The operator introduces the conference call for The Kraft Heinz Company's first quarter results and reminds participants that the call is being recorded. Anne-Marie Megela, the Global Head of Investor Relations, then gives a disclaimer about forward-looking statements and non-GAAP financial measures. The CEO, Carlos Abrams-Rivera, is then introduced to give opening comments.

The speaker provides context for the Q&A session by discussing the current consumer sentiment and the gap between high and low earners. They mention the challenges faced by lower-earning households and the increasing spending among higher earners. The speaker emphasizes that Kraft Heinz is committed to meeting the needs of all consumers, whether they are looking for value or culinary delights. They highlight the company's strengths in innovation, brand renovation, and having a strong team. The company's success in generating incremental net sales from innovation is also mentioned.

The company is expanding its product choices to cater to consumer needs and is proud of its progress but is not satisfied. They are focusing on serving their consumers and making their lives delicious. The company is losing share in North America Retail but is holding or gaining share in 55% of the ACCELERATE platform. U.S. restaurant sales are softening, but there has been no significant impact on the company's at-home eating business.

The company has seen improvement in volume and dollar share in the U.S. over the last five weeks, with their ACCELERATE platforms outperforming other platforms. They are losing share in the PROTECT platforms due to a decline in SNAP benefits, but are excited about upcoming renovations and new options. In the BALANCE part of their portfolio, they are losing share but improving compared to last year, driven by coffee. The Mac & Cheese business is expected to see improvements as they start to overcome the impact of SNAP and introduce new options and flavors. The condiments category is also expanding, with the company growing in volume share.

The company is focused on driving growth in their category and expanding their offers and innovations. They have also exited some non-strategic businesses, such as their Heinz bulk vinegar business. The slowing of restaurant traffic in the US has affected their Away From Home business, but they are seeing opportunities in new channels and are focused on improving margins and distribution. They believe that trends will continue to improve in this area.

The speaker discusses inflation and the company's commitment to providing affordable options for families. They mention a 3% inflation rate and only passing on 1% of that to consumers in 2023. They emphasize the importance of offsetting costs to avoid burdening consumers.

Andre Maciel, responding to a question from Kenneth Goldman, stated that they still expect inflation to be in the low single-digit range in the coffee category. The inflation is more concentrated in Q2 and Q3 due to higher levels of inflation in meat and cheese, but they have taken surgical price increases in those categories. There is no significant impact from cocoa. The increase in gross margin guidance implies slightly higher SG&A, which may be due to the plant shutdown and the deployment of their brand growth system to strengthen their marketing and brands.

The speaker discusses the brand growth system and the need for sufficient marketing across the portfolio. They mention increasing investments in marketing and thank Ken for his help. The next question is about the impact of the SNAP issue on organic sales, and the speaker estimates a negative impact of a few hundred basis points. The speaker then addresses the deceleration in the Away From Home segment in the US, mentioning the impact of exiting a customer and a decline in restaurant traffic. They also discuss expectations for a recovery in the second half, but acknowledge concerns about potential over-optimism in light of recent guidance from other restaurant companies.

Carlos Abrams-Rivera discusses the global strategy for the Away From Home business, which is seeing growth outside of the U.S. despite a slowdown in the restaurant industry. He mentions that the impact of unplanned maintenance in Q2 will be behind them in the second half of the year and that they will be expanding their distribution and focusing on higher-margin channels such as leisure, hospitality, and travel. He also highlights successful programs like Heinz Selection and plans to drive innovation in the Away From Home sector.

In the paragraph, Carlos Abrams-Rivera discusses the impact of consumer stress on North America's volume declines, specifically in categories like Mac & Cheese and catch-up. He mentions that private label is becoming more prevalent in these categories due to factors like new merchandising by retailers and increased price sensitivity among consumers. He also mentions the benefits of having iconic and beloved brands in the company's portfolio.

The speaker discusses the company's performance in comparison to private label brands. They have renovated their portfolio and focused on delivering value to consumers. Private label brands are gaining share, but the company's strong JBP and partnership with retailers allows them to leverage their portfolio and create unique promotions. They will continue to build on this strength.

In the paragraph, the operator introduces the next question from Steve Powers of Deutsche Bank. Powers asks about the unplanned maintenance that affected one of the company's Away From Home plants, and whether there was a root cause for the issue. The CEO, Carlos Abrams-Rivera, responds that the issue was temporary and focused on the Away From Home business, but production has resumed and is expected to fully recover within the second quarter. The CFO, Andre Maciel, adds that the impact on the company's growth will be between 50 to 100 bps. The operator then opens the floor for more questions.

David Palmer asked two questions during the earnings call. The first question was about the assumptions for mid-single-digit organic growth in the Foodservice sector. The company expects current industry trends to remain similar to those seen in the first quarter. The second question was about the challenges and plans for improvement for the Oscar Mayer and beverage businesses, which saw a decline in the first quarter. Carlos Abrams-Rivera and Andre Maciel responded, stating that the company expects to be on track for their long-term growth targets in the second half of the year. This will be driven by improvements in Emerging Markets, the U.S. Retail business, and Away From Home sector.

The speaker discusses how the dynamics of the industry make them cautious, but they still expect improvement. They do not need to rely on U.S. Away From Home sales to meet their goals. The speaker then goes into more detail about the Oscar Mayer and beverage businesses, which are in different portfolio roles within the company. They are focusing on renovating and protecting these brands to drive growth and differentiate themselves in the market. They are also being mindful of managing costs and protecting distribution in these businesses.

In a recent earnings call, Andre Maciel, along with David Palmer and Anne-Marie Megela, discussed the performance of the BALANCE portfolio, which saw a 4% decline in the quarter but a 5% growth in gross profit dollars. Maciel emphasized the importance of balancing investments in the portfolio's brands to sustain their business, but cautioned against expecting average growth. In response to a question about the impact of Foodservice on the overall company, Maciel clarified that the guidance implies a 50 basis point reduction, which will be absorbed by the rest of the portfolio. Carlos Abrams-Rivera added that while retail market shares may be down compared to last year, they are seeing improvement in retail trends and do not anticipate any major adjustments to their marketing plan for 2024.

In the second half of the year, the company expects Emerging Markets to be fully back on track, while North America Retail will continue to improve. They also anticipate gradual improvements in the rest of the world and are confident in achieving their guidance. The company is seeing volume share improvements and will focus on driving brand renovation and innovation, as well as investing in marketing to drive growth. This is possible due to their brand growth system that helps them make smart decisions about where to invest.

The speaker is acknowledging that they will continue to prioritize driving the right funds towards retail growth. They thank the questioner and announce the end of the earnings call for the first quarter of 2024.

This summary was generated with AI and may contain some inaccuracies.