Hello, this is Anne-Marie Megela, Head of Global Investor Relations at The Kraft Heinz Company. I'd like to welcome you to our first quarter 2023 business update. During the following remarks, we will make forward-looking statements regarding our expectations for the future, including related to our business plans and expectations, strategy, efforts, and investments, and related timing and expected impacts. These statements are based on how we see things today, and actual results may differ materially due to risk and uncertainties. Please see precautionary statements and risk factors contained in today's earnings release, which accompanies these remarks, as well as our most recent 10-K, 10-Q, and 8-K filings for more information regarding these risks and uncertainties. We will refer to non-GAAP financial measures, which exclude certain items from our financial results reported in accordance with GAAP.
Please refer to today's earnings release and the non-GAAP information available on our website at ir.kraftheinzcompany.com under News & Events for a discussion of our non-GAAP financial measures and reconciliations to the comparable GAAP financial measures. Today, our Chief Executive Officer and Board Chair, Miguel Patricio, will provide an update on our overall business performance. Andre Maciel, our Global Chief Financial Officer, will provide a financial review of the first quarter and will discuss our 2023 outlook. We have also scheduled a separate live question-and-answer session with analysts. You can access our earnings release, supplemental materials, and audio of our question-and-answer session at ir.kraftheinzcompany.com. A replay of the question-and-answer session will be available following the event through the same website. With that, I will turn it over to Miguel.
Thank you, Anne Marie. Thank you all for joining us today. I'm very pleased to share with you that 2023 is off to a great start for Kraft Heinz. We saw strong growth both on top line and bottom line. This growth is coming from all three pillars: food service, emerging markets, and U.S. retail growth platforms. We are also unlocking efficiencies in our variable costs and continuing reinvesting in our brands to improve profits and profitability. We are building product solutions that offer value and accessibility for our consumers. At the same time, we are increasing investment in transformational drivers across marketing, R&D, and technology. We now believe 2023 will be even better than originally thought, and we are raising both our adjusted EBITDA and adjusted EPS expectations. You can see our strategy is working as we continue advancing our transformation.
While we are still on our journey, we are beginning to see signs of greatness emerge. It's not yet time to declare victory. We are becoming the type of company we know we can be. Organic net sales grew 9.4% versus Q1 2022, with strength from both our North America and international zones. The top line growth, along with gross margin expansion, partially offset by continued reinvestment in the business, drove constant currency adjusted EBITDA growth of 11.9% versus the previous year. This includes a 40 basis point negative net impact from divestitures and acquisitions. Adjusted EPS grew at an even faster pace of 13.3%, primarily driven by our adjusted EBITDA performance.
Our adjusted gross profit margin of 32.8% expanded approximately 130 basis points compared to the first quarter of 2022, and 60 basis points compared to the fourth quarter of 2022. Our new pricing is taking hold. Our teams continue to unlock variable cost efficiencies, and the rate of inflation has moderated. Let's dive deeper into the drivers of our top line growth. Remember, each pillar is expected to contribute approximately 1/3 of total top line growth. Foodservice grew nearly 6%. Emerging markets grew 23%. Our grow platforms in U.S., led by taste elevation and easy meals, grew 8% in the quarter. Let's start with foodservice. North America foodservice grew over 25%, while international foodservice grew over 35%, and we gained share across both markets.
Foodservice is truly a global business, and we're leveraging our scale to support our customers while tailoring for local execution. Let me start with international. One of the key drivers of growth is our chef-led model. We have over 30 chefs dedicated to international foodservice, and we bring them into our conversations with customers, where they can listen to our customers' needs in a different way and co-create menu concepts fits to their specific products. It's driving results. In the first quarter, our chef-led model drove growth in the QSR channel of over 45% versus prior year across the zone. We are also leveraging successful local insights to scale up across multiple markets. Heinz Selection is our brand platform for independent burger houses to drive distribution and consistent execution in this growing segment.
We launched it 3 years ago in 1 market, and it worked, so we scaled it. We are now in 80 markets on an increase of almost 30% versus the end of last year, with 251 outlets in total. This momentum and our winning strategy is why we are confident that we'll continue growing our international food service business and continuing to outpace the industry. In North America food service, we are driving volume growth in the categories where we have a right to win, leveraging the power of our iconic brands such as Heinz, Philadelphia, and Kraft Mac & Cheese. In the first quarter, days sold on our core SKUs were up 20% versus last year. We are also focusing on our largest customers, our distributors. They account for almost 80% of our food service sales in North America.
Specifically, we have been successfully increasing distribution through mutual beneficial joint business plans. For example, we are selling in additional formats to our distributors, such as Heinz Ketchup Dip & Squeeze, and we are extending penetration of adjacent categories, including A.1. Steak Sauce and Grey Poupon Mustard for those distributors that already carry ketchup. We are also launching innovation such as our Kraft Deluxe Mayo, which was created by chefs and for chefs. It handles heat and cold in a way that no other mayo out there does, and it tastes great. Our strategy is working. Distribution increased over 4% year-over-year. We are also entering new channels. Keep in mind that restaurants and bars only account for about half of the 1.3 million food service locations in U.S.
We have a tremendous opportunity in areas like the $25 billion education segment and the $30 billion travel and leisure segment. A great example of this is our recently announced upcoming launch of Lunchables in schools. We reformulated the product to be compliant with the school lunch program to compete in this untapped channel. You have likely seen more Kraft Heinz products such as BC Lunchables and Philly Cream Cheese Cups as you walk through the airport recently. Of course, that's not a coincidence. We also recently launched KH Direct, our B2B e-commerce platform, to deliver product direct to food service customers. We are currently testing a subscription model for Kraft Heinz Direct in the Miami market. All of these channels represent a meaningful growth opportunity for the second half of the year and beyond. Let's turn to our next pillar of growth, emerging markets.
First quarter was yet another quarter of double-digit growth, growing 23% versus the prior year and faster than the total international zone. Notably, we grew over 3.7% in volume. Our growth is being accelerated by our sustainable and repeatable go-to-market model. We are currently working through implementation in additional markets such as Indonesia, and plan to have the model in place in 90% of our emerging markets business by the end of the year. With this outsized growth, emerging markets is becoming a larger part of the business. In this first quarter, it represented approximately 44% of international zone organic net sales. As our emerging markets business grows, it's important to emphasize that while gaining distribution through the implementation of our go-to-market model is critical for growth, so too is continuing to strengthen our portfolio through innovation that is relevant to consumers.
In China, we recently launched Masterstar Organic Sauce, and in Brazil, we launched Heinz Premium Sauce collection of pasta sauce. It's equally important to support our brands and connect with consumers through disruptive marketing. For example, Kraft Heinz recently joined the debate where ketchup belongs on pizza with by the way. Our Heinzola campaign took our pizza pizzeria crust infused with Heinz ketchup to Naples, the birthplace of pizza. Well, the results, everyone loved it. This campaign was scaled to markets throughout LATAM and EU. You can expect to see a lot more disruptive marketing coming in your way. We began implementing our go-to-market model back in 2018, and sales have grown every year, driven by countries such as Brazil, Turkey, Mexico, and Poland. By focusing on mix and efficiencies, we are improving our margins.
For example, our adjusted EBITDA margin in the first quarter increased approximately 160 points. Let's now turn to our final pillar of growth, Grow platforms in the U.S. retail. Our North American zone grew 6.7% compared to the first quarter of 2022. This was driven by pricing, partially offset by a 30 basis point impact from the cheese powder divestment. Our Grow platforms in the U.S. grew more at 8.1%. As you know, our Grow platforms represent the most attractive area of our business, with higher category growth and higher gross margins than the Kraft Heinz average. They represent about 2/3 of our North American business. Within Grow, case innovation and easy meals are expected to drive the bulk of future profitable growth. As you may recall, these are the platforms that we highlighted at CAGNY.
Both grew significantly faster than the rest of the U.S. retail business. Case innovation at approximately 15% and easy meals at approximately 13%. Moving to service, we continue to make progress on our supply chain recovery. For the U.S., case fill rates finished the first quarter in the mid-90s. There is still work to do in certain categories, such as cold cuts. As upstream supply constraints ease and labor constraints improve, we continue to move toward our goal of the high 90s. In fact, 86% of our U.S. volume is already at or above 97% CFR. In terms of market share, in the first quarter, we lost 30 points of mixed adjusted basis in total.
However, within our priority platforms, case innovation and easy meals, where we have been making investments and expect most of our growth to come from, we gain share alongside private label. Our share gain was sourced from branded competition. Our share losses in Q1 were concentrated in cold cuts, cream cheese, and kids' single-serve beverages. In fact, those three categories drove more than 40% of our share loss in the first quarter. We expect gradual year-to-go share improvement coming from sustainable, profitable commercial strategies, in addition to solving our remaining supply challenges. Specifically, there are four actions that we are taking to drive share. First, we are executing our joint business plans with key customers to drive shelf space and merchandising.
In these joint business plans, which have already been signed, we have agreed on a set of common objectives and KPIs with our retail partners so that we win together. We plan to increase our market investments by double digits, focusing on Grow platforms. Third, we plan to ramp up our innovation delivery throughout the year. Finally, we are working through solves for our remaining supply constraints. We will be selective about where to compete to protect our profitability. We do not want to simply chase share, but rather invest purposefully in the areas most aligned with our strategy. For U.S. Retail, that's primarily our Grow platforms. Let me give you more details on what we are doing. First, we plan to gain our fair share of shelf space. On mac and cheese, we are focusing on increasing features and displays for our liquids portfolio.
Kraft Mac & Cheese Deluxe and Velveeta Shells & Cheese have higher revenue and profitability per unit, and also offer consumers a premium taste and gooeyness that provides a sense of comfort. Our joint business plans also provide for us one quality merchandising or merchandising that includes features and displays for key windows. For example, for cream cheese around the holidays. We are working to expand distribution of formats that create expendable consumption, such as Lunchables 5-pack that is lunchbox ready, Philadelphia Soft 2-packs, and Capri Sun variety packs. In fact, we are having the largest number of displays for Capri Sun ever planned for this summer. Second, we intend to increase marketing spend double digits. Two brands where we are focusing investment to drive share are Philadelphia and Kraft Mac & Cheese.
Our cream cheese, we are focusing on Philly's one-of-a-kind kind of difference, as well as our recently launched Philadelphia Plant-Based. Mac & Cheese, once again, we are focusing on our liquids portfolio and will reinforce the brand values of comfort and indulgence. We expect this incremental investment in cream cheese and American cheese to stabilize share in both categories by the end of the second quarter. Next, we continue to focus on innovation, both disruption and expansion. As we progress through the year, we expect a significant ramp-up in innovation. From a distribution perspective, we have Homebake, where consumers can cook main dishes, veggies, and sides all together in just 10 minutes, all at 425 degrees to make a delicious meal. Next, we have NotMayo. We launched NotMayo in the first quarter regionally, leveraging the power of partnership with NotCo.
We plan to scale the product nationally later this year. Our latest consumer data shows that NotMayo is phenomenal versus what is in the market. Later this year, we plan to introduce crispy, microwavable grilled cheese sandwiches that are ready in just 60 seconds. In addition, we are excited to launch consumer-driven line extensions to drive incremental sales. First, turn up the heat with Heinz Spicy Ketchup, including 3 varieties, each featuring a different pepper. Next, we are introducing Country Time lemonade in a pouch. Finally, we are taking IHOP coffee brand nationally into the dry coffee category, featuring roasts and K-Cup pods. Our fourth avenue to drive share is by addressing the remaining issue with our supply chain.
On cold cuts, we entered the quarter with low inventory levels due to previous supply constraints, and throughout the year, we experienced labor shortages at one of our key plants. These issues have been solved, and we are now improving plant efficiencies and rebuilding inventory to fully service the business. We expect a recovery in this category by the end of Q3. For frozen potatoes, in a year with a bad potato crop, we have been able to leverage our scale and new partnership with Simplot to give us more access to the potatoes, and we gained share in the first quarter. We decided to pull up the timing of plan downtime of capital improvements from the third quarter into the second quarter. This will position us full support of our potatoes business in the second half.
Through our joint business plans, incremental investments in marketing, an accelerated pace of innovation, and working through remaining supply constraints, we expect to drive gradual share improvement as we move through the year. As we continue to advance our transformation, we are becoming the company we know we can be. And let me tell you a little bit more about what we are doing. Our teams have made incredible advancements across innovation, disruptive marketing, sales, and supply chain to build scalable, sustainable solutions that drive profitable growth. We could not have accomplished what we have without our talent people. Well, let's dive in. First, innovation. At CAGNY, you saw how we are approaching innovation in a new, entirely new way, with cross-functional, distributed teams that use agile ways of working and partnerships to develop better products and faster.
This innovation is also fueling our entry into new attractive categories. Last month, we launched Just Spices in the U.S., and we are elevating the overall cooking experience for American families. With our majority interest in Germany-based Just Spices, we are bringing together this high-quality product data and direct-to-consumer capabilities with Kraft Heinz scale and brand loyalty to disrupt the U.S. spice category. We also recently launched Tingly Ted's, a new hot sauce and brand that we created in collaboration with world-renowned musician, Ed Sheeran. The initial launch was in the U.K., and we now have listings confirmed across Europe, Australia, New Zealand, and North America. In the U.K., we introduced Heinz pasta sauces for the first time, and recently, we announced that Heinz and Absolut teamed up to create a limited edition tomato vodka pasta sauce.
This collaboration brings together the expertise of Heinz in creating pasta sauces with the magic of Absolut Vodka to further intensify the flavor. The results of our new innovation strategy are already being recognized. This year, we were named the Fast Company's 2023 List of Most Innovative Companies in Consumer Goods, in particular, for the great work done through our joint venture with NotCo. Here, we are elevating the plant-based space by leveraging artificial intelligence to develop great-tasting products quicker than ever before. We are just getting started. In disruptive marketing, we are moving at the speed of culture and driving substantial earned media growth. In the first quarter alone, we had 7.5 billion earned media impressions, an increase of 150% versus the first quarter of last year. Our total consumer engagement grew 24% across situations.
Driving this success are activations like the ketchup boat guy. He survived on nothing but ketchup and spices while adrift on a boat. Our internal agency team, The Kitchen, created what became the most successful earned media campaign for Heinz ever, generating $3.3 billion media impressions with paid media spend of only $10,000. Our Lunchables upcoming entrance into schools drove the news cycle and prompted school administrators to take notice. The announcement gained $1.4 billion earned media impressions with 99% positive or neutral sentiment and cost nearly nothing to execute. Last, but definitely not least, we are transforming our guest organization through the power of artificial intelligence, particularly in sales and supply chain. This is possible through our partnership with Microsoft. Our sales organization has been elevated through the power of Insights to Action.
This tool provides real-time artificial intelligence powered recommendations to drive wins for both customers and Kraft Heinz. We are already seeing the joint wins materialize. We have gained additional distribution in several categories based on these recommendations while driving incremental sales for our customers. From a supply chain perspective, we have rolled out a proprietary AI platform that shifts our supply chain management from being reactive to proactive. The entire platform was built in-house. As a matter of fact, just last week, we filed a U.S. patent application for this powerful tool. We have already started to see results with more cases being shipped per day at the pace of an additional $10 million in the net sales a year. At the same time, there has been a 42% reduction in operator alerts as we prevent issues from arising in the first place.
This is just the beginning of what data and technology can do for our business. As you can see, we had a very strong quarter. We delivered profitable growth coming from all three pillars of growth: food service, emerging markets, and US growth platforms. We expect our future growth to be driven equally by all three of these pillars. As we drive top line and unlock variable cost efficiencies, we are increasing SG&A by double digits with investments in marketing, R&D, and technology in order to accelerate future profitable growth. With that, let me pass it to Andre, who will give you more details on our financial results.
Thank you, Miguel. From a financial perspective, we had a very strong quarter, building on the momentum we saw at the end of 2022. Let's take a look at the details. We delivered strong top line and bottom line performance across the company. For total Kraft Heinz, organic net sales grew 9.4% versus the prior year, driven by strong price realization from our most recent pricing actions in February, as well as the carryover impact of pricing from last year. Volume was down 5.2% as we began to see increased elasticity in the first quarter, which was anticipated. On average, elasticities were still 30%-40% below historical levels. In North America, we grew organic net sales 6.7%. In international, we grew more at 18.1%.
We grew constant currency adjusted EBITDA 11.9%, with 14.1% growth in North America and 12.7% international. Currency negatively impacted adjusted EBITDA in the quarter by 1.6 percentage points. In the international zone, we were negatively impacted by an approximately $20 million impact from Cyclone Gabrielle that hit New Zealand in February. This was the worst storm to hit the region in decades and caused severe flooding around the country. I'm pleased to say, though, that our employees are all safe and that our Hastings plant is now up and running with the business recovering. We generated almost $1.5 billion of adjusted EBITDA in the first quarter. The year-over-year growth of 10.2% was driven primarily by pricing and gross efficiencies more than offsetting inflation.
Adjusted gross profit margin expanded as we recovered from last year's lag between price flow-through and inflation. Our margin expansion also funded investment in marketing, R&D, and technology, consistent with what we outlined in our long-term growth algorithm. We expect to see double-digit growth in marketing this year. We are very pleased with our adjusted gross profit margin performance in the first quarter, which grew approximately 130 basis points versus last year. Pricing and supply chain efficiencies actualized favorable to our plan, while commodity costs are coming down a bit faster than anticipated. In terms of adjusted EPS, we grew approximately 13% versus Q1 2022, driven by our strong adjusted EBITDA performance. The low demand impacts were minimal, with $0.01 positive impact from reduced interest expense and $0.01 negative impact each from effective tax rate and the non-cash pension and post-retirement medical benefits.
Free cash flow conversion was 26% in the quarter. Even though Q1 cash should be seasonally low, there is more work to be done, particularly on reducing inventory levels. We are actively working on this, and I will provide more details in a few minutes. Now switching gears into the topic of our transformation. As we continue on our journey to accelerate profitable growth, we continue to generate efficiencies to allow us to reinvest in the business. Let me walk you through what we are doing. Let's start with revenue management. This encompasses pricing strategy, price stack architecture, mix management, and promotional integration, and we are evolving in all these areas. We have significantly improved our ROIs on promotion activity, executing fewer and better promotions.
We have reduced our volume sold to promotion in the U.S. by 12% versus Q1 2019, compared to an 8% reduction by branded competition. Our ROIs have improved 15 percentage points versus the same period. We expect they will continue to improve as a function of our new tools and ways of working. We have purposely rationalized a large number of SKUs to drive efficiency and profitability while optimizing our promotional strategy and cutting low ROI promos. While these initiatives have driven overall volume decline, as you can see, our base volumes continued to be healthy, up 2% versus 2019. We have been disciplined on promotions. Year to know, we still expect promotional activity to ramp up due to supply chain recovery, but this will be done in a selective way.
Even with this additional spend, we expect volumes sold to promotion for the rest of the year to decline high single digits relative to 2019 levels. In supply chain, we have announced a gross efficiency target of $2.5 billion by 2027, freeing up on average $500 million per year. We are on track to achieve this target in 2023 as we continue to optimize our supply chain through digital investments and the modernization of our assets. This efficiency, along with slightly moderating inflation and improving service levels, is leading to a gradual reduction in cost levels. On a full year basis, we are still expecting high single-digit inflation, with low double digits in the first half of the year and now mid-single digits in the second half of the year.
The timing will be a function of hedges working off and new contracts coming in place. Let's discuss working capital efficiencies, our third funding source and where we have the most work to do, particularly in inventory management. We prioritized accelerating service level recovery in the first quarter, we are taking actions to reduce inventory levels. First, we are rebalancing the network. Now that service levels have normalized across most categories, we can begin to focus on efficient production and distribution and ensure that inventory is in the right place within our network. Second, we plan to reduce our inventory buffers. We have been operating at higher than normal levels during the pandemic, we return to pre-pandemic inventory policies. As we continue to implement our plan to improve demand forecast accuracy, leveraging our Capline Hive proprietary demand planning solution created in partnership with o9 Solutions.
Miguel spoke to you about exciting AI power tools that are accelerating our transformation. This is another example. Throughout the past year, we have seen significant improvement in forecast accuracy driven by Capline Hive. Our distribution forecast accuracy is up 10 percentage points year-over-year in the first quarter and up 5 percentage points versus Q4 2022. We are seeing a similar trend in production forecast accuracy with a 60 percentage point improvement year-over-year and a 4 percentage point quarter-over-quarter. As the machine learning models ingest more data, they become smarter and generate more accurate signals. This gives us reasons to believe that our improvement will continue throughout the year.
As we look ahead for the remainder of the year, we still expect organic net sales growth of 4%-6% versus 2022, above our long-term algorithm of 2%-3%. Growth is anticipated to be price driven with the continuous assumption that elasticity will increase closer to historical levels. We are now increasing our expectation for adjusted gross profit margin to expand 125-175 basis points compared to our prior expectation of 50-100 basis points. This increase is driven by accelerated price execution, which is now 95% implemented, is slightly lower inflation expectations, and better variable cost efficiency. This enhanced adjusted gross profit margin allow us to further increase our investments across marketing, R&D, and technology in 2023. Our SG&A is now expected to increase by double digit percent versus prior year.
As we outlined in our long-term algorithm, we are accelerating investments for growth while preserving our top-tier adjusted EBITDA margin. Speaking of which, constant currency adjusted EBITDA is now expected to grow between 4%-6% or 6%-8% when excluding the impact from lacking the 53rd week in 2022. Based on current foreign exchange rates, we expect a 0.5 percentage point headwind from currency. As we think about some of the phasing, there are a couple considerations. We expect our organic net sales growth rate to moderate to mid-single digits as we map pricing actions from the prior year, exiting the year closer to our long-term algorithm. We anticipate our adjusted EBITDA margin to remain relatively flat to Q1 levels, with an expansion in Q4 due to seasonality.
We now expect adjusted EPS to be a range of $2.03-$2.91. Our outlook now contemplates an effective tax rate on adjusted EPS of 19%-21%. It also includes a currency headwind of approximately $0.02 at current FX rates. In light of previous expectations, approximately a $0.04 negative impact from non-cash pension and post-retirement benefits, and a negative $0.06 impact from lacking the 53rd week in 2022. As you can see, we had very strong performance in the quarter. Organic net sales, adjusted EBITDA, and adjusted EPS all grew faster than our long-term algorithm. Our adjusted gross profit margin expanded both sequentially and versus the prior year, allowing us to continue to invest for growth. As a result, we are raising our guidance for constant currency adjusted EBITDA and adjusted EPS.
With that, let me turn it over to Miguel for some closing comments.
Thanks, Andre. I'm very proud of The Kraft Heinz Company team for the results we delivered in the first quarter. They demonstrate that our strategy is working, not only generating strong top-line growth, but improving gross margins that are allowing us to reinvest in the business. Those investments are transforming our company across every function: marketing, sales, and supply chain, among others. We are still on a journey of greatness, but we are beginning to see the signs that we are becoming the company I know we can be. Thank you for your time and for your interest in The Kraft Heinz Company.