Forget those original 57 varieties. H. J. Heinz now has thousands of products. One of the world's largest food companies, Heinz makes ketchup and other condiments, soups, sauces, frozen foods, beans, pasta meals, infant food, and other processed food products. Its flagship product is ketchup, of course, and the company dominates the US ketchup market. Heinz's customers include food retailers, the foodservice industry, and the US military. Its leading brands include its namesake ketchup, Lea & Perrins Worcestershire sauce, Classico pasta sauces, Ore-Ida frozen potatoes, and its Boston Market, T.G.I. Friday's, and Weight Watchers frozen foods. Heinz was acquired by Berkshire Hathaway and 3G Capital in 2013.
Change in Company Type
Heinz Company shareholders approved an offer of $72.50 per share ($28 billion) by Warren Buffett's Berkshire Hathaway and Brazilian private equity firm 3G Capital to take the food giant private. The deal, which closed in the third quarter of 2013, is intended to speed Heinz's transformation into a global business. The company remains headquartered in Pittsburgh.
Heinz's products are sold in mature markets in the US. However, it continues to see success with its name-brand food products. The company's top 15 brands each bring in more that $100 million in yearly sales. In 2011 the top-tier group of brands enjoyed a combined volume and pricing gains of 3.8%, driven by Heinz, Complan, ABC, Smart Ones, and Ore-Ida brands. Wal-Mart continues to be Heinz's largest customer, representing 11% of 2011 sales.
It pays to keep pounding the bottom of the bottle. The company's ketchup and sauces rang up 43% of its sales in 2011, up 1% vs. 2010 despite a stale economy. Its frozen meals and snack products segment was a close second, accounting for 40% of sales. Its infant feeding and nutritional products came in third at 11%; the balance comprises the Other category, which brought in the remaining 6%. Sales increased in North America, Europe, the Asia/Pacific, and the rest of the world. However, the company attributed the increase largely to a carry-over effect of price increases it instituted in 2009.
Mergers & Acquisitions
Heinz continues to develop its business in emerging markets and in areas that promise growth spurts. Emerging markets offered combined volume and pricing gains of more than 14% in 2011. To build on this foundation, Heinz in 2011 acquired an 80% stake in Brazil's Coniexpress S.A. Industrias Alimenticias, a producer of vegetables, sauces, and condiments (including ketchup and tomato paste) under the Quero brand. The purchase represents Heinz's first venture in Brazil, which is the fifth-most populated country in the world. Previously, Heinz acquired Guangzhou-based Foodstar, a maker of soy sauce and fermented bean curd, in 2010 from private equity firm Transpac Industrial Holding for $165 million in cash. The purchase marked Heinz's entry into China's soy sauce market. Heinz is already on the ground there with a flourishing infant-nutrition business and Long Fong frozen dim sum. Heinz boasts full ownership of Egyptian condiments and sauces maker Cairo Food Industries, which strengthens its operations in Egypt and the Middle East. While infant nutrition is Heinz's smallest division, it's also the fastest-growing. To this end, the company is looking to make acquisitions in infant feeding, as well as in emerging markets such as China and India.
Berkshire Hathaway and 3G Capital acquired Heinz and took the company private in 2013.