Kraft Heinz outlines a turnaround, aiming for sales to rise in next year's latter half

Outlook and timeline

Kraft Heinz sketched out a recovery plan at a Thursday investor event, tying the near-term sales goal to new products and heavier promotion. The company, facing a potential third straight annual sales decline, expects sales to turn positive in the back half of next year.

Management said market share losses should narrow this year and that organic sales - which strip out currency and acquisitions - are expected to be roughly unchanged for the entire year. It projects sales and profit to begin growing toward the end of 2027, with full-year growth in 2028 and a "double-digit total shareholder return" in 2029. The stock was up 1.1% at 12:10 p.m. in New York morning trading on Thursday.

Spending and new products

Kraft Heinz plans additional spending: $325 million directed to marketing and $250 million to product costs, along with $75 million to expand headcount by more than 400 people, and $50 million for upgrades to products and packaging. By 2027, management anticipates innovations will make up 5% of US retail net sales, compared with 3% in 2026.

What is in the pipeline? More protein, less sugar, and shorter ingredient lists. Examples include higher-protein cream cheese and Jell-O, a new Heinz soups line, and a clean-label barbecue sauce that excludes high-fructose corn syrup.

It is also pursuing trends like "cheesy ramen" and restaurant-style mac and cheese, including flavors such as Parmesan pesto. Its mac and cheese line, after three years of declines, has returned to growth, and recent investments in condiments like Heinz Ketchup and in desserts are also paying off.

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Portfolio reshaping and pricing

Chief Executive Officer Steve Cahillane said a US rebound will take time following ten years of under-investment in the company's brands. "Brands that stop being invested in stop being relevant, and for too long that's what happened here at Kraft Heinz," he said, adding that the company now has "the right level of investment for the first time in a long time." He also said the company is looking to "actively pursue" opportunities to reshape its portfolio.

On pricing, Cahillane told analysts last week that the company plans to raise certain prices next year due to persistently elevated inflation. Last week, Kraft Heinz said it will sell its North American coffee business to One Rock Capital Partners LLC for an enterprise valuation of $650 million. The company will retain a 30% non-controlling equity stake.

What this means for your portfolio

In plain English: management is targeting a second-half-of-next-year sales turn with bigger brand investment and a fuller slate of new products, while setting a longer runway to profit growth by late 2027. Two markers to watch are how much innovation shows up in the sales mix and whether share losses keep shrinking.

TD Cowen's Robert Moskow summed up the challenge: "Success will depend on whether these brands have credibility to adapt to consumers' evolving nutritional needs (e.g. protein, fiber, lower sugar) while sticking to their core competence in convenience and taste)."

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