USA – Kraft Heinz, a significant player in the sauces and soup industry in the US, is facing challenges in terms of volumes as consumers, grappling with financial constraints, seek more affordable options.
The company is experiencing a downturn in its food service channel in North America, which is further compounding its woes.
In its first-quarter sales report, Kraft Heinz narrowly missed Wall Street estimates, with net sales increasing by 1.2% year-on-year to US$6.41bn, slightly below analysts’ average projections of US$6.43bn.
However, volumes declined by 3.2 percentage points in the three months ending 30 March, although this is an improvement from the 4.4 percentage point drop witnessed in the fourth quarter of 2023.
Despite facing challenges, Kraft Heinz reported a 3.9% year-on-year decline in first-quarter net income, amounting to $804m, while adjusted operating income increased by 1.7% to $1.26bn.
CEO Carlos Abrams-Rivera, addressing analysts on 2 May, reiterated the company’s expectation of a return to “historical activity” volume levels in the latter half of 2024.
He acknowledged Kraft Heinz’s short-term volatility, citing factors such as consumer pressure, persistent inflation, challenges from the Supplemental Nutrition Assistance Program (SNAP), industry softness in the away-from-home segment, and rising supply chain risks.
Kraft Heinz remains optimistic about its performance, particularly in the US away-from-home segment, where it continues to outpace industry trends and gain market share.
The company maintains a disciplined approach to pricing and promotions, with CFO Andre Maciel emphasizing their strategy of implementing planned pricing actions to offset inflation in various markets.
Looking ahead, Kraft Heinz has reiterated its guidance for 2024, expecting organic net sales growth of 0% to 2% and adjusted operating income growth of 2% to 4%.
Analysts, however, remain cautious about the company’s growth prospects, especially given the potential impact of a weakening low-income consumer base.
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