Heinz looking at emerging markets, health and wellness division to stimulate growth

Posted by Daniel Palmer on 14th August 2008

Leading food manufacturer Heinz has announced their Fiscal 2008 sales increased by 12%, as the company searches for growth from the booming health and wellness food sector.

H. J. Heinz Company Chairman, President and Chief Executive Officer William Johnson advised that the surge in sales past the $10b milestone for the first time was driven by the successful introduction of numerous new products, many of them catering to the fast-growing healthy lifestyles segment. Growth in emerging markets such as China and India was also a key factor behind their success.

In a speech which focused on Heinz’s special strengths in health and wellness and in emerging markets, Mr Johnson commented, “Our top 15 brands, which represent approximately 70% of sales, performed particularly well over the past two fiscal years with a compound annual growth rate of 12% driven by continued double-digit increases in R&D and marketing investment against our tightly-focused brand portfolio.”

“We launched hundreds of successful new products during the past two years. One of our more successful innovations was plastic snap pot beans in the UK,” he added. “These single-serve, microwavable versions of our healthy, fiber-rich baked beans are doing very well in the market. Another successful launch was Smart Ones Fruit Inspirations, the first health-focused frozen entrée with a half-serving of real fruit. This line of four entrees is already on track for $40 million in sales in its first 12 months.”


Health and Wellness

Mr Johnson outlined the goals for the company over the coming years, with sales growth of 6%+ anticipated as the demand for health and wellness products skyrockets. “Heinz continues to offer consumers great tasting and convenient foods while also giving them the health benefits that they are increasingly seeking across: 1. Lifestyle, including products like Heinz SteamFresh vegetables in Australia and reduced salt and sugar beans and ketchup to promote general wellness; 2. Children’s Nutrition, where we are a category leader in the markets in which we compete; and 3. Weight Management,” Mr Johnson suggested.

Mr Johnson has also been excited by the growth of the Weight Watchers brand. “Combined, our Weight Watchers Smart Ones and Weight Watchers from Heinz brands represent almost one billion dollars in sales and together are among the fastest growing equities in the Company,” he said. “Smart Ones is rapidly becoming a lifestyle brand with an increasingly loyal consumer base and we continue to explore new meal occasions including the recent launch of Smart Ones Morning Express – a line of four handheld breakfast sandwiches and quesadillas.”

Despite the potential of the health and wellness sector, it is in fact the emerging markets that Heinz believe could be the greatest stimulant of expansion in coming years. “The Health and Wellness opportunity is large, but perhaps our biggest growth opportunity is in emerging markets, where we are leveraging our first-mover advantage and go-to-market capabilities to drive accelerated growth,” Mr Johnson said. “In fact, emerging markets, which grew sales 25 percent in Fiscal 2008, are expected to contribute about a third of the Company’s total sales growth over the next two years.”

Future Innovations in the Pipeline

“Two of our newest innovations in the U.S. build on insights gleaned from extensive research which revealed that consumers want added convenience while still feeling like they are an integral part of the meal preparation process,” Mr Johnson advised. “Ore-Ida Steam n’ Mash potatoes and T.G.I. Friday’s Complete Skillet Meals satisfy both requirements.”

The focus on innovation has been heightened at the company as they seek growth from new products. “Not since the days Henry Heinz was introducing his first 57 varieties have we been driving such a strong innovation agenda for the Heinz brand globally. We had a busy year of product launches for the brand in Fiscal 2008, with another on tap for Fiscal 2009,” he reported. “In Australia, we launched new varieties of Heinz SteamFresh vegetables in Fiscal 2008 and in Fiscal 2009 we will expand SteamFresh into the meals category. In the UK, our Heinz soup innovation pipeline resulted in record shares in Fiscal 2008, and we have more new varieties planned for later this year.”

Potential for Acquisitions

Finally, Mr Johnson noted that the balance sheet would enable them to consider acquisitions as an avenue for further growth. “With a healthy balance sheet and abundant opportunities to explore in both the developed and developing world, we are confident in our ability to execute value-added acquisitions,” he concluded.