By Savyata Mishra

(Reuters) -Kraft Heinz on Tuesday slashed its full-year organic sales and profit forecasts, as demand for its snacks and ready-to-eat meal kits takes a hit from higher prices and an uncertain economic backdrop wrought by recent U.S. tariffs.

Major packaged food firms such as Kraft Heinz (NASDAQ: KHC ), Conagra and General Mills (NYSE: GIS ) have seen lackluster sales in the United States over the past year as volumes remained muted despite selective price reductions and higher promotions.

President Donald Trump’s steep tariffs on trading partners have also fueled fears of high inflation and stagnation in economic growth, prompting Americans to tighten spending as many everyday essentials could become more expensive.

"We are also closely monitoring implications from market tensions such as tariffs, inflation, and the consequences to consumer behavior," Kraft Heinz CEO Carlos Abrams-Rivera said, adding that the environment remained "volatile".

Slowing demand for packaged meals such as Mac & Cheese, Lunchables and condiments such as mayonnaise has hurt Kraft Heinz, with budget-strained customers hunting for more affordable alternatives.

Analysts said the company’s outlook cut was not surprising given the wider uncertainty, and it gives Kraft Heinz room to step up investments to compete effectively with rivals.

The company now expects fiscal year 2025 organic net sales to decline between 1.5% and 3.5%, from its prior forecast of flat to down 2.5%.

The Heinz ketchup maker projected adjusted earnings per share between $2.51 and $2.67, lower than a prior range of $2.63 to $2.74, due to increased costs of doing business, elevated inflation, and costs associated with potential tariffs.

For the first quarter ended March 29, the company posted net sales of $6 billion, below analysts’ average estimate of $6.02 billion, according to data compiled by LSEG.

PepsiCo (NASDAQ: PEP ) last week cut its annual profit forecast, warning of higher production costs and subdued consumer spending due to uncertainty fueled by Trump’s expansive tariffs.