Heinz keys to growth include U.S. operations
by Eric Schroeder
BOCA RATON, FLA. — Ketchup and sauces, emerging markets, strengthening the U.S. business and driving productivity highlight H.J. Heinz Co.’s four key growth strategies, said William R. Johnson, chairman, president and chief executive officer of the Pittsburgh-based company.
Mr. Johnson identified the growth drivers as part of a Feb. 22 presentation at the Consumer Analyst Group of New York conference at the Boca Raton Resort & Club in Boca Raton.
In looking at the company’s ketchup and sauces business, Mr. Johnson said Heinz continues to discover new geographies and innovations to drive organic growth.
“The potential of global ketchup and sauces is tantalizing,” he said. “We estimate that the global retail market for sauces, dressings and condiments is nearly $110 billion and growing, with the greatest potential in emerging markets.”
Mr. Johnson said Heinz is well positioned to capitalize on this growth, with its iconic Heinz brand and strong local brands like Quero (tomato sauces and ketchup) in Brazil, Master (soy sauce) in China, and ABC (sauces) in Indonesia.
He also announced that the company will begin manufacturing Heinz Ketchup in Brazil in fiscal 2013 to support new distribution and growth in that key emerging market and across Latin America.
Emerging markets are expected to play a key role for Heinz going forward, Mr. Johnson said, noting that the segment is on track to generate more than 21% of Heinz’ total sales this year, or about $2.5 billion.
But attention also will be given to the company’s U.S. operations, he said.
“While we will continue to offer larger sizes, we are also adapting our strategy to reflect … new consumer trends and the need for different types of value,” Mr. Johnson said. “Nielsen data shows that up to 50% of purchases in our key categories are now in smaller sizes. In response, our U.S. team is building a portfolio of products that addresses the needs of consumers seeking value through accessible price points.”
These new products include a 10-oz Heinz Ketchup in a pouch with a suggested retail price of 99c and a 1-lb package of Ore-Ida fries with a suggested retail price of $1.99.
Noting a shift toward snacking and away from full meals, Mr. Johnson said Heinz has decided to discontinue its T.G.I. Friday’s Single Serve entrees and Multi-Serve Meals to reallocate resources against its condiments and sauces businesses and the T.G.I. Friday’s Snacks line.
“Our (T.G.I. Friday’s) snacks business is doing really well,” Mr. Johnson said. “It’s a $200 million business. It’s very profitable. It’s a licensed brand that we acquired the rights to about 9 or 10 years ago. It’s been growing quite well. I think the team and all of us picked probably the worst time to launch entrees as the category began to tank. Rather than chase this and spend a lot of good money after bad, we concluded that we can do better with those funds against our condiments and sauces business in the U.S. and against T.G.I.F. snacks line and Ore-Ida.”