Kraft Heinz has reported lower-than-expected sales for its last quarter, as consumers were put off by the higher prices of its packaged meals and condiments.
Like other FMCG firms, the US food giant has been raising prices for two years to protect margins from the surge in labour, raw material, and transportation costs. However, consumers are becoming increasingly price-conscious, which is starting to affect the benefits of the strategy.
In the second quarter, Kraft Heinz saw its organic net sales increase by 4.0 per cent. However, this was driven by an 11 per cent increase in prices that resulted in a 7 per cent decline in volumes. The company noted that it also faced stronger competition from promotions and cheaper alternatives for its ready-to-eat meals and snacks, sauces, and cooking essentials.
“In the US, price gaps have expanded relative to both private label and branded competition. We have seen branded competition increase their levels of promotion, while we have remained more disciplined,” Kraft said.
Despite missing sales estimates, Kraft Heinz maintained its annual sales and profit forecasts.
Kraft Heinz CEO and Chair of the Board, Miguel Patricio, said: “While we did face headwinds in the second quarter, particularly within US market share performance, the action plans we laid out in the first quarter resulted in share trend improvement each month. We expect these action plans, along with continued strong execution from our teams, to drive momentum through the second half of the year.
“Overall, our results give me confidence in the direction we are headed. As a result, we are reiterating our full-year outlook.”
The results were in line with Oreo-maker Mondelez International and candy maker Hershey that also saw volumes falter in their most recent quarter, as they passed on price increases to consumers.
Industrial action at Bakkavor, a large supplier of the fish roe dip, has caused a “short disruption” to the supply and availability of taramasalata at supermarkets across the country, recent reports state today (12).
Employees at Bakkavor’s Spalding site in the Midlands launched strike action about six weeks ago over pay. Tubs of own-brand taramasalata were out of stock online at Waitrose, Sainbury’s and Tesco, the UK’s largest grocer. The Marks & Spencer dip was also unavailable at Ocado online.
Bakkover said: “There has been a short disruption to our supply of taramasalata, but drawing on the skills based across 21 UK sites, production steps up again next week.”
Bakkavor added that the strike action would not have a long-term effect on food supply and that its Christmas ranges were manufactured at the company’s other sites.
The British Retail Consortium acknowledged there were taramasalata availability issues but said retailers were “adept at managing supply to ensure the impact on customers is kept to a minimum and they can purchase goods as normal”, The Guardian reported.
According to the Unite union, workers at the company’s Spalding site are demanding a pay rise of 81p an hour and most workers at the site are paid £11.54 an hour.
In a statement issued last week, Donna-Maria Lee, chief people officer at Bakkavor, disputed Unite’s claim that the company had carried out years of real-term pay cuts. She said Bakkavor’s pay offer was “well above the national living wage and inflation”, and added that the pay rate for the lowest-paid workers had risen by 22.8 per cent, and by 21.2 per cent for everyone else.
Müller Yogurt & Desserts has announced the appointment of Talar El Asswad, currently serving as marketing lead – treat and desserts, as its new strategy and marketing director.
With over 20 years’ experience within FMCG marketing, the internal appointment signals Müller’s continued focus on strengthening its core brands and driving innovation, to unlock incremental category growth and put a smile on the nation’s face.
Since joining the business in January 2023, Müller said El Asswad has contributed significantly to double digit growth in 2024 for both Müller Corner and the business’ Cadbury chilled products.
Previously she held several marketing lead roles at Jacobs Douwe Egberts.
“We are the nation’s favourite dairy brand and 29 of our branded yogurts and desserts are eaten every second. This is obviously an exciting role, but as we look to continue driving category growth and building further love for our brand, this also comes with significant responsibility,” Richard Williams, chief executive of Müller Yogurts & Desserts, said.
“Having successfully led our treat and desserts marketing team for almost two years, Talar is not only ready for this new challenge, but she will also bring a wide range of new ideas and perspective to our executive team.
“I’m also really pleased to have found the perfect candidate internally. This not only shows the wealth of talent we have within Müller UK & Ireland already, but also the exciting opportunities that exist for everyone within our business.”
A vast majority of consumers still feel cash is their most widely used payment method while most consumers carry cash in case of an emergency, shows a recent survey.
According to "Why Won’t Cash Just Die?!!", a new research report from PayComplete, surveying 5,000 consumers from the UK, US, Germany, France, Italy, and Spain, 89 per cent of consumers surveyed consider the ability to pay in cash as important for their customer satisfaction. 90 per cent of consumers surveyed said that cash is their most widely used payment method
One of the strongest drivers for cash use is its close association with the community, from protecting favourite shops to education and social inclusivity, states the survey report. Cash continues to be a beacon of reliability in difficult situations with over two-thirds (69 per cent) of consumers surveyed carrying cash in case of an emergency.
More than three-quarters of consumers (81 per cent) say that they use cash to minimise data sharing while over a third (34 per cent) of those surveyed prefer using cash to manage their spending.
The report warns that organisations that tell customers that they can’t pay with cash are igniting negative emotions. These feelings range from disappointment (31 per cent) to frustration (21 per cent), and even anger (17 per cent).
One in three (33 per cent) cash users fall within the 25-44 age range, and nearly two-thirds (60 per cent) belong to the mid-range income brackets, earning between £19,000 and £63,999.
“All the noise around the death of cash is just that. While digital and electronic payment providers have been quick to kill and downplay the importance of cash in consumers’ lives, our research shows it continues to hold a significant place in the payment ecosystem, customer satisfaction, and in maintaining and strengthening communities,” said Simon James, CEO of PayComplete.
“Over half (59%) of cash users believe that the ability to pay with physical money supports the inclusivity of all members of the community. While a similar number (52%) agree that cash will continue to have a prominent place in society for the foreseeable future. Businesses that turn their back on cash risk being seen as undermining local communities.
“Saving businesses from card processing fees is not the only reason people stick with cash in the community. Our research shows that education and social inclusion are equally strong motivators. In fact, nearly two-thirds (62 per cent) of consumers believe using physical cash helps children develop financial management skills and track their spending.
“Teaching the next generation about money is critically important. Yet, research from the Money and Pensions Service has found that less than half of children aged 7-17 in the UK have received a meaningful financial education. Using cash as a tool to help educate children can help offset this trend.”
There exists a huge gap between public's intention and actions when it comes to health and wellness with cost being a major deciding factor, shows a recent report, also highlighting a shift in how people structure their meals and attitudes towards global mental and physical health.
Kantar's Who Cares Who Does: Decoding Wellness further adds thatwhile 62 per cent see processed food as harmful, only 37 per cent actively avoid it. It’s a similar pattern for sugary drinks: 73 per cent see them as harmful, but fewer than half (48 per cent) are cutting back on products high in sugar.
Savoury snacks and carbonated soft drinks have the highest product penetration of the FMCG product categories at 90 per cent and 77 per cent respectively.
Cost holds a strong influence over people’s ability to choose healthy products. More than half of people (52 per cent) cite the high cost of healthier options as the main barrier to buying them. Meanwhile, a lack of trust and confusion about what constitutes truly healthy packaged foods also prevents consumers from being able to make healthy choices.
It was seen earlier in Kantar Worldpanel’s Demand Moments that howsnacking has become a full-blown behaviour in the UK, Germany and other markets. In the UK, snacks now make up 28 per cent of eating occasions, surpassing breakfast at 27 per cent, showing a shift in how people structure their meals.
Natalie Babbage, Global Solutions Director, at Kantar Worldpanel at Kantar, said, “People want to do better but are caught in cycles of stress, unhealthy eating habits, and barriers to effective weight management, which are often exacerbated by high costs.
"Brands have a critical opportunity to make a difference. By tackling affordability, convenience, transparency, and emotional needs, they can bridge the gap between how people want to live and their reality, helping improve health outcomes for people around the world.”
The report also shows that while78 per cent of people believe they are responsible for their health, less than half proactively engage with their physical health, and even fewer invest effort into their mental wellbeing.
Diageo Great Britain has on Tuesday launched the Diageo Luxury Company, a new division dedicated to transforming Diageo’s performance in the luxury beverage sector in its home market.
The division unites existing colleagues in marketing, sales, and commercial teams under a new unified strategy and leadership team, with the launch intending to boost Diageo’s presence in the super-premium and premium segments.
The Diageo Luxury Company (DLC) will focus on bold and locally relevant innovations and brand building, as well as exciting consumer experiences across both the on and off-trades, as well as digital channels.
The DLC will have a clear portfolio focus, activating five luxury spirit brands across GB: Don Julio, Casamigos, Johnnie Walker, The Singleton, and Ciroc. Accelerating the role that these brands play in culture will be an integral part of the DLC’s growth ambition, building on recent successes such as last summer’s Casamigos’ three-floor ‘Casa House’ at All Points East Festival in London, and last month’s Johnnie Walker Blue Label ‘Ice Chalet’ experience at Selfridges, London.
The announcement comes as Diageo PLC has launched The Diageo Luxury Group, a newly created global division for Diageo’s most valuable and exceptional assets. While the DLC will work with The Diageo Luxury Group, it will operate under the Diageo GB business alongside the market’s other core spirits and beer brands.
Hinesh Shah
The new division will be led by Hinesh Shah who will serve as general manager of the DLC. Shah has been at Diageo for almost 14 years, spending most of his career in North America working in roles across finance, sales, strategy and working with the largest customers and distributors in the world. His most recent tole was Vice President – Commercial transformation in North America.
With a deep connection to Diageo’s luxury portfolio, Shah picks Johnnie Walker as the brand he is most excited to work with, a brand he says takes him back to special celebratory moments, including his graduation and anniversaries.
“We have built a strong foundation in the luxury beverage space, driving the likes of Johnnie Walker, Don Julio, and Casamigos to the heart of the luxury conversation. But it’s time to take it to the next level, utilising our incredible trade partnerships and marketing expertise to grow our luxury brands like never before,” Shah commented.
“I’m incredibly proud to lead what will become a high-performing team, united under one bold vision - to become the premier luxury drinks company in GB.”
Nuno Teles, managing director at Diageo GB, added: “Through innovation, investing in diverse talent, and a commitment to excellence in execution, the DLC promises to shape the future of luxury beverages. Our GB business has a proud history of developing authentically crafted brands, and I’m confident that Hinesh and his team will engrain these brands, and the tequila and scotch categories, into the future of luxury celebrations.”