Not content to rest on the iconic brand’s laurels during these tough economic times, Heinz UK’s chief commercial officer Matt Hill has a clear strategy for growing the business. Michael Barnett reports.
Marketing Week (MW): Tell us about the current UK market for Heinz.
Matt Hill (MH): It is tough out there. People’s real earnings are down 2.5%, commodity costs are sending up inflation and the battle between retailers means 40% of grocery sales volume are being sold on deal. In three years, that figure is up from 30%. Retailers are driving footfall promotions, such as buy-one-get-two-free, which might encourage footfall but destroys category value.
But there is also some interesting stuff in the polarisation of the retail sector. Discounters are growing and yet [upmarket supermarket] Waitrose is growing. That poses an opportunity for stretching our price ladder both upwards and downwards.
MW: What strategy are you using to grow the business?
MH: When you have a leading market share, I think marketers are best focused on what will grow the category. If you focus on this, then you tend to look at consumers. You look at their needs and how you can meet them better. If you just focus on market share, you are really focusing on your competitor.
It is like what someone told me on the golf course once: “play the course, not your opponent”. That makes you play a different game. Similarly, if we do a better job of growing the category and meeting consumer needs, then we will grow our share too.
MW: How is your marketing strategy aiming to achieve this category growth?
MH: I am pushing a ’marketing basics’ approach of renovation, innovation and consumption. We have some fantastic brand icons here such as beans, ketchup, tomato soup. We have to keep them relevant and bring new benefits to sustain the value. I talk a lot about the holy trinity of food – taste, health and convenience – and how we can build more on all of those.
In terms of renovation, there will be more strategic brand extensions that aim to access new segments of consumers. My mantra with the team on this is “new users, new benefits or new usage”. When you have a highly developed market, you continually look for new ways to segment that market; whether that is through different target consumers, occasions or needs. It is a way of expanding the category. Reduced salt and sugar products fall into this, as does balsamic ketchup.
Heinz – the real story
With UK spending still sluggish due to global economic woes, the brand hopes boosting its marketing presence will help it make an impact on shopping baskets in 2011. Heinz is aiming to grow its business in the UK by increasing the value of each of the product categories in which it competes.
To achieve this, it is doubling the size of its insight department and training budget, and has increased its marketing budget by a double-digit percentage.
According to UK chief commercial officer Matt Hill, it is targeting both the premium and budget ends of the food sector with an approach that focuses on “renovation, innovation and consumption”. This involves adding new range variations, developing new lines and attracting new customers to established products.
Heinz is also expanding its digital media spending, increasing the proportion of the budget it spends from 3.5% to 20%.
MW: What product innovation is involved?
MH: Innovation is a way of ensuring we stay relevant, of meeting new and emerging needs. The core Heinz beans product is iconic and I will resist touching that tin of beans. But around the core product, we have created organic beans, we have introduced reduced salt beans and we have expanded the convenience angle in two directions: the snap box and the fridge pack.
The snap box, a 200-gram microwaveable single portion, is a lifesaver when I am feeding my two girls and I have five minutes to put food on the table. Ditto the fridge pack. It is driving frequency of use through visibility – I open the fridge about 30 times as often as I open the cupboard.
MW: How do you attract new customers?
MH: There is often a temptation for marketers to focus all their energy on new toys – new products, new pack designs and so on. I want to make sure there is enough focus from my team on driving consumption – understanding the triggers for use and barriers to use. Examples are things like the ’secret ingredient’ campaign for our ketchup. That comes from insight that consumers use ketchup as a cooking ingredient. It adds a richness to meat bases such as bolognese. Likewise, a can of soup can give you a sauce you would not have been able to cook yourself.
The campaign ’It has to be Heinz’ is also trying to reaffirm people’s conviction and belief in the Heinz brand and products as the premium choice in a period of recession. If someone goes into a café and there is a bottle of Heinz ketchup on the table, they will know if the restaurateur has refilled our bottle with another product [because it will taste different]. These products are distinctive and there is an emotional conviction from consumers that it has to be Heinz. It is a taste they grew up with.
MW: How do you ensure Heinz’s products are seen as the premium choice?
MH: Whenever I interview anyone for a job here, one of the first questions I ask is, do they cook? Are they a foodie? Are they passionate about food? You have to be if you’re going to make good products. Our chilli ketchup is not a cheap pepper burn. It is a deep, smoky chipotle chilli. Ditto on the balsamic ketchup – there is a deep, complex note to it. We spend a lot of time crafting these to make sure they are ’foodie’, as well as using natural ingredients. That is what people expect from premium brands.
MW: How is Heinz adapting its media activity to emerging digital channels?
MH: The year before I arrived, we were spending 3.5% of our marketing budget on digital. We are now approaching 20%. My approach is ’test and learn’. We met with the Facebook team a year ago and they want to learn with us as much as we are learning with them. Our balsamic ketchup launch on Facebook is an example of how digital is helping us market in different ways.
We took out one print ad in The Times to announce the new limited edition ketchup, explaining the first 3,000 would be available only to our Facebook fans for a month. That was about PR, seeding the campaign with our brand fans and creating expectation. We knew that people would write reviews on Facebook and create anticipation for the product. On the Friday night when the press release came out, there were three tweets a minute. We got a million pounds-worth of exposure value on Facebook and Twitter.
MW: Where do traditional media fit in your marketing plans?
MH: Television and radio still give us by far the strongest opportunity to create brand affinity, to tell stories and win hearts and minds.
There are many other channels that are more information-heavy or are about engagement, dialogue and relationship. The new emerging channels are additional rather than replacements.
In my first week here, I blocked out my diary for a day and watched every ad made by Heinz. I suggest any marketer in a new job do this, because you have to understand your brand’s roots.
You need to know where your brand comes from and the historic cycle it has been through under different leadership, and where it has gone in varying directions, to understand the brand.
Heinz real-time reader responses
@Tack_Global: How do you meet the challenge of developing Heinz’s workforce and help them identify new opportunities?
MH: We encourage people to be nosy and inquisitive, for example by opening their friends’ cupboards and fridges – with permission. Keep close to what is going on out there, how people store our products, how they use them, why they chose the brands.
To be a consumer-centric marketing organisation, you have to have an internal culture that is not only creative but is a bit obsessive in its forensic understanding of how consumers tick.
When it comes to new ideas, I am trying to work towards a clear strategy for each of our categories, with ideation and creativity within the areas identified by that strategy. If you go too wide and too broad, you get a lot of white noise.
In addition, we have a team looking beyond our current portfolio, being more future-oriented and unconstrained by our current capability. We are taking off our blinkers to emerging consumer opportunities that do not happen to be our current business. All major businesses need that balance of ’hunters’ and ’farmers’: we are farming these core categories well, but we need people to hunt new business.
@kerchinguk: Does a globalised approach to marketing mean you lose your light touch?
MH: Every one of our innovations and products is conceived, created and delivered here [in the UK], as is every piece of communication. The philosophy of Heinz is that we will win customers through being fast, creative and meeting the needs of local consumers. We will then get the global synergies and efficiencies where it makes sense. We are very connected, we share a lot and we pass ideas around.
From my experience elsewhere, if you are leading a big international project in a big global business, the approach ends up being only 80% right for every market. You do get efficiencies and scale. But you end up creating super-structures and layers that lead to bureaucracy and slowness.
Instead, the right balance should differ category by category around the world. Sauces, for example, could be more international. Other categories that are cuisine-based – meals and sides – are cultural. They are about flavour, taste, history and what we grew up eating. Anybody who approaches internationalisation with a one-size-fits-all mindset is going to fail.