Several big US packaged food companies raised their full-year financial forecasts on Thursday, in a sign they expect consumer spending on everything from cheese to snacks to coffee to increase in the months ahead, although at a more moderate pace.
Kraft Heinz, known for brands from Philadelphia cream cheese to Heinz ketchup, bumped up its expectations for core profit, while Cornflakes maker Kellogg and Keurig Dr. Pepper raised both profit and sales outlook, citing a strong uptick in at-home consumption in the third quarter.
'Big Acceleration In Consumption'
"We continue to see a pretty big acceleration in consumption," Kraft Heinz chief executive officer Miguel Patricio said on a conference call with analysts.
He, however, said consumers were buying more economy packs, which are relatively cheaper, while finance chief Paulo Basilio warned that sales may be slightly softer in the final quarter.
Both Kraft Heinz and Kellogg have been struggling for growth, largely due to a perception that their products are unhealthy. But the COVID-19 pandemic has drawn shoppers back to familiar brands and processed foods on fears of new lockdowns.
Over the past two years, Kraft was forced to write down the value of several brands by billions of dollars, forcing it to embark on a plan to save $2 billion by 2024.
The company last month decided to sell its natural cheese business to French dairy company Groupe Lactalis for $3.2 billion (€2.7), raise marketing spending and overhaul its supply chain.
Industry data showed its US retail sales rose 9.8%, more than Kellogg or General Mills over the past 12 weeks.
Kraft reported quarterly sales of $6.44 billion(€5.5 billion), a 6% rise from a year earlier and forecast a high-single digit rise in adjusted core earnings from mid-single digit earlier.
