Kraft Heinz CEO Reveals Dire Supply Chain Situation — and What It Means for Your Mac & Cheese and Ketchup New problems arise every day, and there's no end in sight.
By Amanda Breen •
Inflation and supply chain issues have been with us for a while now — and they don't appear to be going anywhere soon.
Kraft Heinz CEO Miguel Patricio told CNN Business that the problems facing the food industry now will likely continue into next year. To avoid passing all of the cost onto consumers wanting to buy Kraft Heinz ketchup and macaroni and cheese as usual, the company has had to stay several steps ahead.
Related: 4 Ways to Protect Your Business From Inflation
Food prices have risen 11.4% over the past year, the largest 12-month jump since 1979.
Complicating the issue are years-long supply chain challenges resulting from pandemic pressure on a "just in time" system created by Toyota in the 1950s, per The Guardian — essentially, many companies had few raw materials in reserve.
And consumers are feeling the pain at the grocery store: CNBC reported that it's caused many to change their shopping habits, opting for inexpensive items even if they're not as healthful.
For its second quarter, which ended June 25, Kraft Heinz increased its prices overall by 12.4 percentage points compared to the same period a year earlier.
"Every day we have a new problem. It's the new normal," Patricio told CNN Business. "At the beginning, we thought it was a crisis — now we know it's a new normal and we have to adapt to that."
Related: Being Different Is the New Normal: Why 'Disruption' Is Here to Stay.
To prevent the consumer from picking up all of the extra cost, Kraft Heinz has implemented "obsessive" tracking of potential supply chain hurdles and embraced different packaging and pricing strategies, including bulk value packs for its macaroni and cheese and more bottle sizes for its ketchup.
