Heinz Fingers Increased Marketing Costs as Profits Slide

12 September 2002

Food giant H J Heinz blamed a rise in marketing costs as profits slipped in its fiscal first quarter (ended July 31).

Net profits slipped 11% year-on-year to $177.8 million (€183m; £114.7m), while operating income dropped 10% to $345.1m. The decline partly reflected a 1% rise in marketing outlay, with spend on its major brands jumping $25m (45%).

Sales increased by 6.1% to $2.2 billion, fuelled by new acquisitions. However, shipments declined by 4.6% – a drop blamed on moves by store chains to reduce inventories; also a switch in Heinz’s marketing strategy from retail promotions to consumer advertising.

The group intends to shift its petfood, tuna and babyfood businesses into a new joint venture with Del Monte Foods, allowing it to focus on its core products.

Data sourced from: Washington Post Online; additional content by WARC staff