issue is precision. Which consumers are paying more? Which packs are absorbing it which retailers are resisting? Which promotions are truly incremental? Which innovations are recruiting? Which SKUs are stealing from the rest of the portfolio? Which parts of the baseline are durable? Which parts depend on temporary support? Oliveira's next chapter at Heineken will be watched closely because BIER has many of the same revenue management, price ladders, pack architecture, promotional dependence, retailer concentration, brand equity, premiumization no and low innovation and local elasticity. The broader lesson from JDE Peets is already visible. In an inflationary environment, the best consumer goods companies will be those that know which volume deserves defending. Some volume should be allowed to leave the system. Some promotions should be stopped. Some SKUs should be removed. Some price points should be rebuilt. Some retailer conflicts may be necessary. Some short term sales losses may be the cost of restoring economic discipline. And this requires care. Europe shows the risk of pushing pricing too hard in elastic and retailer concentrated markets. Pricing that damages the franchise is not discipline. At the same time, protecting headline volume through margin leakage is also dangerous. The commercial challenge is to distinguish erosion from purification. Erosion happens when pricing, pruning or promotion cuts damage valuable baseline demand. Purification happens when the company stops funding volume that was never truly incremental. The two can look similar in a monthly sales report. Their long term impact is very different. That is why source of business thinking is becoming more central to modern FMCG M management. It gives executives a language for separating attractive growth from expensive noise. It makes trade offs explicit. It forces promotions, pricing and assortment to justify themselves against a uh, do nothing baseline. It also reduces the temptation to treat gross uplift as proof of value. The JD EP case is not universally transferable in every detail. Coffee has particular commodity exposure, consumption rituals, brand structures and pack economics. The management logic, however, travels well under pressure. Oliveira chose discipline. He accepted volume pain where the economics demanded it. He backed fewer brands. He pruned complexity. He used pricing aggressively, but with attention to market differences. He shifted the company away from promotional dependency and toward net incremental value. For senior FMCG M executives. The question is whether your organization has the analytical capability and commercial courage to identify the same sources of value and leakage in your own category. In many companies, the value leaks are visible but tolerated. They sit in half price promotions that lift sales while subsidizing loyal buyers. They sit in multipacks that win volume while weakening the premium ladder. They sit in innovation pipelines that create internal switching and call it growth. They sit in long tail skus that absorb complexity and management attention. They sit in annual pricing rounds that treat elastic and inelastic markets too. Similarly, they sit in retailer negotiations where volume optics override profit reality. The next phase of revenue growth management will require a different standard net incremental profit per serve, per occasion, per shopper and per channel. That standard is harder to manage. It requires better data, better experimentation, better cross functional governance and more willingness to challenge comfortable routines. It is also more accurate consumer goods growth is a portfolio of sources, and those sources are not equal. Some create value, some consume it. Rafael Oliveira's JDE Peetz Playbook matters because it demonstrates the executive discipline required to act on that reality. The company faced severe inflation. It took major pricing. It suffered volume pressure. It endured retailer friction. It pruned the portfolio. It reduced promotional dependency. It still defended profit. The result was harder growth but cleaner growth. And in today's FMCG environment, that may be the most serious form of management. That is it. For this week's episode of FMCG Weekly, check out the blog post on Olivera and JDE at uh, www.acurus.com. see you next week.