Heinz boosts spending to spark brand growth

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H.J. Heinz Co.'s newly appointed chief growth officer is charged with deploying as much as $200 million in additional marketing spending this year in a bid to reproduce the recent success of its ketchup across some of the company's flagging brands.

Casey Keller, formerly managing director-ketchup, condiments and sauces, will be the first in some time to oversee global strategies for the entire portfolio of brands. He points to the doubled media spending and innovation as one reason for Heinz Ketchup's 6% to 7% top-line growth over the last three years. The company now "has to start replicating that across other brands," he said.

renewed focus

Following the sale of its tuna, pet food and other brands recently to Del Monte, Heinz now has 15 brands that represent about 75% of company sales, among them Heinz Ketchup, Smart Ones and Ore-Ida. To grow them, Mr. Keller said, will require a renewed focus on marketing, first and foremost on media. Heinz spent $93 million in measured media during the first 11 months of 2002, according to Taylor Nelson Sofres' CMR. Heinz has said it plans to invest between $150 to $200 million more on marketing this year, half of that on consumer spending. But analysts are wary.

One food analyst said the company has pledged to spend more on consumer marketing before, but instead channeled those dollars into trade spending, moves like price promotions and coupons that are akin, he said, to "buying the business." Furthermore, the analyst suggested that while Heinz may indeed spend more on media, "the question is, can they do it more effectively and efficiently to actually get a return on it?" Frankly, he said, "they don't seem to have the right [marketing] people or enough of them to make it click."

close watch

Mr. Keller hopes to address that issue with renewed efforts to "upgrade the marketing function and capabilities across the company." He will also monitor more closely the results of work from external agencies, including Publicis Groupe's Leo Burnett Worldwide and Omnicom Group's DDB, San Francisco.

Heinz spent $22 million in media on its lead ketchup brand last year, compared with just $10 million in 2001, per CMR. But such spending is still small for a brand Mr. Keller said totals $2.7 billion and represents 30% of company sales. Buttressing the media expenditure-especially for new-product innovation including EZ Squirt colored ketchup for kids and new Easy Squeeze! upside down bottles-have been extensive public relations efforts from a variety of agencies, including Omnicom Group's Ketchum, Havas' Magnet Communications and independent Jack Horner.

core concentration

A public relations push was also the crux of Heinz's launch last year of Ore-Ida Funky Fries, a kid-targeted product that is now being discontinued by most retailers. "Funky Fries didn't work," Mr. Keller said, and while some varieties may continue to appear, "we need to move on and figure out how to build the core franchise."

Despite the fact that Ore-Ida is Heinz's second-largest brand, with sales in supermarkets alone totaling $451 million for the year ended Jan. 26, per Information Resources Inc., Heinz put just $1.5 million against the brand last year. Mr. Keller said Ore-Ida is one of the brands that will receive hefty marketing investment, along with continued investment against its growing Smart Ones brand, efforts on Classico and teen-targeted initiatives such as Internet, promotions and print ads on frozen snack brand Bagel Bites.

Mr. Keller is also overseeing new-channel expansion efforts for its brands to capture the growing carryout trend, including a test in 7-11 stores of frozen hand-held meals under its Delimex Mexican brand. Increased marketing and innovation overseas, including on Heinz's soup and beans brands in the U.K., is also on Mr. Keller's agenda.

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