Heinz to strengthen frozen business
That was just one of the pledges from Heinz Chairman, President and CEO William R. Johnson, who spoke to the annual conference of the Consumer Analyst Group of New York (CAGNY) in Boca Raton, Fla.
Johnson started by noting that H.J. Heinz Company delivered “excellent third-quarter results with growth of more than 7 percent in sales and 13 percent in earnings per share before special items” as the company adapts “our proven strategy to drive sustainable growth and shareholder value in this rapidly changing global environment."
He continued, “Our third-quarter performance was fueled by excellent organic sales results from our trio of growth engines: Emerging Markets, the biggest driver with growth of 20 percent; Global Ketchup, which delivered very strong organic sales growth of 9 percent; and our Top 15 brands, which grew sales by 6 percent.”
Johnson highlighted four key elements of the company’s growth strategy: Ketchup and Sauces, Emerging Markets, Strengthening the U.S. Business and Driving Productivity.
KETCHUP AND SAUCES
“We have a competitively advantaged Ketchup and Sauces core that is delivering strong growth in both Developed and Emerging Markets,” said Johnson. “This business is our foundation and we are intensely focused on leveraging our winning position to unlock future growth opportunities.”
He added: “I see an enormous opportunity to leverage our global leadership in Ketchup and Sauces. With projected sales of well over $5 billion this year, Ketchup and Sauces is also our fastest growing business. Led by the iconic Heinz® brand, this core category has grown to almost half of our total sales and we have only scratched the surface of its potential.”
He said “the global retail market for sauces, dressings and condiments is nearly $110 billion and growing, with the greatest potential in Emerging Markets.”
“Heinz is well positioned to capitalize on this growth, with the 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,” Johnson said.
Johnson 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, where Heinz currently holds leading shares in several other countries in the region.
“We have a rapidly growing Emerging Markets business, focused around Ketchup and Sauces and Infant Nutrition, that continues to deliver disproportionate growth,” Johnson said. “With our increasing breadth and infrastructure in the most important Emerging Markets, we are well positioned to deliver significant value from both organic growth and future M&A activity.”
He also said “Heinz Emerging Markets are on track to generate more than 21% of our total sales this year, or around $2.5 billion. I expect our businesses in Brazil, China, Indonesia and Venezuela to each deliver at least $400 million in sales in Fiscal 2013.”
In addition to Ketchup and Sauces, “there is another sizeable opportunity in Emerging Markets – Infant Nutrition,” Mr. Johnson said. “It represents the intersection of two high-growth opportunities and Heinz is well positioned to capitalize on each.”
Heinz is number-three globally in baby food and number-six including formula.
“We have focused primarily on organic growth initiatives in Infant Nutrition but we will consider bolt-on acquisitions in Emerging Markets to accelerate growth, particularly in food. At the same time, I see no compelling need for Heinz to ‘bet the ranch’ to build on our solid position in this category,” Mr. Johnson said.
STRENGTHENING OUR U.S. BUSINESS
“We are taking aggressive action to strengthen our U.S. business in this changing environment, particularly in the challenging areas of Frozen and Foodservice," said Johnson. "The iconic core brands in our U.S. portfolio will be the building blocks for future growth in this key market, supported by innovation and marketing that will be more responsive to consumer trends.”
He noted that the “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-ounce Heinz® Ketchup in a pouch with a suggested retail price of 99 cents and a one-pound package of Ore-Ida® fries with a suggested retail price of $1.99.
“We are driving productivity, attacking fixed costs and leveraging global scale to make Heinz even more competitive in the years to come,” Johnson said. “Heinz remains on track to deliver our goal of at least $1.3 billion in cost savings by 2015.”