The operator introduces the conference call for The Kraft Heinz Company's second quarter results and hands it over to Anne-Marie Megela, Head of Global Investor Relations. Anne-Marie mentions that forward-looking statements may be made during the call and refers to the accompanying earnings release for more information. She also mentions the use of non-GAAP financial measures. CEO Carlos Abrams-Rivera then gives opening comments, expressing pride in the company's ability to provide quality and value to consumers in a difficult environment.

The company is focused on renovating and innovating with new benefits and improving efficiencies. They have been able to hold prices below inflation and return capital to stockholders. The leadership team is committed to driving improvements and achieving the company's goals. In the second half, there will be selective promotion and trade spend activity to drive volume results for a value-seeking consumer. The percentage of sales that require adjustments is not specified, but the company is addressing hotspots that require more aggressive pricing actions. Promotional activity is currently below 2019 levels.

Carlos Abrams-Rivera and Andre Maciel discuss their company's plans for trade investment levels and promotions in the future. They believe that investing in innovation and market strategies is the best way to grow the business, but they also see opportunities to add promotions in certain areas to close price gaps. They estimate that 30-40% of their portfolio may require additional investments in the U.S. In terms of volume, they expect gradual improvement throughout the second half of the year, but their guidance does not rely on volume growth. They anticipate a 1% increase in price for the total portfolio in the second half.

The article discusses the positive volumes in emerging markets, despite challenges in certain countries. The company expects volume to continue improving in the second half of the year, and they are focused on driving value in a sustainable way through innovation, renovation, and marketing. This includes offering new products and solutions for families spending more time at home. The company has also seen improvements in their Away From Home business and is being selective in their investments in trade. They are committed to a disciplined approach in using their RGM tools to balance profitability.

The speaker, Andre Maciel, comments on the company's approach and guidance for the second half of the year. He mentions that the company has adjusted their net sales guidance down but kept their EBIT and fully capital EPS growth. They are being disciplined in their investments and considering the long-term implications. The next question from Ken Goldman asks about the factors that will contribute to hitting the updated outlook, such as innovation, renovation, marketing, and targeted promotions. The speaker, Carlos Abrams-Rivera, responds that it depends on the region, with emerging markets seeing improvements and success with distribution gains and go-to-market strategy.

The company's Away From Home business is driving improvements in service and winning customers, particularly in the U.S. and globally. There may not be a significant improvement in the U.S. market, but progress is expected in distribution gains. The company is focused on innovation, renovation of brands, and revenue management tools to drive growth in North America. The U.K., China, and Brazil have different dynamics, with the company working to correct price gaps in the U.K. and navigate consumer demand softness in China and Brazil. Sequential improvement is expected in the back half of the year.

The company has experienced inflation and increased competition in the U.K. market, leading them to invest in protecting their volume and maintaining their market share. In China, the industry is soft and growth expectations are low, but the company is gaining market share in modern trade. In Brazil, they continue to gain market share but have faced challenges due to consumer fatigue and retailers adjusting their inventories.

The speaker discusses the current situation in North America, where there is high interest-based consumer tightness and low inventories. They believe that inventories should be at an appropriate level and this will improve the situation. They also mention their portfolio of iconic brands and their success in renovating and resonating with consumers. The speaker is confident in their ability to compete on non-price factors through innovation and marketing.

The speaker discusses the importance of offering consumers different price points for products in order to fit into their budget and increase accessibility. They also mention expanding distribution in various channels such as dollar stores, grocery stores, and clubs. The speaker also addresses the decline in away from home sales, mentioning a plant closure and discontinuations as contributing factors.

In the second quarter, the Global Away From Home business declined by 2.1%, with the plant closure impacting it by 200 basis points. Excluding the plant closure and planned exits, the business would have been flat or grown by 1.5%. The industry saw a decline in Q2, with the category Heinz plays in being 100 basis points softer than Q1. Heinz's equipment strategy, including the Heinz Remix, is focused on innovation and solving pain points for operators. The Heinz Remix is currently in market and receiving positive feedback, with plans to scale it in 2025.

The company is collecting data from consumers to improve their deployment strategies for 2025. They have seen success with their HEINZ REMIX product in various fast food chains. They are also working on new dispensers and tabs to make the process easier for operators. In the U.S. retail market, they are expecting stabilization and improvements in their portfolio, with a focus on products like Capri Sun and Lunchables. However, these may not be the only areas of improvement.

Abrams-Rivera explains that certain brands and categories were a significant challenge for the company in the second quarter, but the teams have been working hard to improve them in the second half. For example, Lunchables saw a steady recovery and will have new innovations and partnerships in the future. Capri Sun was also a challenge, but the team is focused on improving its trajectory in the second half.

The company has made changes to the original Capri Sun to better suit consumer preferences and has increased marketing efforts for the upcoming year. They have also secured strong partnerships for back-to-school displays and have expanded into new channels. The company is seeing positive momentum in some of their accelerated platforms, such as Narita, Mexican business, and cream cheese. They are also focusing on their Spoonable business and Mac & Cheese, with investments in new flavors and packaging design, as well as new innovations and partnerships.

The speaker discusses the company's plans to bring innovation and excitement to their Mac & Cheese business, which they believe will help improve its momentum in the second half of the year. They also mention their focus on condiments and sauces, particularly in the spoonables category. The speaker addresses concerns about potential pressure on gross margin in the next 12 months, but explains that they have already made progress in this area despite some one-time issues. They expect a more muted impact on gross margin in the second half of the year, but are not worried as it aligns with their plans.

The company expects to see gradual but continuous gross margin expansion in the future, thanks to strong efficiency and a well-managed supply chain. This is a result of the company's focus on driving efficiency and improving return on investment through various departments, such as procurement, operations, and marketing. The company believes that having a healthy gross margin is crucial for sustainable growth.

Andre Maciel discusses the changes made to Kraft Heinz's operating model, which has resulted in successful integration between commercial and supply chain. The company has also implemented incentive alignments by giving all employees two common KPIs: market share and gross margin, in order to promote profitable growth. The conference concludes with thanks from Anne-Marie Megela and the operator.

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