Heinz has announced 5.7% sales growth in its first quarter. The world’s biggest ketchup maker has seen encouraging sales growth in the first quarter of its fiscal year. As pressure from increasing commodities costs and the low carb dieting trend continue to challenge the food industry, the company has wisely chosen to stay true to its core brands.
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It has been a good year for the food giant: HJ Heinz has announced a growth in sales for the first quarter of its fiscal year, and, discounting the effects of selling several brands to Del Monte, which boosted profits last year, earnings per share were up 7.8%.
Heinz has continued meeting expectations despite rapidly rising costs of energy, transportation and commodities, which have forced other companies such as General Mills to raise wholesale prices by as much as 9%. Heinz responded to the added expenses by boosting its ketchup prices for US restaurants and other commercial customers, keeping price increases from reaching consumers in retail outlets.
The company can attribute much of its growth to the US and Canada. This was largely due to Heinz’s successful – and innovative – method of addressing the low carb craze. The popularity of the low carb diet, which recommends avoiding pastas, breads, and other starchy foods, has been blamed for falling sales in products such as frozen potatoes.
Heinz, whose popular Ore-Ida frozen potatoes brand accounts for 6% of its total US sales, met the challenge by introducing Ore-Ida Extra Crispy Easy Fries earlier this year. Rather than emphasising carb content, the company chose to focus on the improved taste quality and high convenience of the product. The fries have proven extremely successful thus far. In addition, Heinz’s newly released Smart Ones Truth About Carbs frozen dinners line has also performed well.
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By GlobalDataDespite the potential the low carb fashion offers for growing market share and increasing sales, it has also presented many pitfalls for food and drink manufacturers. By staying true to its core products and emphasising qualities other than carbohydrate content, Heinz is leveraging its strengths as a frozen food producer and effectively confronting the challenges facing the sector.
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