By Jessica DiNapoli
NEW YORK (Reuters) -Kraft Heinz is spending $3 billion to upgrade its U.S. factories, its largest investment in its plants in a decade, even as executives say consumer sentiment is at its second-lowest point in 70 years, and it has cut sales and profit forecasts.
The upgrades will help lower costs by making the plants more efficient, which in turn may help offset President Donald Trump’s tariffs, which factored into the company’s decision to make the investment, said Pedro Navio, Kraft Heinz’s president of North America, in an interview with Reuters.
The investment also allows the packaged food maker to come up with and sell new products faster, he said.
Kraft Heinz manufactures its market-leading Heinz ketchup, Kraft macaroni and cheese and Philadelphia cream cheese, among other products, at 30 plants across the United States. Kraft Heinz told Wall Street analysts last month that tariffs were adding to its costs and that consumers were buying less due to economic uncertainty.
But the company is moving forward and making the new investment now to defend its market share, Navio said.
“It goes beyond just efficiencies or dealing with the current tariff challenges,” he said, saying the investment allows Kraft Heinz to produce food for the long term.
The company is currently facing tariffs on imports such as coffee, after the United States last month implemented a 10% levy on all imported goods. Its imports from China, which faces higher tariffs, are negligible, a spokesperson said.
Kraft Heinz, which also roasts and sells Maxwell House coffee, asked suppliers for a 60-day notice before putting through price hikes.
Nearly all of what Kraft Heinz sells in the United States is made domestically, Navio said, adding that the company grows its own tomatoes in California and potatoes in Idaho, for example. It exports some of what it manufactures in the United States to Canada, Navio said.
The company expects the investment will create about 3,500 new construction jobs where the plants are located. Navio said the company doesn’t anticipate the need for additional employees beyond that.
Facial tissue manufacturer Kimberly-Clark and brewer Anheuser-Busch InBev have made similar announcements in recent weeks.
(Reporting by Jessica DiNapoli in New York; Editing by Aurora Ellis)
