Wall Street Journal  Mar 16  Comment 
A former home security guard for a board member of H.J. Heinz Co. has been accused of insider training before the ketchup maker’s 2013 takeover by Warren Buffett and 3G Capital, according to a suit filed by the SEC.
Clusterstock  Feb 17  Comment 
US stocks closed little changed but the S&P 500 recorded its strongest weekly performance since the beginning of the year, following the record highs reached from Monday through Wednesday. The Dow hit an all-time high on Friday. Here's the...
newratings.com  Nov 23  Comment 
WASHINGTON (dpa-AFX) - H.J. Heinz Co. has recalled about 5,022 pounds of bistro au jus gravy product for incorrectly labeling it as pork gravy that contains undeclared allergens. The au jus gravy product contains milk and soy, known allergens,...
Clusterstock  Aug 6  Comment 
Bill Ackman has taken a $5.5 billion position in the snack-food company Mondelez, according to The Wall Street Journal. According to The Journal, Ackman has amassed a 7.5% stake in the company when options contracts are included, and this stake...
Benzinga  Jul 30  Comment 
In a report published Thursday, Bernstein analyst Alexia Howard upgraded the rating on Kraft Heinz Foods Co (NYSE: HNZ) from Market Perform to Outperform, while raising the price target from $73.50 to $94. The analyst believes that the stock...
Wall Street Journal  May 8  Comment 
Packaged foods giant H.J. Heinz Co. reported a 12% drop in revenue in the first quarter hurt by foreign currency exchange rates and inventory buildup in the year-ago period.
Jutia Group  Mar 25  Comment 
[Business Wire] - TheGrantLawFirm, PLLC is investigating a potential action on behalf of the shareholders of Kraft Foods Group, Inc. for possible breaches of fiduciary duty and other violations of state and federal law by the Company’s officers...
Forbes  Mar 25  Comment 
H.J. Heinz Company and Kraft Foods Group have agreed to merge, in a deal that makes it the fifth largest food and beverage company in the world.
Yahoo  Feb 11  Comment 
Activist investor Nelson Peltz's Trian Fund Management has been pushing Pepsi for about two years to separate its snack division from its beverage business to make two leaner and more entrepreneurial companies. In January, Pepsi said it had...


H.J. Heinz Company (NYSE: HNZ) makes processed food products like condiments, sauces, and frozen foods. The company is best known for its namesake brand, Heinz ketchup, which has 60% market share in the US, 70% in Canada, and 78% in the U.K[1] Heinz' other product lines include condiments and sauces such as salad dressing and soy sauce, frozen food, soups, beans and pasta meals, and infant food. The company's 15 top brands, including the flagship Heinz brand, make up over 70% of total sales.[2] In FY 2010, Heinz had sales of nearly $10.5 billion with a net income of $864.9 million.[3]

Heinz has spent a good part of the last decade restructuring its business, shedding less profitable brands and instead focusing more cash on marketing and product development.[4] The firm's renewed efficiency has recently been tested by rising commodities prices, which are driving up the costs of making and packaging food - high fructose corn syrup is a key ingredient in almost all Heinz products, and oil is refined to make plastic bottles for sauces and condiments.

Company Overview

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Many of Heinz’s products are prepared from recipes developed in their own research laboratories and experimental kitchens. After the ingredients are selected, they are shipped off to one of the company’s 68 owned factories or 9 leased factories to be processed. Methods of processing include sterilization, homogenization, chilling, freezing, pickling, drying, freeze drying, baking, and extruding.

In order to obtain a portion of certain raw products such as tomatoes, cucumbers, potatoes, and some other fruits and vegetables, the company makes pre-season futures contracts with farmers, which provides some protection against volatile commodity prices; for example, if the price of tomatoes suddenly skyrockets, Heinz is able to still buy them at the low price agreed upon in the contract. Other products such as dairy, meat, sugar, sweeteners, spices, flour, and other fruits and vegetables are purchased on the open market [6].

The company's core 15 brands accounted for 70% of total sales. Emerging markets currently generate 15% of the company's total sales, however Heinz's goal is to have them generate 25% of earnings by 2016 and up to 40% in the long term.[7] Company shows 11.6% market share in frozen dinner food

FY2011 Q1 Earnings Summary

  • Generated revenues of $2.48 billion, an increase of 1.6% from Q1 2010
  • Net income increased 13% to $240 million.

FY011 Q2 Earnings Summary

  • Revenues were $2.6 billion, a decrease of 1.2% from the previous year
  • Net income for the quarter increased 8.6% to $251.4 million.

FY2011 Q3 Earnings Summary

  • Posted third quarter earnings of $273.9 million or $0.85 EPS, up from $228.5 million or $0.72 EPS same quarter last year.[8]
  • Revenues rose 2% to $2.72 billion which matched analyst consensus estimates.

Segment Information

North American Consumer Products – includes operations in the United States in Canada, specifically the manufacturing, marketing, and sale of ketchup, condiments, sauces, pasta meals, entrees, and snacks to grocery stores. Other popular company owned brands include Classico, Jack Daniels, Bella Rosa, Weight Watchers, Bagel Bites, Boston Market, T.G.I. Friday’s, Lea & Perrins, and HP. Heinz owns the food and licensing rights for these various brands. Wal-Mart (WMT) is the company's largest customer, accounting for roughly a tenth of sales.[9]

U.S. Foodservice – similar to the North American Consumer Products segment, but deals with commercial (bars, restaurants, travel/leisure places, vending machines, take-out) and non-commercial (schools, hospitals, prisons, military) food outlets and distributors.

Europe – includes the operations in Europe of products in all categories. Other popular company owned brands include: Orlando, Karvan Cevitam, Weight Watchers*, Brinta, Nipiol, and Plasmon.

Asia/Pacific – includes the operations in New Zealand, Australia, Japan, China, South Korea, Indonesia, and Singapore of products in all categories. Other popular company owned brands include: Tim Piper, Wattie’s, ABC, Bruno, and Winna. The company plans to begin producing baby food at plants in China and Russia and to grow its child nutrition business in India. Baby food is the company's highest margin product, yet only accounts for 11% of revenue ($1.1 billion); the company is the world fifth largest company in total baby food. China's infant formula market is estimated to be worth $2-$3.7 billion and Heinz already has 3.1% market share (includes 48% share of prepared baby food market). A couple of competitors in China's baby food market may be potential takeover targets, especially as Heinz continues the worldwide trend of consolidation in the baby food market, following Nestle's acquisition of Gerber and Danone's purchase of Numico.[10]

Rest of World – includes operations in Africa, India, and Latin America of products in all categories. Other popular company brands include: Wellington’s Complan, Glucon D, John West, and Banquete.

Products as Percentage of Total Revenue[11]
Product 2010 2009 2008
Ketchup and Sauces 42% 42% 41%
Meals and Snacks 41% 42% 44%
Infant/Nutrition 11% 11% 11%
Other 6% 4% 4%

Trends and Forces

Rising Commodities Prices are Forcing Heinz to Make Difficult Choices

The ability to obtain raw materials, which include agricultural commodities such as tomatoes, cucumbers, potatoes, flour, at favorable prices is an essential part of the company’s success. Higher commodities prices translate into higher production costs for the company, which forces the company to either raise the prices of its products by placing the burden on the consumer or to take the burden itself by absorbing the higher costs and decreasing its profit margin. Many variables affect the availability of these commodities, such as government policy and regulation, crop shortages due to disease or pest infestation, adverse weather conditions, or other unforeseen circumstances.

Consumer Sentiment Shifting Towards Healthier Foods

As consumers have become more health conscious, they have shown a growing demand for healthier alternatives across all food categories. Riding this wave of consumer sentiment, Heinz introduced a certified organic ketchup "Heinz Organic Ketchup" and "Heinz Light", which are low sugar ketchups, as well as a number of other healthy alternatives. The biggest competitor in the organic ketchup market is a private company which makes "Annie's Organic Ketchup".

Competitor Analysis

Because Heinz makes a wide range of products selling in different markets, the company faces competition from both big companies with a diversified line of products and smaller companies with a narrower focus.

In the market for canned goods and soups, Campbell Soup Company (CPB) and ConAgra Foods (CAG) are Heinz’ direct competitors.

In the Major Diversified Food industry, Heinz competes with Archer-Daniels-Midland Company (ADM), Kraft Foods (KFT), and Tyson Foods (TSN).


  1. About Heinz
  2. H. J. Heinz Company F2Q08 (Qtr End 10/29/08) Earnings Call Transcript.
  3. HNZ Financials, Google Finance
  4. New York Times: "Heinz to Shed Units and Job in an Overhaul" 18 Feb 1999
  5. HNZ 2009 10-K, p. 19
  6. HNZ 2007 10K, Item 1 pg. 2
  7. Heinz Annual Report 2010, Letter To Shareholders
  8. Heinz 3Q net rises; buys stake in Brazilian co.
  9. HNZ 2010 10-K, Item 1: Business, p. 3
  10. Heinz Eyes Baby-food Sales Amid China Boom, Pittsburgh Tribune-Review, 4/30/10
  11. HNZ 2009 10-K, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations, p. 17
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