Page 6: Conclusion
By operating through a strategic European category structure, Heinz is now able to identify top-line growth opportunities and not just focus attention on geographic markets as it did previously. It is this change in organisational structure which has enabled Heinz to create the sort of organisation with a competitive edge that can ‘deliver the 21st century early’. It is only by operating in such a dynamic way that a modern organisation is able to create shareholder value. Heinz wants to ensure the proper management of capital investment, to control capital expenditure and ensure the best return to shareholders.
The new organisation also offers better opportunities in terms of manufacturing synergy, i.e. servicing the consumer at the lowest possible cost. For instance, with a European focus, Heinz can now choose where to produce a particular product. In some cases, it may make more sense to manufacture products for the UK in France and products for the continent at Kitt Green in the UK. Kitt Green is Europe’s largest food manufacturing plant, producing beans, soups, canned and jarred baby food and ketchup. The factory has state-of-the-art technology for production, with 1,200 cans a minute coming through these lines. These sorts of manufacturing opportunities were not possible under the old organisational structure.
Heinz is now seeking to build firmly on its European foundations to secure European leadership in the categories it is trading in. This not only involves double digit profit growth but top-line sales growth as well. This can be illustrated by using the seafood category as an example. Heinz has recently acquired John West – giving the company leadership in canned tuna in Europe. Today, Heinz is the only global canned tuna supplier which is vertically integrated, with controls from boat to supermarket shelf.
Heinz is still involved in the process of restructuring. Ensuring that the management clearly understand what is required of them, following the restructuring, is a key priority. In addition, Heinz in Europe must deliver the objectives which the group has set - ensuring 10 - 12% earnings growth each year. The net result of the restructuring is that the newly reinvented Heinz organisation is best placed to create high level returns. Heinz has recently been able to sell off non-core lines in which returns have been low and can now focus on those core businesses which are successful. Heinz continues to focus on these core categories whilst seeking new ways to build on strengths and identify new opportunities.