Earlier this week H. J. Heinz Co (NYSE: HNZ) launched a widely discussed preview of its latest product: Balsamic Ketchup. The new version, which is made with balsamic vinegar rather than the traditional white vinegar, is being positioned as a fancier, more sophisticated alternative to the Heinz classic. This new offering, as well as the recently introduced individual single-serve packets, will continue to boost customer satisfaction and increase Heinz’s dominance in the ketchup segment over competitors such as Kraft Foods (NYSE: KFT).
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Failed Facebook Launch
In order to spread word-of-mouth and drum up support for their new product, Heinz announced in late October that customers would be able to order the limited-edition balsamic ketchup on their Facebook page starting on November 14th – a full 2-3 weeks before the product hits stores. Unfortunately, a technical glitch did not allow customers to place orders until 9:00pm on the 14th, causing a flurry of wall posts and messages clamoring to be able to order the fancy new ketchup. [1] Once the problem was fixed, Heinz promised a free bottle to all those who had posted about the difficulty or tried to order the ketchup that day. [2]
Number One in Customer Satisfaction
Despite the debacle of the Balsamic Ketchup Facebook launch, Heinz recently announced that it was ranked #1 in Overall Customer Satisfaction by the American Customer Satisfaction Index (ACSI), with a score of 89 – eight points higher than food industry average. [3] Strong, consistent customer satisfaction is what has allowed Heinz to develop more than 60% market share in the US ketchup segment.
Currently the ketchup, condiments, and sauces category accounts for 44% of the company’s stock price according to Trefis estimates. If sales of the new balsamic ketchup are able to increase Heinz’s global market share, it could have a strong upside potential for the stock price.
The Trefis price estimate for Heinz is $60, a 20% premium over the market price.
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