Heinz boss keen to capitalise on emerging trends

Posted by Daniel Palmer on 13th August 2009

William Johnson, President, Chairman and CEO of Heinz, told shareholders last night that the manufacturer was likely to see record results continue in coming years as emerging markets and trends drive sales.
The owner of the Watties and ABC brands reported a 9.2% increase in yearly profit in May and the coming year’s growth is not expected to fall too far short of this figure.

“Fiscal 2009 continued our streak of superior results under our plan to drive growth and high performance,” Mr Johnson said. “Over the last three years, our global sales have grown at a compound annual rate of more than 5%.”

“We expect our proven plan to drive continued growth on a constant currency basis, although we anticipate that the stronger dollar and foreign currency volatility will likely impact our reported results given that 60% of our sales and profits are generated from operations outside the United States,” he added in regard to Fiscal 2010 – with operating income of between 6 and 8 per cent forecast.

The strength in the company’s results given the economic recession was put down to emerging trends, emerging markets and a focus on core brands – with a higher marketing investment in their Top 15 brands.
“While Heinz performed well in Developed Markets, our Emerging Market businesses delivered even more impressive results with reported sales increasing almost nine per cent, propelled by growth in India, Indonesia, Latin America and Poland, as well as higher baby food sales in China,” Mr Johnson said in reviewing Fiscal 2009 results at the AGM last night. “We expect Emerging Markets to contribute disproportionately to our long-term growth and anticipate that they could generate as much as 20% of our total sales by Fiscal 2013, compared with 14% in Fiscal 2009 and just 11% three years ago.”

Marketing caters to developing trends

“Our increased marketing and successful focus on quality and innovation have helped Heinz rise to the challenges posed by the global recession and the emerging trends of increased at-home dining, channel shifting and the growth of private label,” Mr Johnson said.

He added that leading branded manufacturers could withstand the worst of the crisis despite pressure from private label because of the trust consumers have built up in the brands for many years.