Heinz blames costs as price rises exceed rivals

Heinz has blamed cost pressures after it emerged its recent prices rises are far in excess of any rivals.

Heinz has been at the centre of a storm over price hikes, with Tesco chairman John Allan calling out Heinz specifically as an example of how the supermarket was getting tough on suppliers for unjustified price hikes.

It has now emerged that Heinz is hiking prices far more than any of its rivals across numerous products.

Heinz ketchup, for example, is up by an average of 37% against the same time last, according to The Grocer’s analysis of Assosia data, compared to just 10% across its competitors’ ketchup lines.

On baked beans, the average price increase for Heinz was 40% year on year, compared to 28% for own label and 35% for the challenger brands.

Ged Futter, director at The Retail Mind, suggests Heinz’s dominant position in the market has allowed it to get the price increases it needs to cover costs. “The stronger your brand is, the more likely you are going to get what you need.”

Heinz attributed the price hike to rising costs, particularly of tomatoes and energy. 

Tomatoes make up most of the volume of its ketchup and 36% of its Beanz. Tomato costs have more than doubled since the end of 2019, according to a spokeswoman for Heinz.

Energy prices are up fourfold for Heinz. Meanwhile the cost of metal, used for cans, increased by 71%.

According to the World Bank, energy prices almost tripled between 2020 and 2022 while the price of iron ore, used for tin cans, increased by 11%.

Yet despite the higher price hikes, Heinz’s is still seemignly failing to cover its costs with its latest accounts showing a fall in profts. Heinz’s annual adjusted EBITDA declined 5.8% to $6bn in 2022.

Heinz’s prices rises mean its prices are quickly becoming comparable to those of premium brands. 

The gap between premium sauce Tiptree Tomato Ketchup 310g and the equivalent Heinz product dropped from 57p to 35p. The Tiptree product now costs an average of £2.85 compared to £2.50 for Heinz Ketchup 342g.

And the brand is now less competitive versus own label products. 

The biggest gap between Heinz and own label was at Asda, where Heinz’s 910g Ketchup was a full £2.85 more expensive than the 970g own label alternative.

For beans, the biggest gap is at Sainsbury’s, where a tin of Heinz Beanz is £1.40 compared to 44p for Sainsbury’s standard beans.

A UK spokeswoman for Kraft Heinz said: “Like everyone, it’s costing us more to make our products.

“The price of ingredients, energy and packaging have all risen significantly, exacerbated by double-digit inflation.

“We’re doing all we can to absorb these costs and only increase prices when we absolutely have to. We’ve done this so that we can continue investing in our business, brands and people.

“We remain committed to offering good value for money without compromising on quality and are working collaboratively with retailers, suppliers and partners to maximise efficiencies, run regular promotions and offer greater consumer choice through our tasty value ranges and alternative pack sizes.

“We do not anticipate any further price increases.”