From dollar store shoppers to wealthier club store members, consumers are seeking value.
So said Kraft Heinz CEO Carlos Abrams-Rivera, addressing his company’s 7.1% quarterly sales drop during an earnings call Wednesday (Feb. 14).
Speaking with analysts, the chief executive said company data shows “that regardless of the income levels, consumers are looking for value and they continue to be under pressure.”
“And what we see is low-income consumers are actually shopping more at places like dollar stores, higher-income consumers, more at club stores,” continued Abrams-Rivera. “But mostly, we are seeing them looking for overall smaller trips to stretch their dollar further.”
With that in mind, he said, Kraft Heinz is seeking ways to deliver on that value. This year, it plans to have a 20% higher number of offerings in club stores than it did in 2023 while adding another 10% to dollar stores.
“So we are making sure that we are in the right channels with the right assortment and continue to invest in innovation in order to make sure that we are actually consumers looking for value independent of what they’re looking for, different occasions, different formats, different shopping behaviors,” Abrams-Rivera said.
Among the headwinds the company dealt with this quarter were challenges related to its popular macaroni-and-cheese product.
“Frankly, it’s a business that is driven disproportionately by our SNAP exposure,” Abrams-Rivera said. “So that affected some of the business in Q4.”
To combat this, he said the company is investing in new flavors for this flagship product, and working on partnerships with other in-house brands like Oscar Meyer as well as with retailers to improve “the overall assortment to optimize the traffic down the aisle.”
The company’s earnings come one day after new government inflation data showing that food-related prices were up 2.6% year on year in January, with food prices climbing 0.4% from December. Food consumed at home — seen as a proxy category for grocery spending — was up 0.4% month on month.
“The costs of simply existing has pinched our collective wallets a bit more,” PYMNTS wrote Tuesday (Feb. 13). “And given the fact that the January data comes in the wake of the holiday spending surge, the impact of higher prices paid by consumers in January may have been felt more keenly than before.”
The situation has also helped drive an uptick in retailers offering private-label products — that is, the store-brand alternative to the things Kraft Heinz sells — as consumers seek to trim their grocery budgets.