Kraft Heinz volumes sink as consumers push back on higher prices

Kraft Heinz’s (KHC) latest quarter shows shoppers are pushing back against higher prices on their favorite brands by buying less.

The consumer staples company, whose brands include Velveeta, Oscar Mayer, and Jell-O, saw net sales increase 2.6% in its second quarter as it raised its prices. Yet volumes decreased 7% year over year.

The multinational said it expects volume trends to improve in the second half of 2023 and into 2024.

The results highlight a bigger trend among consumer staples giants that increased prices amid elevated inflation. While the companies have largely managed to achieve their top and bottom line targets, the lack of volume growth suggests consumers are trading down to private labels or buying less overall.

Coca-Cola's (KO) CEO also recently noted that consumers globally were getting increasingly cost-conscious as inflation weighs on pocketbooks and economists debate the likelihood of a recession ahead.

"They're looking for value and stocking up on items on sale," said CEO James Quincey during the company's second quarter earnings call.

"We have seen some willingness to switch to private-label brands in certain categories. Across the sector, consumers are increasingly cost-conscious," he added.

Coca-Cola has been able to raise the prices of its drinks amid higher inflation. The company reported a 10% increase in price/mix, a metric that incorporates price, product, and package size.

"Volume was flat, and after a slower start, it sequentially improved, with June being our strongest month in the quarter," said Quincey.

Procter & Gamble (PG) recently posted better-than-expected quarterly results thanks to higher prices. Global shipment volumes declined by 1%.

P&G CEO Jon Moeller told Yahoo Finance after posting its quarterly results that it was a "very, very modest decline, which you would expect with the level of pricing that we've been taking."

Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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