Kraft Heinz Posts Sweet Q3 Sales Momentum Amid Supply Chain Bottlenecks and Rampant Inflation

Although the market continues to snub Kraft Heinz (with the stock price about flat), we think this move is unjustified given its stout 11.6% third-quarter organic sales growth, up 6.4% relative to the third quarter of 2019. We acknowledge the level of pricing that Kraft Heinz has put through is massive (15.4% on a consolidated basis, including 15.3% in North America), though the volume response is striking (down just 3.8% and 4.4%, respectively). From our vantage point, these results evidence the prudence of the strategic playbook CEO Miguel Patricio inked when he took the helm in 2019, prioritizing brand (marketing and product innovation) and capability (category management and e-commerce) investments, an approach that has merit even once current dynamics (the pandemic, macro challenges, inflation, supply chain hurdles) are put to rest. And we posit spending to bolster the long-term health of the business will continue to take top billing, with our forecast calling for Kraft Heinz to direct 6% of sales ($1.7 billion) annually to such areas.