HEINZ, TABASCO CO-BRAND HOT KETCHUP

PAT NATSCHKE LENIUS

PITTSBURGH -- H.J. Heinz Co. here is expanding its test of Heinz Hot Ketchup with McIlhenny Tabasco sauce, in selected markets. Plans call for a national rollout of the co-branded product, according to Todd Phillips, product manager in the retail marketing division at Heinz.

"Hot foods are really popular and growing. Heinz is an all-American company known for basic ketchup, not hot sauce. What could we do to make it hot and make the consumer recognize it as hot?" he said.

"The first thing we looked at was co-branding with a hot sauce. We knew that consumers would never believe our ketchup was really hot unless we had an identifiable brand of hot sauce on the product."

Heinz contacted the industrial sales division of McIlhenny, Avery Island, La., which sells Tabasco sauce in bulk, in August 1993.

"We thought of McIlhenny Tabasco sauce as parallel to us. They are a No. 1 brand and premium quality. It seemed like a good fit," Phillips said.

"They were very interested, so we put some concepts together. They were great to work with. Hot sauce has fairly low household penetration, probably below 10%, while our ketchup has 97% household penetration. Ketchup is found in more household pantries than salt and pepper," he said.

The product being test marketed bears hot colors, flame orange and yellow, and contains nearly 4% Tabasco by volume, Phillips said.

"We tested about three different heat levels to find one that appealed to more people vs. alienating others. Inside the Heinz keystone logo on the package is the diamond logo for McIlhenny. We rolled it out in January 1994 in San Antonio, Houston and New Orleans. In early June it should be on the shelf in Memphis, Tenn.; Little Rock, Ark., and Atlanta," he said.

The co-branded product is being tested in a 28-ounce plastic squeeze bottle and should not be confused with Heinz's earlier effort at a "hot" ketchup, which is still available in some markets but is packaged in a glass bottle, Phillips said.

The new test markets will test a smaller size package, a 20-ounce plastic squeeze bottle, he said.

"The product has been doing well in test markets, but we are trying to get the package size right before we roll it out nationally," Phillips said.

The earlier version of hot ketchup will be replaced by the co-branded product as distribution is expanded, he said.

Heinz is also distributing a 14-ounce

glass bottle of its co-branded hot ketchup to restaurants in the same test markets, he said.

"This is the first time in the history of our 119-year-old flagship ketchup that we have co-branded this product. That speaks to how well a fit McIlhenny is to Heinz," he said.

Unlike its traditional ketchup, which is marketed to female decision-makers, the hot ketchup promotions will have more of a male skew, Phillips said.

"The largest consumers of our ketchup are kids. Hot ketchup is really an adult item. McIlhenny is on ESPN. We are going after male consumers with radio," he said.

"We have taken hot sauce and mainstreamed it by combining it with ketchup. That is an added benefit for McIlhenny," Phillips said. "The advantage for McIlhenny in this product is that we are associated with another brand that is the leader in its category. Hot and spicy food and sauces are of particular interest to consumers. This is a brand extension for us in a way. It also helps put our brand in another category, giving us more exposure," said Martin Manion, retail marketing director at McIlhenny Co.

"It brings more recognition and allows people to think of a new way to use our product. That is a value for us," he said.

The McIlhenny logo on the label needed to be large enough so people would recognize it right away, but it could not dominate the package, Phillips said.

"If the McIlhenny logo was extremely large, people might think the formulation was 50-50 ketchup and Tabasco. We want to be sure people know this is ketchup with Tabasco. We had talked about calling it Heinz Tabasco Ketchup, but it was thought that connoted something too hot and might alienate people with preconceived feelings about Tabasco," he said.

With the current package design, the consumer's first impression is that this is a Heinz product, but one cannot help but notice the McIlhenny logo, Phillips said.

"Our logo is very prominent on the package. Tabasco is a product distributed in every country in the world. Not many packaged goods companies have brand recognition in every country in the world. Heinz knows our diamond logo has powerful recognition for this kind of product. They used our logo to the best advantage for immediate recognition," said Manion of McIlhenny.

"There is not much opportunity for us to co-brand with our steak sauce or vinegar. This was one case where it would work. It would be effective and have synergy," Phillips said.

Heinz performed heat level and concept tests in its development of the co-branded product.

"We really tried to measure what the name Tabasco did to the concept. Tabasco is almost generic to hot sauce. We worried that people view it as having a specific flavor profile. Tabasco adds the heat. In the end, the flavor profile married very well," Phillips said.

Heinz had to deal with the issue of adding value without dramatically altering the concept of its original ketchup product, he said.

"We had tried a salsa style ketchup that is not around anymore. There was confusion. People were not sure what it was and they didn't know what to do with it. This hot ketchup doesn't change the makeup of what ketchup is. It is just a hotter version. You can use it for the same products," he said.

"This is a simple idea embellished with co-branding. If we just co-branded for co-branding's sake, that would be silly, and it would just destroy our equity," Phillips said.