Friday, June 13, 2008

Heinz: when marketing in red is good

I would be remiss if I didn’t comment on some good retail news related to my new home town. Although there are no longer ketchup processing plants in the city, the association between Heinz and Pittsburgh is strong, with the food giant lending its name to everything from the football stadium to a large philanthropic organization to a set of luxury loft apartments. Heinz is among the lucky companies reporting a steady increase in profits in the last eight months. According to comments made by Chief Executive William Johnson,

The company's top 15 brands, which include ketchup, sauces and processed foods, generate 70% of its revenue. It currently has 13 brands that bring in $100 million a year, and by 2009, Johnson said Heinz expects to have four more hit that mark. "We now expect to increase consumer marketing by almost $60 million this year," Johnson said. "This represents a more than 20% increase from last year and is well above our original commitment. We also expect to maintain our recent trend of double-digit increases in research and development spending."
While having basic products in economic belt-tightening helps keep them steady, it’s worth noting that Heinz’s marketing strategies are also critical. Their emphasis on core products in the US and Europe, especially at a time when food prices are steadily climbing and companies are competing even more fiercely for a wealthier consumer base awash in excess food.
For marketing purposes, it helps that Heinz has some tried-and-true packaging.

My vintage food t-shirt collection includes some bright red ones with the ketchup logo on the front. Everyone recognizes it. But on a more upscale note, Heinz is marketing their brand on clothing, cooking aprons, and European football shirts (that’s soccer to you Americans – and the jerseys are a hot item on both sides of the Atlantic). The ketchup bottle logo may be ubiquitous to folks in the US, but according to food and marketing experts, it’s well known and liked even in France!

Henry Miller once said “Americans can eat garbage, provided you sprinkle it liberally with ketchup, mustard, chili sauce, tabasco sauce, or any other condiment that destroys the flavor.” Despite the fact that Europeans have historically belittled our palates, and gladly bequeathed us the McDonald’s version of pomme frites (remember Freedom Fries?), the global taste for ketchup is not limited to fast food. Having originated as a spicy fish sauce in Southeast Asia, it’s no accident to see ketchup in Thai and Indonesian dishes. In Korea, Heinz has added a chili pepper to the ubiquitous ketchup logo and nonsensical English phrases: both the shirt and the product are selling like crazy. Indeed, some of Heinz’s growth markets are in China and India, where they are developing, producing, and marketing products designed to match regional tastes.

But Heinz is more than ketchup. Executives at the company also pointed to its European operations, which are being led by "encouraging results" in U.K. groceries, Weight Watchers, Heinz healthy meals and desserts, and strong volume growth in Italian infant feeding.

One other reason to like Heinz is that they do work on keeping food processing plants in areas that need the work. Despite closing some plants (including Pittsburgh not too long ago), Heinz has plants in Ohio and just announced it will be opening a frozen food facility in South Carolina. There’s still the issue of contracted tomato growers. This week’s outbreak of salmonella linked to tomatoes in Florida will certainly take its toll, despite the fact that most of Heinz's tomatoes come from California.    Luckily, Heinz claims that part of its mission is transparency in the food system. Working with the University of California at Davis and the Business Coalition of the Sustainable Food Lab, trying to develop farming and planting methods that are less environmentally draining and more consistently profitable for workers and producers.  In the future,  there's hope that they can mesh good labor, sustainable and/or organic production, and profitability.

So, while I’m going to stick to my favorite New Orleans hot sauces for most things, I think we may refill the freezer with Weight Watchers cookie covered ice cream bars and add some ketchup-red soccer jerseys to the family wardrobe.


Bill Gerba said...

Funny that you should write about this now...

I was just noting a few days ago how my family has switched away from Heinz ketchup almost entirely (no, not for Hunt's -- are you kidding?).

You see, we've been trying to lower our intake of high-fructose corn syrup the past 18 months or so, and it's one of the main ingredients in plain old ketchup. Heinz offers a HFCS-free version in its organic product line, but at something like $7/bottle, it seemed a bit rich -- and not in the food sense. So we tried our local supermarket's (Publix) own organic variety, and you know what? It's great. Sure, it's not quite the same as Heinz, but it's really tasty, has a bit of a unique and appealing flavor, and is completely sans-HFCS.

Not that this really has anything to do with the bulk of your article :)

Annie said...

Funny, indeed! There's only one serious ketchup user in our house. We buy the Heinz since it's one of the few foods we buy that has high fructose corn syrup in it (and yes, we really do try to avoid almost all of it. I'm sure you are figuring out how hard that can be!).

In terms of marketing, I think some of the restaurant bans on fats may translate into more retail advertising that focuses on eliminated HFCS from foods.