The paragraph is a transcript from The Kraft Heinz Company's Q4 2024 earnings call. Anne-Marie Megela introduces the call, mentioning the presence of forward-looking statements and non-GAAP financial measures. She then hands the call over to CEO Carlos Abrams-Rivera. Carlos thanks the Kraft Heinz team for their efforts during a challenging year, noting the company's focus on future growth, improving profit margins, and increasing free cash flow. Despite economic challenges, Kraft Heinz returned $2.7 billion to shareholders through share buybacks and dividends, boasting the highest yield in the food industry.

The paragraph discusses the company's outlook for 2025, emphasizing confidence in improving financial performance and maintaining profitability. Carlos Abrams-Rivera addresses a question from Andrew Lazar of Barclays about the company's reinvestment strategy, particularly regarding margin expansion and pricing. Carlos explains that although margin expansion in 2025 will be smaller than in the previous year, the company is still on track, with a head start in its growth pillars. He highlights that 75% of new customer wins in the Away From Home segment are already secured, contributing significantly to year-over-year growth in that area.

In the paragraph, the company discusses its plans for growth and expansion in Emerging Markets and North America Retail by 2025. They have mapped out an increase in distribution points and locked in 75% of their innovation pipeline for 2025. The focus is on leveraging their Brand Growth System, investing in pricing, product, marketing, and technology-led solutions to drive efficiencies and improve margins. They are shifting more funds toward consumer-facing marketing to boost margins modestly while building on progress made in 2024. Andre Maciel adds that the top line improvement is driven by more than just pricing, including overcoming past challenges and implementing product enhancements, with expectations for efficiencies to surpass inflation rates.

The paragraph discusses the company's strategy for managing inflation by adjusting prices in commodity categories, particularly coffee, and in emerging markets. It also touches on their investment strategies in pricing and trade. Peter Galbo from Bank of America asks about the company's growth rate expectations for its pillars of growth (ACCELERATE, PROTECT, and BALANCE) within the organic sales guidance for 2025. Andre Maciel responds by highlighting anticipated growth in emerging markets, expecting double-digit growth by the end of 2025, and improvements in the "Away From Home" segment, aiming for mid-single-digit growth. In the U.S., the focus is on ACCELERATE platforms, targeting gradual recovery and improvement through price investments and product enhancements, with noticeable improvements expected during the year, but not significantly in Q1.

The paragraph discusses the company's investment strategy, emphasizing the importance of the ACCELERATE platforms in driving improvements in the U.S. Carlos Abrams-Rivera highlights that while tactics win battles, strategies win wars, and their overarching strategy remains unchanged. The focus is on maintaining a balanced portfolio that contributes to the right margins and sustains innovation to stay relevant with consumers. The goal is to adhere to this long-term strategy despite short-term challenges. The paragraph also addresses market share softness in the U.S. and the impact of reducing unprofitable promotions, indicating that consumers may be more accustomed to purchasing on deals. As these promotional changes occur, the initial pain is more significant than anticipated due to consumer elasticity.

The paragraph discusses the company's strategy for enhancing product base volume and its impact on lift size. It highlights a focus on potential base price changes over promotions based on category needs and emphasizes that higher promotion frequencies work better than deeper discounts. Carlos Abrams-Rivera mentions observing consumers shopping at more locations with smaller basket sizes, leading to increased trips. This has prompted the company to expand distribution in U.S. dollar and club channels to ensure competitive pricing and attract consumer purchases. The mention of the operator introduces a question from Ken Goldman of JPMorgan about the expected increase in the company's tax rate by 2025, noting its uniqueness among multinational food and beverage companies.

In the paragraph, Andre Maciel discusses Kraft's tax strategy and recent financial activities. Kraft recorded a $2.4 billion tax benefit in net income for Q4 due to a specific business transfer, part of their strategy to mitigate the financial effects of global minimum tax regulations. Although this will lead to a 500 basis points increase in the P&L tax rate starting in 2025, it will also generate approximately $120 million in annual cash gains over the next 20 years. This translates to a smaller 200-300 basis points impact on the cash tax rate. Consequently, Kraft's cash conversion rate is expected to be around 95% by 2025. The paragraph concludes by noting a question from Leah Jordan of Goldman Sachs about the recovery of Kraft's Lunchables business following a supplier issue in the fourth quarter.

The paragraph discusses ongoing challenges faced by the company due to supplier ingredient issues that started in Q4 and continue into Q1, affecting the service and performance of specific SKUs, particularly in the Lunchables line. Despite soft January data, the company anticipates improvements throughout the quarter. They plan to address these challenges by investing in innovation and marketing to enhance product quality and ingredients, suggesting that the current challenges won't define the entire year's performance. The company acknowledges that some SKUs are significantly impacting overall sellout rates, with expectations for these issues to persist into February.

The paragraph discusses the outlook for organic sales growth and inflection throughout the year. Andre Maciel explains that while the second quarter will see some improvement due to factors like the Easter shift and the previous year's plant downtime, the more significant sales growth inflection is expected to start in the third quarter. This growth will be driven by factors such as the Easter timing, lapping of previous disruptions, and enhanced product offerings. Additionally, there is a question about marketing spending, highlighting a comparison between the company's 4.5% spending level, including market research, and peers who spend closer to 5% or more on advertising.

The paragraph discusses the marketing strategy of a company, emphasizing the need for tailored marketing investment across different brands and countries based on specific needs. Carlos Abrams-Rivera outlines a strategy categorizing their businesses to "ACCELERATE," "PROTECT," and "BALANCE," directing marketing dollars accordingly. Over the past two years, the company has focused on enhancing the return on marketing investments by employing analytical tools and shifting funds from non-working to working areas to increase marketing efficiency. Andre Maciel adds that the company aims to gradually achieve a marketing sufficiency level of around 5%.

In the paragraph, the speaker addresses concerns about the company's underperformance in comparison to the historical growth rates of the categories they compete in. While certain specific categories have faced issues, there appears to be a broader underlying dynamic affecting the company's performance. The speaker questions if this underperformance is due to execution, affordability, or other factors. They seek insight into corrective actions—such as adjusting pricing strategies, increasing advertising, or improving execution—should the anticipated pickup in performance not occur in the coming months.

Carlos Abrams-Rivera discusses the company's focused strategy on addressing challenges within its portfolio, which consists of over 200 brands across 40 countries. He highlights that their current challenges are concentrated in four brands within the U.S. Retail business. To address this, the company is focusing its investments on these key areas to drive top-line improvements and manage gross margins. He shares the success story of Capri Sun, which saw a 5-point increase in dollar sales in the fourth quarter due to product renovation, new packaging, and expansion into new channels. This approach is part of their Brand Growth System, which they aim to apply to other critical brands for continued results.

The paragraph discusses Kraft Heinz's approach to retail and product investment strategies using their Brand Growth System to drive growth. Andre Maciel highlights the importance of varying strategies across different categories, focusing on affordability and product superiority in specific areas like Capri Sun and Lunchables. The conversation turns to GLP-1 injectable weight loss drugs when Alexia Howard from Bernstein inquires about its impact on Kraft Heinz. Carlos Abrams-Rivera responds that there hasn't been a significant impact on their business from GLP-1s, but the company is ensuring they offer protein and hydration alternatives, which are typically sought by consumers using these drugs.

The paragraph discusses the company's focus on enhancing their product portfolio by highlighting items like Oscar Mayer, Lunchables, P3, and others that offer protein in a tasty, accessible, and affordable way. They emphasize the importance of their Taste Elevation platform to enhance any protein consumers use at home. The company plans to continue emphasizing these offerings to provide diverse choices for consumers. The paragraph concludes with a wrap-up from company representatives, thanking participants in the teleconference and mentioning an upcoming event at CAGNY.

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