US packaged food heavyweight Kraft Heinz is almost done with price hikes.
The Heinz Ketchup and Kraft cheese manufacturer’s announcement came in the same week as a report that US grocery chain Walmart is starting to resist food firms’ pricing actions, fearing the loss of customers to discount supermarkets.
Speaking to analysts after the release of its Q4 and full-year 2022 results, which included a year-on-year surge in net income, Kraft Heinz CEO Miguel Patricio said: “From a pricing perspective, 99% of all needed pricing has already been announced for 2023.
“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.”
He added: “We have about 95% of our pricing already accepted, and we have about 90% already implemented.”
The move by Kraft Heinz, which last year briefly stopped supplying some products to UK supermarket giant Tesco due to pricing disagreements, is not one that all of its peers have taken. Unilever, for one, has indicated that more price hikes could be on the cards as it attempts to recover some of the inflationary costs in its supply chain.
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Kraft Heinz said that in the fourth quarter its prices were 15.2% higher than they were a year ago, including a 14.2% increase in North America and an 18.5% jump internationally. For all of 2022, prices increased by 13.2%.
But Patricio said: “Consumers are looking for convenient, filling and nutritious meals, while at the same time paying more attention to the price tag.”
Announcing net sales of US$7.4bn for the three months ended 31 December – a 10% increase year-on-year – Patricio said: “We continue to see strength driven by our key growth pillars, while at the same time prioritising investments in our brands and delivering on efficiencies.”
Net income for the quarter was up a massive 447.9%, compared to the prior year, at $887m.
For the year, sales were up slightly (1.7%) at $26.5bn, while net income was up 133.4% at $2.4bn.
However, Kraft Heinz posted a 4.8% decline in volume and mix in the fourth quarter, including a 5% drop in North America. Volumes fell 3.4% in 2022.
Looking ahead, the Oscar Mayer brand owner expects 2023 organic net sales growth of 4% to 6% versus 2022 and is anticipating high single-digit inflation.
Its results were described by John Baumgartner, a US-based analyst at Japanese investment bank Mizuho Securities, as a “solid delivery” and the outlook was “very encouraging”.
He said: “Underlying momentum [is] evident in [its] strong close to FY-22, with market share continuing to outperform other brands gaining across all income tiers.”