Kraft Foods Group’s third-quarter profit fell almost 11 percent, as it sold fewer items after raising prices on products from cheese and meat to coffee.
Kraft’s decision to raise prices to mitigate the affect of higher commodity costs has been successful, “but in other areas, our execution has been mixed,” CEO Tony Vernon said in a statement Wednesday.
Vernon had previously said Kraft’s price increases were a turnoff for some shoppers. The company ran into trouble this year after raising prices only to see that many rivals didn’t quickly follow its lead.
Kraft executives admitted they have their work cut out for them as they try to figure out how to cut more costs and make their products more affordable and more appealing to shoppers.
“From trade spending to taxes, we need to look at everything,” Vernon said on an afternoon conference call. “From a consumer lens, we need to remove every inefficiency that creates costs that moms are not willing to pay for.”
The maker of Kraft macaroni and cheese, Oscar Mayer deli meat and Maxwell House coffee earned $446 million, or 74 cents per share, down from $500 million, or 83 cents per share, a year earlier. Revenue rose about 0.1 percent to $4.4 billion.
Northfield-based Kraft’s profit was in line with Wall Street’s expectations, while revenue was weaker than analysts anticipated.
Overall, the company raised prices by 2.1 percent from a year ago, including a 4.7 percent increase on cheese, its largest unit.
Cheese revenue rose 1.6 percent because of the price increases, while operating profit fell almost 16 percent. The company blamed factors including higher costs and its own missteps, which it said affected its manufacturing productivity in that category, such as recalls earlier this year and higher-than-expected startup costs on some projects.
More Top Picks Best Watchmaker Tool Sets
Revenue in the meals and desserts business, which includes products such as Jell-O, fell 6.7 percent as the company increased its spending on promotions as it tried to lure shoppers. Kraft said the overall meals and desserts category is weak.
Shares of Kraft slipped 34 cents, or 0.6 percent, to $56.91 in Nasdaq trading on Wednesday, before the results were released. The shares fell another 2.9 percent to $55.25 in after-hours trading following the company’s conference call.
Twitter @jessicawohl