Behind The Spin - Heinz

THE DILEMMA

To the British, Heinz is best known for tomato ketchup and baked beans.

Last year, it had nearly 78% market share in ketchup and just over 46% in canned baked beans. Yet the Pittsburgh-based company has found that in the cut-throat world of condiments, being a brand king does not make you invincible. In Europe especially, Heinz has been feeling the pressure from deep discounters like Lidl and Aldi, and supermarket own-labels, as well as fragile consumer spending in big markets such as Germany. Having earlier diversified into foods beyond its tomato-based staples - from Farley's baby food to Linda McCartney's vegetarian ready meals - Heinz no longer just meanz beanz but a wide portfolio of products.

THE SPIN

'We were not focused sufficiently,' the '57-variety' company admitted earlier this year. 'We had too many balls in the air. It's tough, so you have to play to your strengths.' The solution? Heinz began restructuring across the whole group, aiming to focus on three core areas: ketchup, condiments and sauces; meals and snacks; and infant nutrition. A category champion in each business, Heinz attributes its success in these areas in part to 'its operational capabilities with leading-edge tomato technologies'.

It's selling off its Dutch prepared vegetables operations and European frozen foods businesses. But the big news was its £470 million acquisition in August of HP Foods, with brands such as HP Sauce and Lea & Perrins Worcestershire Sauce.

THE STRAIGHT TALK

Heinz, which opened its first UK factory in Peckham 100 years ago, has realised that innovation is the name of the game in a mature market. Hence the removal of 70 management roles in the UK and Eire to make the company leaner, and the disposal of its frozen foods business as a growing number of UK consumers move to chilled foods. It's also expanding into promising new markets, such as Russia, China and India.

THE VERDICT

Life will become simpler for Heinz, now that it has decided to concentrate on the brands it best knows how to make and market. With the intention that growth should be fuelled by innovation, Heinz opened a new Global Innovation and Quality Center in Pittsburgh, where it claims 100 chefs, nutritionists and researchers will be pushing the baked bean envelope.

Any threats on the horizon? Only one. Cambridge scientist Dr Colin Leakey has invented a low-flatulence variety of baked beans. Ten tons of his low-emission Prim Beans go into production next year.