Heinz proposes to freeze out its niche brands
Heinz is reviewing the future of its European frozen and seafood businesses – and could be about to sell off brands such as Linda McCartney and John West.
The company has owned most of the brands up for review for less than ten years, but it says they are no longer part of its European core strategy, which consists of ketchup, condiments, sauces and its Heinz’s baked beans and soup ranges.
The “strategic review”, which encompasses its entire frozen and seafood range across Europe, illustrates a desire to concentrate on leading products.
The businesses under review have a combined sales value of $1bn (&£550m) across Europe, a third of the company’s sales on this side of the Atlantic. Heinz Europe president and chief executive Joe Jiminez admits: “The businesses under review are successful,” but, he adds, “they do not fit into our vision of becoming a faster-growing, more focused company.”
It seems likely that most of the brands affected will be sold, although Heinz says the review will consider options that maximise a brand’s value. Nevertheless, the review means an uncertain future for 7,000 Heinz employees working on the brands.
Marketing troubleshooter and co-founder of Freestyle Rob Rees says such a review is long overdue at Heinz. Large food businesses need to concentrate on their leading brands, he says, and the cost of marketing peripheral products can hinder growth. He adds that companies such as PepsiCo and Unilever focus on top brands that deliver good returns.
Spending money on marketing and pushing individual brands such as Linda McCartney or Harry Ramsden’s has no benefit for other Heinz products, says Rees, whereas promoting products with the Heinz brand, for example soups, will raise the profile of other products carrying the brand.
Catalyst director Nick Cloke says that many of the brands in Heinz’s review, such as Linda McCartney, are in areas where supermarkets’ own brands are strong. While John West is a leading name in tinned fish, that sector is again one in which own-brands are strong, he says.
Cloke believes that in order to develop, John West can only really move into the frozen or chilled markets. However, Young’s is the market leader in frozen fish products, and retailers are not keen to take on new brands in this sector.
Cloke thinks it may be hard to find a buyer for some of the Heinz brands, but Rees predicts that venture capital groups such as Hicks Muse Tate & Furst will snap them up. What that means for the brands remains to be seen, but it could be a case of John West – gone west.
