Kraft Heinz Q4 2024: Navigating Contradictions in Lunchables Recovery, Marketing Strategies, and Market Share Dynamics

Earnings DecryptWednesday, Feb 12, 2025 5:26 pm ET
3min read
These are the key contradictions discussed in The Kraft Heinz Company's latest 2024Q4 earnings call, specifically including: Lunchables Performance and Recovery Timeline, Marketing Investment Strategies, Trade Spend and Promotion Strategy, Innovation and Product Improvement, Market Share Trends, Consumer Behavior During Deals, and SNAP Benefits Impact:



Sales and Margin Expectations:
- The Kraft Heinz Company expects improving top-line performance throughout 2025 while preserving profitability, with a focus on gross margin expansion of between flat and 20 basis points.
- The company aims to achieve this balance by leveraging its growth pillars and investments in price, product, and marketing, despite economic challenges.

Pricing and Consumer Behavior:
- The company plans disciplined reinvestment, focusing on modest gross margin expansion, and flat pricing in 2025, despite recognizing the need for some price investments.
- This approach accounts for market share trends and consumer behavior, such as increased number of shopping locations and smaller basket sizes, signaling the importance of strategic pricing strategies.

Emerging Markets and Growth Pillars:
- In Emerging Markets, Kraft Heinz anticipates gradual improvements, building from Q4 and exiting 2025 at double-digit growth rates.
- The company's Away From Home segment is expected to see slight improvement in Q1, building throughout the year to mid-single-digit growth.
- Investments in pricing, product enhancements, and marketing are expected to drive recovery in North America Retail and other business segments.

Tax Rate and Cash Conversion:
- Kraft Heinz anticipates a 500 basis point increase in the P&L tax rate starting in 2025, following a $2.4 billion tax benefit recorded in Q4.
- However, the cash tax rate impact is expected to be about 200 to 300 basis points, with cash conversion maintained at around 95% in 2025.