Kraft Heinz reports decline in net sales as pandemic boom starts to wane

US – American multinational food company Kraft Heinz has reported a decline in net sales for Q2 2021 as the pandemic boom experienced in 2020 starts to wane and consumers resume normal purchasing behaviors.  

For the three months ending 26 June, the company reported net sales of US$6.62 billion, representing a 2.1% organic decline.  

While the results did not compare to an extraordinary Q2 2020, Kraft Heinz says consumption vs 2019 remained strong with a 5% organic increase as demand for snacks and packaged meals persisted. 

The company predicted current-quarter organic net sales to decline by a low-single-digit percentage compared with 2020 when sales boomed due to stock-piling amid the pandemic. 

The owner of Philadelphia cream cheese also said its second-quarter results however benefitted from the recovery of the foodservice sector and positive pricing.  

“In the second quarter, we maintained the lion’s share of extraordinary gains we had in 2020. As a result, organic net sales grew 5% versus the same period in 2019,” said Patricio during the company’s Q2 2021 earnings call. 

Kraft Heinz’s largest market, the United States, saw net sales decline 3.6% to US$4.74 billion while Canada reported an 8.8% rise in sales to US$464 million. 

The company’s international segment also posted an impressive 8.3% to US$1.41 billion despite being weighed down by declining coffee sales. 

Our second quarter results serve as a strong indicator that our Kraft Heinz team will not only deliver a stronger 2021 than we initially anticipated, but will come out of the global pandemic much stronger than we entered,” said Miguel Patricio, Kraft Heinz CEO. 

Kraft Heinz says its US team is continuing to drive key strategic initiatives to transform the business including closing the sale of its nuts business to Hormel Foods this quarter, as well as completing its natural cheese divestment soon. 

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Meanwhile, in June, the company agreed to acquire Assan Foods in Turkey, which it says “serves as a steppingstone to accelerate [its] retail and foodservice growth across Europe, Middle East and Africa”. 

For the third quarter of 2021, Kraft Heinz now expects a mid-single-digit percentage increase in organic net sales.  

The company has, however, announced price increases across its portfolio to counter the impact of higher expenses while noting that inflation was “manageable.” 

The company forecast annual inflation to be above the midpoint of a mid-single-digit range compared with the prior estimate of it being at the lower end of the range. 

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