Kraft Heinz to launch first IHOP’s branded coffee in April, pauses price hikes in some regions

US – American multinational food company, Kraft Heinz, has announced the first launch of IHOP’s branded coffee in both bags and K-Cups in April as it plans to pause further price hikes in North America, Europe, and Latin America.

The IHOP deal is Kraft Heinz’s only current partnership in the coffee space, according to a spokesperson of the company.

“This is an example of how we’re taking new and unexpected approaches within some of our product categories,” CEO Miguel Patricio said during the company’s earnings presentation.

According to the spokesperson, the partnership will allow the company to combine its scale and capabilities with the fan-favorite IHOP brand.

Coffee is a popular beverage that is overtaking the water in the US. On Mar 15, 2022, PR Newswire quoted data from National Coffee Association (NCA), showing that 66% of Americans now drink coffee each day, more than any other beverage, including tap water, and up by nearly 14% since January 2021, the largest increase since NCA began tracking data.

The Spring 2022 National Coffee Data Trends (NCDT) report prepared by Dig Insights on behalf of the NCA found that Americans have increased coffee consumption away from home by 8% since January 2021.

Consumption of espresso-based beverages, typically prepared away from home, has shot up 30% since the start of the pandemic, signaling recovery from the COVID-19 pandemic and also indicating new growth, the news agency reported.

NCA also highlighted that the drink is getting more popular with younger consumers. The Association said 51% of young adults between 18 and 24 drank coffee in that period, representing an increase of 11% since July 2021.

According to Food Dive, IHOP’s restaurant coffee, which comes from B2B producer Royal Cup, has been praised for its smooth taste and bold profile, and bringing the same option to a home-brewable blend is likely to be a hit.

For the Full Year 2022, the company’s net sales increased by 1.7 percent versus the year-ago period to $26.5 billion. Organic Net Sales increased 9.8 percent versus the prior year period.

During the period Kraft Heinz had a negative 8.0 percentage point impact from divestitures and acquisitions, a negative 2.0 percentage point impact of currency and a positive 1.9 percentage point impact from the 53rd week.

Its fourth-quarter net sales rose 10% to $7.38 billion from the year prior. Organic Net Sales increased 10.4 percent versus the prior year period.

Though packaged food companies have increased prices over the last two years, they still struggle with rising commodity costs and supply chain issues.

Kraft Heinz had hiked its pricing by 15.2% but receive a 4.8% decline in volume for the amount of units sold.

With this, Patricio said on the earnings call: “As we look to the rest of the year, we have no current plan to announce new pricing in North America, Europe, Latin America, and most of Asia.”

The company expects organic net sales growth of 4% to 6% in 2023, slightly above estimates of 4.8%.

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