Elevated marketing drives Kraft Heinz’s bottom line

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Kraft Heinz beat Q3 sales estimates, which the company credited to how it has elevated its marketing.

The maker of Kraft Dinner, Heinz Ketchup, Peanut Butter, Philadelphia Cream Cheese and Lunchables, saw net sales grow to $6.51 billion USD in the third quarter from $6.32 billion USD a year earlier, topping analyst expectations. Accrued marketing spend was up 0.87% compared with the period a year prior.

“We are elevating our marketing to strengthen the equity of our brands and drive earned media,” said Kraft Heinz CEO Miguel Patricio, who added that the CPG hasnecessary tools to do that: access to propriety first-party data, A.I.-enabled insights through Kraft-o-Matic and its in-house creative agency, The Kitchen.

“By increasing the relevance and impact of our creative, we are getting more and more earned media coverage, amplified by our huge consumer base,” Patricio said. “This year we have executed six activations with more than one billion earned impressions each [and] we have seen an increase of 60% in brand PR campaigns versus last year.”

Consumption in the U.S. specifically continues to increase, up to 9.2% in the third quarter. And according to Patricio, Kraft Heinz is growing and gaining market share in categories where it has made investments in brands, whether through renovation, elevated marketing or additional capacity to meet increased demand.

He cites by way of example, Lunchables and Kids Single Serve Beverages, both of which were cornerstones of the company’s recent back-to-school campaign positioned around saving shoppers time and money. Stateside, Lunchables grew 23% and Kids Single Serve Beverages grew 20%, with both gaining market share.

Patricio attributes success to Kraft Heinz’s broad balanced portfolio of brands, with market share by consumer base not over-indexed to any one income level.

“With price ladders across much of our business, we are well-positioned to serve consumers across all income levels,” he said.

In this morning’s investor call, Patricio said that its sellout price is comparable between its products and private label. He says as of right now, brand switching to private label is not an ongoing concern.

Food service, meanwhile, grew double digits in the third quarter in both North America and International Zones. And because foodservice channel growth has historically outpaced the retail industry by 1.5 times, Patricio believes there is a lot of white space there.

“The channel provides a strategic platform for us to test and learn on innovation before scaling up in retail,” he notes. “It’s also an outstanding marketing vehicle [and] it serves as a consumer trial engine for our brands, especially in geographies where we have lower retail penetration.”

Much of the current growth in foodservice is coming from strong restaurant partnerships, Patricio says, although he admits that in the United States, its products are only in about 25 of the top 50 QSRs.