The Kraft Heinz Company (KHC Quick QuoteKHC - Free Report) is progressing with its transformation to unleash its full potential. The consumer products company is benefiting from effective pricing strategies. The focus on strategic growth pillars is noteworthy.

The Zacks Rank #2 (Buy) company’s shares have increased 7.9% in the past three months against the industry’s 1.4% decline.

Let’s delve deeper.

Strategic Growth Efforts on Track

Kraft Heinz is committed to accelerating its profit and enhancing the long-term shareholders’ value. As part of its transformation phase, management unveiled AGILE@SCALE in February 2022. The strategy helps Kraft Heinz to improve its agile expertise and capabilities via partnerships with technology giants and cutting-edge innovators.

Management is on track to build its innovation pipeline aided by the Agile Innovation Engine. Strength in Kraft Heinz’s AGILE@SCALE and strategic partnerships are generating solutions throughout the value chain to drive growth and efficiency. As part of the AGILE@SCALE strategy, management is building digital-first solutions to fuel gross efficiencies.

Kraft Heinz is benefiting from strength in its three key pillars — Foodservice, Emerging Markets and U.S. Retail Grow platforms. In the Foodservice business, management prioritizes higher margin spaces and undertakes customer-friendly innovations to drive growth. Kraft Heinz’s data-driven and repeatable go-to-market model has been yielding across emerging markets. Strength in the company’s Heinz brand bodes well in such markets.

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Pricing Efforts: Key Driver

Kraft Heinz is undertaking strategic pricing initiatives to improve its performance. In fact, robust pricing strategies have been shielding margin performance amid inflation. In the third quarter of 2023, the company’s organic net sales increased 1.7% on favorable pricing to the tune of 7.1 percentage points — stemming from higher list prices to counter escalated input costs. Adjusted gross margin expanded 396 basis points (bps) to 34%, driven by pricing actions undertaken to offset inflation, solid gross supply chain efficiencies and a favorable mix in North America. Management expects an adjusted gross margin expansion of 200-250 bps, driven by pricing and efficiencies in 2023.

Final Thoughts

The company is battling high costs in some areas, although the inflation continues to moderate. It is focused on enhancing productivity throughout its value chain and channeling operational efficiencies into crucial areas. These investments are pivotal to KHC’s strategic framework. Strength in the company’s transformations and gains from sales growth in the company’s three key pillars bodes well.

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