Double-digit price hikes help Heinz and Reckitt deliver sales jump

theguardian.com:

The ketchup and baked beans group Kraft Heinz and Reckitt Benckiser, the maker of Dettol, Nurofen and Strepsils, have both revealed they hiked prices by double digits in the spring and that this helped to drive better-than-expected sales.

Heinz said prices rose by 12.4% in the three months to 26 June, helping it deliver a 10% rise in sales despite a 2.3% drop in the number of items sold.

The US-based food group which paused deliveries to the UK’s biggest supermarket, Tesco, this spring in a battle over price rises, said the inflation was “primarily driven by price increases to mitigate rising input costs”.

Sales are now expected to increase by more than 7% this year compared with about 5% previously anticipated. Miguel Patricio, Heinz’s chief executive, said the trading environment “remains fluid” but the company was now more resilient, and was “anticipating and adapting to changing market conditions” by managing inflation via pricing and efficiencies.

Reckitt hiked its prices by almost 10% in the three months to 30 June, saying customers were willing to accept increases on branded items and further rises were on the way.

Underlying sales for the group rose by nearly 12% in the second quarter of the year – ahead of expectations – as it also benefited from a 40% increase in demand for its baby formula in the US amid a nationwide shortage triggered by problems at rival Abbott Laboratories, which was forced to recall its products.

Reckitt swung to a pre-tax profit of £1.7bn after making a loss on the sale of brands in the year before, while its total sales rose just over 4% to £6.9bn for the half year.

The group now expects sales to rise by 8% for its financial year, up from a maximum 4% previously expected. Laxman Narasimhan, its