Heinz plots marketing blitz

26 November 2009

PITTSBURGH: Heinz, the US food company, plans to substantially increase its marketing expenditure over the next few months, as it seeks to attract increasingly price-aware shoppers to its brands.

In the last quarter, the company's sales rose by 2.5%, to $2.67 billion (€1.7bn; £1.6bn), with the US down by just 0.5%, while emerging markets delivered a pronounced uptick, to a share of 15% of revenues overall.

Bill Johnson, chairman/ceo of Heinz, argued "even though the global recession appears to be abating, there's no question that consumer and customers remain intensely focused on value which they are more often defining as price."

"Consumers in particular are looking for bargains wherever they shop for food and household items," he added.

During 2009 to date, the Pittsburgh-based firm has boosted its marketing spend by 9%, a figure that reached double-digits during the last quarter, and will continue to expand going forward.

Overall, Johnson predicted Heinz's global marketing outlay will jump by a "minimum" of 25% to 30% in the second half of the fiscal year, amounting to a lift of 15% over the 12-month period as a whole.

This will mean the resources dedicated to this aspect of the organisation's operations will have swelled by $130 million, or almost 50%, in four years, with its current aim being that of "driving sustainable growth, not buying growth."

"We are significantly increasing marketing investments in the second half of the year, particularly in North America and Europe, while accelerating new product activity as well," said Johnson.

"Our goal continues to be to strike an optimal balance between pricing, promotion, productivity, profit, and volume, with increased marketing support and investments, stronger commercial plans and a heightened focus on value-oriented innovation for consumers."

Its recent activities in North America have included the Consumer Value Programme, a major element of which is offering discount coupons to its most loyal customers.

This scheme also involves "selective price point adjustments that are more attractive to cost conscious consumers, targeted media, increased point of purchase and in store marketing, and increased new product activity," Johnson said.

In the UK, it has adopted a multi-brand approach to advertising, based around the tagline "It Has to Be Heinz", with this platform already argued to have delivered volume and market share gains.

Sales in India also improved by 26% on an organic basis in the previous reporting period, helped in particular by the strong performance of its Complan and Glucon-D health and wellness-based beverages.

Latin America posted like-for-like growth of 38%, with its Ketchup and baby food lines among the main drivers of this trend, while Russia was up 16%, thanks both to a tie-up with McDonald's and "aggressive marketing".

Data sourced from Seeking Alpha; additional content by Warc staff