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ase Introduction

An Icon

An Icon • • • • Market leader in the ketchup category since 1960s H. J.

Market leader in the ketchup category since 1960s H. J. Heinz Company records over $10 billion dollars in annual sales The company owns 15 brands, each accounting for over $100 million in sales. Out of this, Ketchup by itself accounts for 30% of total sales.

An Icon • • • • Market leader in the ketchup category since 1960s H. J.

Current Scenario – 2007

Current Scenario – 2007 • The product had matured. • The market was heavily saturated. •

The product had matured.

The market was heavily saturated.

Heinz was still the market leader.

It relied on innovations – product, packaging and pricing to maintain modest growth.

Heinxe Ketchup was a brand in a commodity

market. Cost implications were having a direct

impact on Heinz’s margins. Three years of declining operating income despite being market leader.

Current Scenario – 2007 • The product had matured. • The market was heavily saturated. •
Current Scenario – 2007 • The product had matured. • The market was heavily saturated. •

Ketchup Wars

Competition against many generic brands. Most

prominently against Hunt’s. However, primary competition was with private labels.

Heinz’s twofold problem – Distribution channel, Shelf

Space. Heinz began offering trade deals despite eroding

margins. This helped block the growth of private lables.

Ketchup Wars • Competition against many generic brands. Most • prominently against Hunt’s. However, primary competition
Ketchup Wars • Competition against many generic brands. Most • prominently against Hunt’s. However, primary competition

The Red Rocket conditioning

The Red Rocket was a retro 24 oz. ketchup bottle by

Heinz. Heinz adopted trade promotions on the Red Rocket to

block private labels. While compensating the retailers to offset their margin compressions. While the category expanded, the price point trained the

consumer to wait to purchase ketchup only during these promotions. Meanwhile, the promotions helped the retailers compete with Walmart’s EDLP.

The Red Rocket conditioning • The Red Rocket was a retro 24 oz. ketchup bottle by
The Red Rocket conditioning • The Red Rocket was a retro 24 oz. ketchup bottle by

The EZ Squeeze

The EZ Squeeze bottle was essentially an upside-down

20 oz. ketchup bottle that was sold at the price of the traditional 24 oz. bottle. The EZ Squeeze bottle introduced in 2002 is proof of

Heinz’s innovations leveraging consumer habits. Consumer research indicated that 7 out of 10 consumers

preferred the new bottle. But the bottles represented only 12% of the sales. The

reason behind this was unknown. Intended as a short term profit boost, the plan failed. This prompted the team to look for new ways to stimulate sales through product innovation.

The EZ Squeeze • The EZ Squeeze bottle was essentially an upside-down • 20 oz. ketchup

The Package Conundrum

Heinz’s consumer research brought out an ongoing theme: A modest increase in ketchup consumption seemed to result when people purchase larger sized bottles

This was viewed as a way to increase sales and revenue growth.

However, implementation proved challenging, consumers cited

issues with – handling and storage. Twofold problem for the retailers – Increased shelf space, Lower

margins. Discounts could again proves as a viable solution but restocking

would have to be much faster, thus more expensive. Expanding the shelf space was not seen as a possible solution

considering the onslaught of private labels and the expensive slotting allowances. As a whole, the entire idea seemed improbable considering the required product promotion revamp and potential resistance from the retailer and consumer.

The Package Conundrum Heinz’s consumer research brought out an ongoing theme: A modest increase in ketchup
The Package Conundrum Heinz’s consumer research brought out an ongoing theme: A modest increase in ketchup

Preserving the Icon

Despite the tensions among Heinz, the retailers, the competition, and the buying public. Heinz needed to

  • 1. Maximise net profit by increasing the sales of their highest margin items.

  • 2. Deal with pushback from the retailers in the form of lowered shelf space and reduced promotional support.

  • 3. Handle the high consumer demand for the Red Rocket during its promotion, which had – high packaging costs and low margins.

Preserving the Icon Despite the tensions among Heinz, the retailers, the competition, and the buying public.
Preserving the Icon Despite the tensions among Heinz, the retailers, the competition, and the buying public.