5 of 15 Top Heinz Brands are from Emerging Markets
H.J. Heinz Co.’s (NYSE:HNZ) acquisitions of Foodstar in China and Quero in Brazil are now among the firm’s top 15 global brands. With the entry of these two names, 5 of the top 15 brands of Heinz are now considered emerging market brands. H.J. Heinz Co. is aggressively focusing on expanding its international footprint and aims to generate 25% of its revenues from emerging markets by 2016. It manufactures and markets an extensive line of processed food products that includes condiments, meals, snacks and infant/nutrition products. The company 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 near $62 Trefis price estimate for H.J. Heinz Company, which is around 20% ahead of the market price.
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New product launches to facilitate rapid growth
These two acquisitions have enabled Heinz to expand its presence in the international space and is expected to increase company sales considerably over time.
Quero had a big impact on Heinz’s performance in Latin America. With annual sales of $325 million the acquisition is expected to double Heinz’s sales in Latin America apart from providing Heinz’s popular brands a channel to increase product distribution. This also provides the company the ability to develop products locally over time.
Foodstar’s solid market presence in the fast growing Chinese market will boost Heinz sales to $350 million this year, well ahead the previously expected $300 million. Nine months since the acquisition, Foodstar has grown by more than 20% compared to the same period last year due to additions in soy manufacturing capacity and expansion of the Master brand in more Chinese markets. Heinz will soon launch Foodstar’s first new products in more than 2 years, giving it a premium presence in all 3 of the largest soy sauce segments in China that include light, dark and Weijixian soy sauce.
5 of the top 15 are now emerging market brands
With the acquisition of Quero and Foodstar, 5 of the Top 15 Heinz Brands are now considered emerging market brands. The top 15 brands currently make up nearly 75% of Heinz’s portfolio.
Emerging markets continue to grow in importance for Heinz as it accounted for 23% of the sales in the last quarter and representing nearly 13% organic growth.
Emerging markets are the primary growth engines for Heinz’s top line. Heinz has gradually diversified its footprint across a majority of key emerging markets and will benefit from double-digit organic growth in China, India, Indonesia, Brazil and Russia. We wrote more about this in a recent article – Heinz Heads to $62 on Growth from Emerging Markets.