(Reuters) -Kraft Heinz missed quarterly sales estimates on Wednesday as inflation-hit customers bought fewer packaged meals and condiments, discouraged by higher product prices.
Shares of the Jell-O maker were down 0.5% in premarket trade after it also maintained its annual sales and profit forecasts.
U.S. 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.
Kraft Heinz’s product prices rose 11 percentage points in the second quarter ended July 1, driving a 7 percentage point decline in volumes. In the prior quarter, volumes had fallen 5.3 percentage points year on year.
The company also flagged higher promotions in the market as customers hunted for cheaper alternatives for its ready-to-eat meals and snacks, sauces and cooking essentials.
“In the U.S., 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 in its prepared remarks.
The Philadelphia Cream Cheese maker logged adjusted earnings of 79 cents per share for the quarter, above analysts’ estimate of 76 cents per share.
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.
The Heinz ketchup maker’s net sales rose to $6.72 billion in the quarter, from $6.55 billion last year. Analysts on average had expected $6.81 billion, based on Refinitiv data.
The company reiterated its 2023 targets for organic sales growth of 4% to 6% and adjusted profit of between $2.83 and $2.91 per share.
(Reporting by Savyata Mishra in Bengaluru; Editing by Milla Nissi)
