Kraft Heinz said on Wednesday it would hit pause on further price hikes for its quick-fix meals and condiments, as consumers turn increasingly sensitive to persistently high inflation.
The packaged food giant also forecast 2023 profit below Wall Street estimates, weighed down by more promotions and higher costs of commodities including dairy, soybean, oils and packaging materials.
Kraft’s move mirrors PepsiCo Inc. that last week said it would not raise prices any further, expecting some consumer pushback in the second half of the year.
But Coca-Cola Co., Dove Soap maker Unilever PLC and Procter & Gamble Co. have said they would keep hiking prices, showing the diverging paths consumer goods companies are taking to boost sales.
“Consumers are looking for convenient, filling, and nutritious meals, while at the same time paying more attention to the price tag,” Kraft’s chief executive Miguel Patricio said, adding the company would halt fresh price hikes in North America, Europe, Latin America, and most of Asia.
Retailers have also been increasingly opposing food manufacturers’ price hikes. Last year, Kraft briefly stopped supplying some products to Tesco due to pricing disagreements with the British supermarket chain.
“With the vast majority of 2023 price increases already implemented in stores, pricing will be less of a tailwind throughout the year,” Edward Jones analyst Brittany Quatrochi said.
“This means driving increases in the number of products sold through innovation and adding value to consumers will be increasingly important to sales growth,” she added.
Kraft projected annual adjusted earnings of between $2.67 and $2.75 per share, below analysts’ estimate of $2.77, as it expects shoppers to become more price-sensitive by the end of the year.
It said average selling prices rose 15.2 percentage points in the fourth quarter, while sales volumes declined 4.8 percentage points.
Net sales rose 10 percent to $7.38 billion, beating the estimate of $7.27 billion.
