Can Probiotic Juice Help Heinz’s Australian Operations?

by Trefis Team
-21.21%
Downside
72.49
Market
57.12
Trefis
HNZ
H.J. Heinz Company
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H.J. Heinz Company (NYSE:HNZ) is teaming up with Probi AB of Sweden to launch Golden Circle Healthy Life probiotic juice in Australia. [1] Since 2011, Heinz has been suffering in Australia as price wars between the country’s two biggest retailers, Coles and Woolworths, led to a significant margin erosion in the region. Heinz is also extending its ketchup portfolio and increasing the production of Lea and Perrins to meet the growing demand for ketchup, condiments and sauces. Heinz competes with major food and consumer companies like Kraft Foods (NYSE:KFT), Tyson Foods (NYSE:TSN), ConAgra Foods (NYSE:CAG) and Campbell Soup Company (NYSE:CPB).

We have a $51.21 Trefis price estimate for H.J. Heinz Company, which is about 6% below the market price.

See our full analysis for H.J Heinz Company

First of its Kind Product

This product is the first non-dairy probiotic beverage launch in Australia. Heinz had acquired Golden Circle in 2008 and is one of the leading juice players in the country. Major food and beverage companies around the world are introducing products perceived to be natural and organic since consumers are getting more health conscious, especially in the developed world.

Ketchup and Sauces Remain Focal Point

Having received a terrific response for limited time Heinz Ketchup Blended with Balsamic Vinegar, the company has decided to permanently add the product to its standard line-up of ketchup offerings. [2] The product is the first new flavor from Heinz Ketchup in nearly a decade.

Heinz also plans to expand Lea and Perrins sauces production by a third to 12,500 tonnes by the end of 2013. Heinz had acquired the Lea and Perrins brand in 2005. [3] The company continues to perform well in the overall ketchup, condiments and soups market with a market share of 8.05% in 2011, as per our estimates. Moreover, global ketchup sales witnessed a 8.6% revenue growth last quarter.

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Notes:
  1. Probi and Heinz to launch the first probiotic juice in Australia, 4-traders.com, April 20, 2012 []
  2. Heinz® Tomato Ketchup Blended with Balsamic Vinegar Satisfies Fan Hunger as Newest Member of Heinz Ketchup’s Standard Line Up, eon.businesswire.com, May 1 ,2012 []
  3. Heinz plans to increase Lea and Perrins production, bbc.co.uk, 16 May,2012 []
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