Kraft Heinz missed quarterly sales estimates on Wednesday as inflation-hit customers bought fewer packaged meals and condiments, discouraged by higher product prices.
US packaged food makers have kept their product prices higher for more than two years to shield their margins from a surge in costs of labor, raw materials and transportation, but the benefits are starting to fade as consumers grow more price-conscious.
During the quarter, Kraft's volumes fell 7 percentage points from last year as customers hunted for cheaper alternatives for its ready-to-eat meals and snacks, sauces and cooking essentials, and traded down to private-label brands.
Net Sales Increase
The Heinz ketchup maker's net sales rose to $6.72 billion in the second quarter ended 1 July, from $6.55 billion last year.
Analysts on average had expected $6.81 billion, according to Refinitiv IBES data.
It logged adjusted earnings of 79 cents per share for the quarter, above analysts' estimate of 76 cents per share.
Abandoning Further Price Hikes
The company has in recent months also said it would abandon further price hikes for its quick-fix meals and condiments as consumers turn more price sensitive, though it still expects 2023 growth to be driven by price.
Even with inflation squeezing household budgets, consumers have mostly refrained from trading down to cheaper alternatives and are still willing to pay more for their favourite snack brands despite multiple rounds of price hikes.
Read More: Kraft Heinz Lifts Profit Outlook On Price Hikes, Easing Costs
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