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A comprehensive background of Heinz containing its History and Origins, Early Evolution, Modern Business, Global Expansion, Company Structure, Recent Efforts and Company DNA. As one of the chapters of the book FMCG: The Power of Fast-Moving Consumer Goods by authors Greg Thain and John Bradley. For more details on their success story and that of other leading FMCG companies, check www.fmcgbook.com or Amazon http://amzn.to/1jRyd20.
Heinz was founded in Pittsburgh in 1869.
Henry John Heinz first established the firm of Heinz and Noble with his
neighbor, Clarence Noble.
They produced and sold bottled pickled food under the Anchor brand name,
their first product was his mother’s grated horseradish. Henry was the
driving force, yet the company collapsed.
Henry Heinz set up the firm of F & J Heinz with his brother John and cousin
Frederick two months later.
One of his earliest decisions was to add, to their range of pickles, the first
commercial grade of tomato ketchup to be made available in the USA.
In 1888 Henry bought out his brother and cousin and was in sole charge of
Heinz went political after seeing that less ethical companies were giving the
entire prepared foods industry a bad name.
Henry campaigned relentlessly and finally sealed the deal via the 1906 Pure
Food and Drug Act during his talk with President Teddy Roosevelt.
In 1919, Howard succeeded his father as CEO
By 1924 Heinz had 150,000 acres of crops, 25 branch factories, over 100
salting stations, and nearly 800 rail cars. It also had nearly 1,500 salesmen,
including 160 overseas, primarily in the UK and Canada.
In the 1930s, the company entered the baby food market. It was also that
time when Heinz bred its first hybrid tomato seeds to send out to their
In 1941, Henry John Heinz II, became the company’s third CEO at the tender
age of 33.
Henry Mk II became more interested in travelling the globe, and the new
Heinz businesses he set up in the Netherlands and Japan were not
By 1950, Heinz was only making a 2.5% return on sales with matters not
improving for another decade or more.
Aside from their highly profitable UK arm, the company was barely breaking
even; in 1963 over 80% of company profits came from the UK.
While the products were still excellent, the management of the company had
failed to move with the times.
R.Bert Gookin, Vice President for Finance, engineered the acquisition of
In 1965, it purchased the Ora-Ida Foods – frozen foods.
A year later, Gookin was appointed CEO and was to preside over a remaking
of the company.
Gookin hired his Vice-President of Marketing from P&G, Heinz’s first time
hiring an externally trained marketer. The company realigned itself behind a
product management structure.
Heinz embarked on an own-label soup strategy and became the dominant
industry supplier, which eventually became the second-largest component
of Heinz’s US operation.
In 1967, Heinz created a partnership with Erin Foods – an Irish company.
By 1968, 50% of Heinz’ ketchup was re-engineered around the use of
Tony O’Reilly, managing director of Erin Foods was offered by Gookin the
job of managing director of Heinz’s booming UK business and soon asked to
oversee the flagship US operation.
Morris the 9-Lives Cat was introduced replacing StarKist’s 9-Lives brand,
driving up sales to over 20% of the national market and keeping three
canneries working flat out.
In 1978, Heinz acquired Weight-Watchers International and of Foodways
Heinz Tomato Ketchup’s share of the market had slumped to 20% and was
losing money which was solved by creating the product to a Heinz
proprietary tomato paste.
Sales doubled during the second half of the 1960s, and two years later,
brand share was a market-leading 34%.
Company agronomists developed tomato hybrids specifically suited to a
paste production process. This has become a key part of the Heinz DNA –
institutionalizing the best tomato expertise.
A year later, Tony O’Reilly became the company’s fifth CEO.
Under the O’Reilly years, StarKist expanded into the dog food market with a
couple of acquisitions, most notably Jerky Treat in 1979 which trebled its
sales within the next two years.
In 1980, Heinz more than doubled its sales. Also, Weight Watchers came up
with the innovation such as the “At Work” programme.
In 1982, they switched into microwaveable fiberboard trays that fitted in with
the busier lifestyles of the target market.
In 1986, the company was rated one of Dun’s Business Month’s five best-managed
By 1988, Weight Watchers outsold Lean Cuisine and Sara Lee.
In 1990 O’Reilly was voted Chief Executive of the Year by Chief Executive
Weight Watchers growth ran out in 1990 and 1991, so O’Reilly carved out a
stand-alone company to give the brand the focus it needed.
In 1991, Heinz was prompted to make a major acquisition of JL Foods for
$540 million from its Canadian owner, John Labatt Ltd.
Smart Ones and Personal Cuisine which helped modernize the brand and
grow sales were added to the new Weight Watchers.
It also launched Meaty Bone and the entire product range was booming as
the pet category had become one of the fastest-growing in the supermarket.
The tuna side of the business was also a success with the company shipping
40% of America’s total consumption, a record market shares on all fronts
and annual sales approaching $1 billion.
By the end of the decade, Heinz’ sales had doubled and net profits
quadrupled since 1980; market capitalization having increased ten-fold from
when O’Reilly had taken over.
The acquisition strategy was also ramped up. JL Foods and Watties had
transformed both the food service side and the potential for Heinz in Asia
and the Pacific.
Heinz acquired the Farley’s Brand of baby biscuits in the UK and the All
American Gourmet Company, makers of the Budget Gourmet frozen food
In March 1995, Heinz paid over $700 million to almost double the size of its
pet food business, acquiring Quaker Oats’ pet division.
A year later, it also acquired Earth’s Best, a maker of organic baby food.
In 1886, Henry sold his first products to London's famous Fortnum & Mason
He developed the UK business and opened a sales office in 1896.
In 1905, Heinz sent Charles Hellen, his best manager, to the UK to develop as
he saw fit.
Hellen purchased Batty and Co. Ltd., a British pickle and sauce manufacturer.
In 1914, Heinz Salad Cream, the company’s first brand for the British market
was launched. By this time Heinz had also opened small factories in Canada
Heinz also made a go of its soup business in Britain - canned pasta, salad
dressings, ketchup and baby food. In each of these categories Heinz built a
market share of 70% or higher by 1960.
1963, Heinz purchased the Milan-based Societa del Plasmon whose business
was baby biscuits plus a range of baby foods.
Heinz installed their latest equipment and processes for making strained
baby foods, which, under the highly respected Plasmon brand name, soon
became brand leaders in Italy.
In 1979, O’Reilly took over the business.
In 1984, Heinz was invited to manufacture infant cereal to address an
endemic shortage of fortified weaning food in China.
In June 1986, their new factory opened in Guangdong Province as what was
agreed and signed in the joint venture.
Two years later the factory had to be tripled in size and by the mid-1990s,
Heinz was selling in 25 cities spread across half the country.
Heinz could now be found in Africa, Asia and Eastern Europe, and was
setting up in South Korea, Thailand, Botswana, Egypt.
Heinz returned to Greece in 1990 and New Zealand in 1993. Here they
acquired, for $300 million, Watties Ltd, the largest food company in
Australasia, and with substantial exports into Australia.
In 1994, it can also be found in India where Heinz purchased Glaxo’s Family
Products division, primarily the Complan and Glucon D nutrition brands.
In 1997, Heinz acquired Poland’s leading producer of ketchup, Pudliszki.
Weight Watchers International, under Heinz’s management, boomed
overseas, generating 40% of its business outside of the United States.century
In the US it had five major business units:
Weight Watchers International
Weight Watchers Food Company
Outside the USA, Heinz competed in various food categories: Italy – soft
drinks, England – canned meats, Zimbabwe – soap, Korea – margarine,
Canada – maple syrup, New Zealand – ice cream, to mention a few.
In 1997, they sold the Ora-Ida food service and private label set-up to
McCain Foods for $500 million.
William R. Johnson, a Heinz insider, became the next CEO
Heinz set about closing or selling 25 factories and shedding thousands of
The retail side of Ora-Ida was combined with Weight Watchers Foods to
create a new unit, the Heinz Frozen Food Company
In 1999, the company sold Weight Watchers International to a Swiss venture
capital firm for $735 million
For the millennium, Heinz would be globally managed with six core
Ketchup, Sauces and Condiment
Heinz also focused its efforts behind its six core markets that generated 80%
of company revenue: USA, UK, Italy, Canada, Australia and New Zealand.
In 2002, Heinz spun off large parts of its US business and merged them with
The Del Monte deal made Heinz the most internationally diversified US-based
food company, reducing its US component to 44% of sales.
By 2012, the company would re-focus again around the three main retail
categories of Ketchup, Condiments & Sauces, Meals & Snacks, and
Sales grew to $8.4 billion, half of it from the UK alone and the acquisition of
John West tuna brands and ABC of Indonesia. Heinz purchased Shanghai
Heinz entered Russia via its baby food business. Had a joint venture with
Petrosoyuz, Russia’s leading maker of ketchup, mayonnaise, spreads and
Organic volume increased by nearly 4%, driven by the now healthy North
American Consumer Products Division and the Asia Pacific region, both
delivering volume increases of around 8%.
Overseas businesses delivered 30% of the total company annual sales
growth in the Russia, Indonesia, China, India group, now joined by Poland.
The company re-oriented itself around a consumer-centric Health and
Wellness axis. The company identified four key areas: Lifestyle, Children’s
Nutrition, Weight Management and Health Management.
The company’s greatest marketing campaign on ketchup grew global sales
by 9%, which in turn contributed to a sales growth of over 13% in the
company’s top-15 brands. The company also took acquisitions: Benedicta, La
Bonne Cuisine and Golden Circle.
Heinz acquisition of China’s Foodstar company helped the company’s sales in
the Asia/Pacific region top $2 billion for the first time.
Major acquisition in Brazil of the manufacturer of Quero, a rapidly-growing
brand of tomato-based ketchups, sauces and condiments.
Heinz registered a 9 % sales increase to over $11.6 billion. All the increase
came from favorable sales mix increased pricing and favorable currency
exchange: volume actually declined slightly.
Heinz DNA can be boiled down to three simple components: Quality,
tomatoes, and global management.
Quality - Heinz is one of the world’s best-known food brands with a
reputation for quality second to none. Quality is instilled in their culture. No
one can beat Heinz on trustworthiness.
Tomatoes –Embodied by their proprietary Heinz Seed programme, Heinz
has better tomatoes every year.
Global Management – No American food companies can do this as well as
Heinz. Heinz managed the transition well from having a confederation of
stand-alone businesses to one managed globally, along category lines.
The Heinz history can be split into four basic parts:
Heinz, while managed by the three Heinz Chairmen built a ketchup and
The company managed to survive the transition from family-run to
The O’Reilly years when the company became much broader and much
The fourth phase would be the company getting back to its core of being
a ketchup, condiments and sauces company and developing it on a truly
Heinz laid out much more focused strategy in selling more ketchup and soy
sauce in Emerging Markets and cutting cost in developed market business
Heinz is getting back to doing what their founder set up to do: selling meal-enhancing
ketchups, condiments and sauces, but this time to everyone on the