With William R. Johnson at the helm, H.J. Heinz Co. prevailed last year in an embattled economy that impacted the whole world.
During its latest fiscal year, the company achieved or surpassed virtually all its financial targets despite weak economies here and in Europe, Johnson told SN.
In hitting all its targets, the Pittsburgh-based company chalked up record sales and record gross profits.
“We delivered record sales of $10.5 billion, which was up 4.8%, as well as record gross profit of $3.8 billion, and record operating free cash flow of almost $1.1 billion,” said Johnson, the firm’s chairman, president and chief executive officer.
Not surprisingly, in the midst of the financial crisis, North American sales were not up as much, but they were up, nonetheless.
“Sales in North American consumer products, which includes the U.S. and Canada, increased 1.8% to $3.19 billion in fiscal 2010.”
Going against the grain during the recession, the company increased marketing spending by nearly 26% to get customers to take notice of its 15 top brands. The idea was to differentiate its iconic brands from the competition, including private label, Johnson said.
Concurrently, emerging markets provided primary growth, delivering 30% of the company’s total sales growth, “as new middle-class customers discovered the premium quality, value and nutrition of Heinz products,” he said.
“Our sales reflect a successful and rapidly developing emerging market business as well as our increased marketing investment to protect and build our brand equities.”
In fiscal 2010, growth was fueled by the company’s strong performance in emerging markets overseas like India, Indonesia, Latin America, the Middle East and Russia, the world’s second-largest ketchup market, Johnson pointed out.
In the next few years, additional emerging markets loom ahead for the company.
“Attractive markets include the Philippines, Turkey, Vietnam and Brazil. We believe these markets would be a natural fit with Heinz, especially in ketchup and sauces and infant nutrition,” Johnson said. “Overall, I believe emerging markets could generate as much as 25% of our company’s total sales by 2016 and as much as 35% to 40% of our total sales long term.”
While it may seem that there’s a bottle of Heinz Ketchup on every table, that’s not necessarily the case. Thus, the potential for increasing sales of one of the company’s most-recognized products is big, Johnson explained.
“Heinz already holds the No. 1 positions in seven of the world’s top 10 ketchup markets, but our research indicates that Heinz Ketchup has substantial room to grow,” Johnson said.
“In our top 10 markets for example, consumers spend over $2 billion a year on ketchup, but we estimate that only one in three households purchased Heinz ketchup in the last year. The upside potential is tremendous and we are aggressively pursuing it."