Kraft Heinz gets stacked with losses on Lunchables

Kraft Heinz’s prepackaged meals for children, Lunchables, appear to have taken a big hit from reports that the lunchtime favorite is riddled with contaminants.

The Jell-O and Capri Sun maker said it took a $1.4 billion hit largely attributable to its Lunchables brand. The company’s stock fell 3% Wednesday after it reported earnings.

Carlos Abrams-Rivera, CEO of Kraft Heinz, told investors on a call that part of that is because “the negative publicity that we received from that misleading interest group appears to be lingering longer.” This comes after Consumer Reports found contaminants in the children’s meals and began a petition to get the US Department of Agriculture to remove them from the National School Lunch Program. 

Abrams-Rivera said rebuilding trust will take time, particularly when it comes to a product for children. “Let me just be clear: Lunchables is a very important part of our business and defending a No. 1 market share is a top priority, full stop,” he said.

That isn’t the Lunchables’ only headwind: it’s also seen “some competitive entry” to the category and a smaller issue of supplying ingredients.

Lunchly, a venture by Logan Paul and MrBeast, has positioned itself as a healthier alternative to Lunchables. It may have been positioned to capitalize on Lunchables’ bad publicity, but they themselves have reportedly been contaminated with mold.

Kraft Heinz said it was also dealing with a short-term issue where “one of our suppliers was unable to fulfill one particular ingredient, and it actually impacts essentially one SKU of Lunchables, but it’s an important one.” Abrams-Rivera did not specify which one is impacted.