The Kraft Heinz Company 4Q23: Net Sales -7%, Organic Sales -0.7%, Adjusted EBITDA -5.3%

Mar 25, 2024 | Corporate Insights, No Bull Economics

Kraft reported that 4Q23 was more challenging than originally anticipated as higher interest rates continue to weigh on the consumer at the same time SNAP benefits significantly declined from 4Q22 peak levels. Notably, the resumption of student loan repayments in October 2023 is not expected to have a meaningful impact on future sales and management expects to drive top-line growth, return to positive volumes, and expand gross & operating margins during 2024.

The Kraft Heinz Company manufactures & markets food products which include condiments & sauces, cheese & dairy products, meals, meats, refreshment beverages, coffee, and other grocery products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Ore-Ida, Maxwell House, Kool-Aid, Jell-O, Heinz, ABC, Master, Quero, Kraft, Golden Circle, Wattie’s, Pudliszki, and Plasmon brands.


  • Regardless of income level, consumers are under pressure & looking for value. Low-income consumers are shopping more at dollar stores while higher-income consumers are frequenting club stores.
  • Further, consumers are generally shopping in smaller trips to stretch their dollars.
  • Management underestimated the impact of SNAP, which pressured sales -1.5% more than expected during 4Q23. Notably, a concentration of emergency SNAP allotments at the end of 2022 drove a -40% y/y decline in net benefits during 4Q23. The 1Q24 y/y decline in net benefits should be under -20%.
  • Kraft reported solid performance for its Away-From-Home business (Foodservice organic sales increased +7% y/y during the quarter), with continued progress & improvement in its QSR business.

Kraft Heinz Sales Chart


  • A -3% y/y decline in North American organic net sales (+2.5% price offset by -5.5% volume/mix) was driven by trade timing & an anticipated retailer inventory deload during the quarter. Together, this drove -1.5% underperformance relative to total U.S. retail consumption.
  • Kraft’s U.S. retail GROW platform declined -2.3% y/y after a price increase on 75% of its portfolio in February followed by the reduction in SNAP benefits.
  • Notably, Kraft called out challenges to its Mac & Cheese business which is driven disproportionately by SNAP spending.
  • While FY24 organic net sales guidance of flat to +2% y/y is uninspiring, management expects that going forward sales should benefit from a +15% y/y increase in both FY23 marketing investment and R&D spend which has already supported a ramp-up in 2023 product innovation.

Operations & Margins

  • Management solved its remaining supply constraints, exiting 2023 with a case-fill rate in the high 90s.
  • Inflation continued to moderate to +3% y/y during 4Q as the overall cost environment improves, with deflation in many categories offset by higher prices for tomatoes & sweeteners. In any case, management noted that inflation is primarily driven by labor cost increases.
  • 2024 pricing should run +1% y/y, below the +3% expected inflation rate.
  • While Kraft’s 4Q23 adjusted gross profit margin increased +2.6% y/y to 34.8%, its adjusted EBITDA declined -5.3% which reflected higher marketing and R&D costs.

Kraft Heinz 4Q23 Financials

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