Heinz said prices rose 12.4% in the quarter to June 26, helping it achieve a 10% rise in sales despite a 2.3% drop in the number of items sold. The US-based food group, which halted deliveries to the UK’s biggest supermarket Tesco this spring in a battle over price hikes, said inflation was “mainly driven by price increases to mitigate rising input costs’. Sales are now expected to rise more than 7% this year compared to around 5% previously expected. Miguel Patricio, Heinz’s chief executive, said the trading environment “remains fluid” but the company is now more resilient and “anticipates and adapts to changing market conditions” by managing inflation through pricing and efficiency. Reckitt raised its prices by almost 10% in the quarter to June 30, saying customers were willing to accept increases on branded items and further rises were on the way. Underlying sales for the group rose almost 12% in the second quarter of the year – above expectations – as it also benefited from a 40% rise in demand for US baby formula amid a national shortage caused by problems at rival Abbott Laboratories, which was forced to recall its products. Reckitt posted a pre-tax profit of £1.7bn after making a loss on brand sales the previous year, while its total sales rose just over 4% to £6.9bn for the half. The group now expects sales to rise 8% for the financial year, up from a peak of 4% previously expected. Laxman Narasimhan, its chief executive, said: “Despite the difficult conditions, we are confident about the rest of the year.” Reckitt said sales were strong despite a challenging environment in its supply chain “both in terms of logistics availability and some raw material constraints”. It added: “We continue to expect cost-of-goods inflation to remain in the high-teens for the full year, based on current commodity pricing.” The evidence of price rises at Reckitt comes after Unilever, the maker of Marmite and Ben & Jerry’s, said it had raised prices by 11% in the spring and forecast growth for the year at the top end of expectations due to further increases. Brand hikes helped store prices jump this month by the most since at least 2005, adding to pressure on households from rising energy and petrol bills. Slough-based Reckitt said demand for baby formula in the US was likely to fall as Abbott’s product became available again, but said it expected a long-term increase in sales of cold and flu products as Covid-19 became endemic . While sales of Lysol cleaning product fell significantly, revenue remained more than 50% above pre-pandemic levels, as Reckitt said “consumers continue to exhibit increased hygiene behaviors.” Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Matt Britzman, equity analyst at Hargreaves Lansdown, said shoppers may not be excited by the higher prices, but he was impressed by Reckitt’s ability to sell more items despite the high rate of inflation. “This is a testament to the defensive nature of Reckitt’s portfolio, cleaning and hygiene products are unlikely to be the first things off shopping lists when wallets are stretched,” he said. “Performances from key brands Dettol and Lysol continue to support the argument that increased hygiene awareness is here to stay. Sales may be down from the astronomical highs of recent years, but both products appear to be turning a base much earlier than pre-pandemic levels.”
