Kraft Heinz Faces Sales Setback Amid Consumer Price Resistance
Source: The DairyNews
Kraft Heinz (KHC.O) reported lower-than-expected sales for the first quarter, disappointing Wall Street analysts. The decline in sales signals that consumers, cautious about inflation, are pushing back against higher-priced branded lunch combinations, macaroni and cheese, and deli meats.
The company's shares dropped 6% in early trading as it also forecasted that second-quarter organic sales would be similar to the first, citing unplanned maintenance.
With many Americans relying on government assistance for grocery purchases, there's a heightened demand for value-oriented products this year. This trend has prompted Kraft Heinz and its competitors to adjust their offerings and strategies after years of price increases.
In the first three months of the year, overall sales volumes decreased by 3.2 percentage points, while prices rose by 2.7 percentage points across Kraft Heinz's product lineup. Over the past three years, prices have increased by an average of 8.1 percentage points.
Kraft Heinz announced that it would target price increases for products experiencing higher raw material costs, such as dairy, sweeteners, and coffee.
Despite the challenges, Kraft Heinz saw an increase in the volume of products sold through promotions compared to the previous year, as it utilized offers to stimulate volume recovery across its markets.
While the company anticipates a turnaround in overall volumes in the latter part of the year, analysts expressed concerns about the company's performance. Citi analyst Thomas Palmer noted that the company's results were in line with expectations, but the lower-than-anticipated outlook for second-quarter organic sales growth could impact its shares.
Kraft Heinz reported net sales of $6.41 billion, slightly below analysts' average estimate of $6.43 billion. This marks the company's fourth consecutive quarter of missing sales expectations.
Furthermore, the company warned of a 50 to 100 basis points impact on current-quarter total organic net sales growth due to a temporary maintenance shutdown at a factory producing products for its North America Away From Home business.
With many Americans relying on government assistance for grocery purchases, there's a heightened demand for value-oriented products this year. This trend has prompted Kraft Heinz and its competitors to adjust their offerings and strategies after years of price increases.
In the first three months of the year, overall sales volumes decreased by 3.2 percentage points, while prices rose by 2.7 percentage points across Kraft Heinz's product lineup. Over the past three years, prices have increased by an average of 8.1 percentage points.
Kraft Heinz announced that it would target price increases for products experiencing higher raw material costs, such as dairy, sweeteners, and coffee.
Despite the challenges, Kraft Heinz saw an increase in the volume of products sold through promotions compared to the previous year, as it utilized offers to stimulate volume recovery across its markets.
While the company anticipates a turnaround in overall volumes in the latter part of the year, analysts expressed concerns about the company's performance. Citi analyst Thomas Palmer noted that the company's results were in line with expectations, but the lower-than-anticipated outlook for second-quarter organic sales growth could impact its shares.
Kraft Heinz reported net sales of $6.41 billion, slightly below analysts' average estimate of $6.43 billion. This marks the company's fourth consecutive quarter of missing sales expectations.
Furthermore, the company warned of a 50 to 100 basis points impact on current-quarter total organic net sales growth due to a temporary maintenance shutdown at a factory producing products for its North America Away From Home business.
23.09.2024
Carbon emissions in global milk production - the elephant in the room
I have been thinking to make this post yes/ no. I decided for yes and like to ask everyone to not "shoot the messenger". The chart shows an analysis of IFCN Dairy Research Network from the 2024 supporter conference in Poland.
