Page 5: Identifying new opportunities
The newly reinvented Heinz will only be successful if it is able to identify and develop new opportunities. We have already identified two recent examples of Heinz’s inventiveness using new plant and investment in technology new to Heinz – tomato flavoured pizza crusts and baked bean pizzas. Another excellent example of Heinz’s ability to seize new opportunities is the way it has developed in Eastern and Central European markets. These have only been open for a relatively short period of time but current rates of growth in these markets provide a strong case for optimism.
Heinz now has well established babyfood businesses in most Eastern European markets - in Russia, the Czech Republic and Hungary. It also recently bought Publitski, Poland’s leading ketchup and sauce brand, which will act in tandem with the Heinz brand in Polish and other Eastern European markets. Heinz expects to see 25% compound growth from Eastern European business in the next five years. The pet food operation in Eastern Europe and Russia is an embryo business at the moment. There are more pet owners in Russia than in the USA - a clear indicator of the potential of this operation. Heinz now has to persuade pet owners to purchase conveniently prepared Heinz animal food.
Heinz has been marketing baked beans in Russia for 18 months, an operation which was built on the back of the baby food business. The Russians enjoy eating beans, but are not used to eating them in tomato sauce. Heinz realised this was a major opportunity to build on the existing popularity of baked beans throughout other European markets. However, a certain amount of subtlety was required in introducing such a popular brand to a new market in which consumers had little awareness of Heinz Baked Beans. For the Russian and East European market, therefore, Heinz changed the label design to show the product so the consumers could see what they were buying. This resulted in a tenfold increase in baked bean sales in Russia within 12 months.