Ketchup King Heinz Turns Attention to Mustard

Formulated Product Backed by Lighthearted Campaign, Wider Distribution

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Heinz is the undisputed ketchup king with more than 60% market share. But when it comes to mustard, the brand is mere commoner, barely registering a sales blip at grocery stores.

How can this be, when ketchup and mustard go together like salt and pepper? The short answer is that Heinz hasn't put much energy behind the yellow condiment. While Heinz mustard is widely available in foodservice accounts -- like restaurants -- grocery distribution has been limited, mostly confined to co-packaging with relish and ketchup as part of a "picnic pack."

That will soon change with the launch of a new reformulated Heinz mustard that the marketer plans to distribute widely. A new campaign (above), by David, seeks to leverage the brand's ketchup strength using the tagline "Ketchup's Got a New Mustard."

"We are trying to kill the autopilot effect … where people don't think too much about yellow mustard," said Eduardo Luz, president of Heinz's North American division. "It's a funny, light way to connect Heinz mustard with ketchup."

The launch comes nearly two years after Heinz was acquired by 3G Capital and Berkshire Hathaway. Heinz last month announced a merger with Kraft Foods Group in a deal that was also orchestrated by 3G and Berkshire.

The mustard launch could offer clues about how the newly combined company will seek to grow its brands, which mostly are sold in sluggish and mature center-of-store categories. "It's a logical line extension for them to position the combined company stronger in the ketchup-mustard and all-other condiment industry," said Rick Shea, a former packaged-food marketing executive and president of Shea Marketing. He noted that Heinz mustard could be a nice complement to Kraft's Grey Poupon brand. Synergy opportunities also exist with Kraft's Oscar Mayer hot dog brand.

Mr. Luz declined to comment on the merger, which is expected to close in the second half of 2015.

Mr. Luz, who is from Brazil, joined Heinz after the takeover by 3G, which has Brazilian roots. Notably, 3G also has an ownership stake in Burger King and the fast feeder uses David as its lead global agency. WPP-owned David was founded in 2011 by Latin American Ogilvy execs. Asked if Burger King's connection to David influenced Heinz's selection of the agency, Mr. Luz said: "I know the David guys from Brazil …The connection goes way back."

He said that Cramer-Krasselt would remain the agency for Heinz ketchup.

Heinz controls 62.4% of the ketchup category in the U.S. with $470 million in sales in the 52 weeks ending March 22, according to IRI. Under 3G, Heinz has sought to boost sales with innovations including sriracha-flavored ketchup, which launched earlier this year. In the period ending in March 22, Heinz gained 0.4 share points in the ketchup category, while private label brands lost share, as did ConAgra, which owns Hunts.

The leading mustard brand is French's, which recorded $166 million in sales during the period for 38.7% share, according to IRI. Heinz had less than a 1% share.

Heinz is touting its newly reformulated mustard as containing "100% natural ingredients," including "stone-ground mustard seeds and a secret blend of spiced and vinegar."

Companies owned by 3G are known for strict cost-cutting programs and that has been the case at HJ Heinz, which has eliminated jobs and shut factories. But marketing spending appears to be on the rise. Measured media on Heinz-branded ketchup and condiments increased from $2.3 million in 2013 to $15.7 million in 2014, according to Kantar Media.

Mr. Luz declined to detail spending plans for the mustard launch, but said it would get significant support. "We have unprecedented brand support behind the Heinz brand this year, and last year was a record also," he said.

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