HEINZ, GROCERS TEAM UP FOR ADS

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In an effort to reach consumers in a more local way, H.J. Heinz Co. is biting into the relatively new area of "grass roots" co-marketing with grocers.

The ketchup king recently appointed J. Brown/LMC Group, Stamford, Conn., as its co-marketing agency of record, as well as Ketchum Advertising, Pittsburgh, to replace Leo Burnett USA, Chicago, after 26 years.

"We're trying to move into genuine brand equity, which encourages retailers to support our products at a very local, account-by-account basis," said Brian Falck, VP-retail advertising for Heinz.

"The concept of the old way of doing business is changing," said John Kramer, president of J. Brown. "Retailers made money from buying goods rather than selling goods. Heinz has realized if you're going to gain and maintain your position, you must market with the retailer."

While some Heinz brands, such as ketchup and gravy, were up somewhat according to Information Resources Inc. in the year ended Jan. 1, others were nearly flat. Heinz 57 sauce was up only 0.7% to $36.5 million and Ore-Ida up 0.8% to $413.4 million.

Heinz will work with grocery stores to build promotions that tie in either store brands or other manufacturers through local and regional advertising and direct mail. For example, Heinz might offer a discount on its ketchup with the purchase of hamburger at a particular grocer.

"Joint programming builds brand image and the retailer simultaneously," Mr. Kramer said. "The traditional co-op advertising was price and item driven; this will be equity building for both in a seamless integration."

While Heinz will appear to work with many individual stores, Mr. Kramer noted three retailers-Grocer's Supply, Kroger Co. and Fleming Co.-accounted for more than half of all commodity volume in 18 of the top 25 cities.

But some are concerned about the loss of traditional advertising.

"They're more dependent on promotions than the average food company," said analyst John McMillin, Prudential Securities, New York.

Terry Bivens, an analyst at Argus Research, sees Heinz's efforts as worrisome cost saving. "They've cut down on advertising a bit to keep their earnings up, which is not a good long-term strategy," he said.

Heinz expects its total marketing spending to be about $300 million worldwide in 1996. Ad spending in measured media hit $38.4 million last year, according to Competitive Media Reporting.

"We'll still be doing network TV, but it's not necessarily the most important strategy for all brands," Mr. Falck said.

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