Heinz to offload more brands

By Anita Awbi

- Last updated on GMT

Related tags: Brand

US food giant Heinz has announced plans to shed more brands over
the next 12 months, as the firm continues to concentrate on key
lines and boost falling profits.

Following yesterday's completion of the Tegel poultry business sale in New Zealand, Heinz has indicated it will sell other peripheral brands.

Tegel, a leading processor of fresh poultry and animal feed, fetched NZ$250m (€126m).

All New Zealand processing plants, feed mills and livestock operations have now passed to Australasian private equity firm Pacific Equity Partners.

Heinz CEO William Johnson said in a statement: This divestiture continues the execution of our strategic plan, which is aimed at making Heinz a more focused, faster-growing and higher-margin company."

The steady retraction of Heinz from its non-core food businesses has highlighted the battle the company faces in maintaining healthy profit levels, and is symptomatic of a difficult global trading environment.

Although the firm hit its target of a three to four per cent rise in third-quarter sales last month, profits have not followed suit and the firm failed to make its forecast six to eight per cent rise.

But the company, famous for leading brands Heinz Baked Beans and Tomato Ketchup, expects the restructuring programme to bring new focus to its European, Australasian and Asian markets.

Recent divestitures have included the seafood businesses in Europe and Israel, HAK vegetables in the Netherlands, and HP Ethnic Foods in the UK.

Total proceeds will be around €826m.

But Johnson has indicated that more sales may be on the way, saying the firm has "identified a number of other non-core assets which we intend to divest over the next six to 12 months."​ Possible targets have not as yet been declared.

Over the past six to 12 months the Western European food sector in general has seen job cuts and reduced research and development spending as cheap competitors from Asia and Eastern Europe eat into market share.

The rise of the private label phenomenon has also worked against long-established companies who trade on their brand names.

The current downturn has caused many leading manufacturers, including Unilever and Kraft, to cut costs and reduce their portfolios.

Currently Heinz' top 10 brands account for 60 per cent of total sales, growing 4.4 per cent in the third quarter.

But the loss of sales in non-core areas may already be impacting overall performance, piling pressure on these few key brands to outperform.

Nevertheless the company is attempting to follow its changing market, citing new product launches and recent packaging design changes as growth boosters.

And the firm still maintains a strong presence in New Zealand and Australia with the Wattie's brand of baked beans and condiments. Heinz Wattie's is the leading food manufacturer in New Zealand, and the country's most recognised grocery brand.

Related topics: Market Trends

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