Kraft Heinz missed Wall Street expectations for first-quarter sales as consumers pushed back on price hikes, it was reported on Wednesday.
The company, like its competitors, raised the price of products in an effort to protect margins as the cost of transport, energy and raw materials increased.
Price hikes have worked for brands such as Coca-Cola and PepsiCo, but Nestlé and Kraft Heinz have had less success as consumers move towards cheaper products.
Inflationary Pressures
Shares for Kraft Heinz were down 4% even as the packaged food maker maintained its 2024 targets.
Unlike in 2023 when government benefits helped Americans with grocery budgets, consumers are now looking for value products.
This change prompted Kraft-Heinz and peers to update their strategies and products following a series of price hikes.
Overall, volumes for the quarter fell 3.2% while prices rose 2.7% across Kraft Heinz’s portfolio.
A volume decline of 3.7% in North America had eased from 6.5% in the previous year.
Future
Kraft Heinz is leaning on promotions to aid in recovery of volumes across its markets, but as the rate of inflation remains high it has hampered those efforts.
The company still expects volumes to turn positive in the back half of the year.
The ketchup-maker posted net sales of $6.41 billion in the three months ending 30 March, above analysts’ average estimates of $6.43 billion according to London Stock Exchange Group data.
Adjusted earnings per share of 69 cents was in line with analysts’ estimates.
The company maintained its forecast for organic net sales growth to be flat to 2% and adjusted earnings to grow by between 1% to 3%.
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