Kraft Heinz attributes food services and emerging markets to fuel its growth in the 2nd quarter 2023.
Sales to restaurants, bars and other institutions grew 30% in the first 3 months of the year, pointing to other opportunities to grow its foodservice business such as the upcoming launch of its Lunchables product in schools. The company said that emerging markets are a growing part of its business, highlighting strong growth in Asian countries such as Indonesia and new products it is launching in China.
Kraft Heinz is optimistic of China’s huge potential. It has made consistent investments in the country to better satisfy market demand despite the COVID-19 pandemic, said Miguel Patricio, CEO of Kraft Heinz.
Patricia believes in China potential to be its biggest future growth market, despite the country currently contributing only a small portion of its business. Kraft Heinz will continue to commit more investments in China in the future.
During the pandemic, Kraft Heinz relocated its Asian headquarters from Singapore to Shanghai in 2020 and invested Rmb 47 million (US$6.83 million) in the expansion of its ketchup production line in Qingdao, Shandong province, as well as investing around Rmb 27 million (US$3.9 million) in the new office and experience center in Shanghai. The experience center comprises of a Western kitchen, a Chinese kitchen and sensory, sauce, analytical and packaging labs. This year, a further US$11.3 million investment was allocated to expand the Qingdao factory’s capacity. A total of Rmb 280 million (US$40.3 million) has been spent on the facility in the past 5 years, Patricio said.
Rafael Oliveira, Executive Vice-President and President of International Markets for Kraft Heinz said, “China is critical for our growth … We see the great potential, so we are investing. We are putting efforts into developing our people, brands, capabilities and factories.”
The company saw single-digit growth in the Chinese market due to COVID-19 last year, and it expects to achieve double-digit growth in China this year.
Oliveira said that as a producer of sliced cheese and ketchup, the company has 3 major goals in China – becoming the number one Western sauce brand, strengthening and diversifying its Chinese sauce portfolio and becoming a competitive food service provider by targeting customers with customized products and solutions.
Kraft Heinz is the largest player in the Chinese ketchup retail market with 27% market share. With a wide variety of innovative flavors and creative applications of sauces, the company expects to grow significantly in the sauce market.
Euromonitor International reported that China’s sauces, dips and condiments market rose from Rmb 117 billion (US$16.84 billion) in 2017 to Rmb 173.45 billion (US$25 billion) in 2022 and it projected the market to reach Rmb 220.65 billion (US$31.8 billion) in 2027, nearly double that of 2017. Despite the growth, China is still comparatively small when compared to the global market which is expected to reach US$204.74 billion in 2027.
