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Heinz 1Q Net Down 6%; Plans More Entry-Priced Items

Wall Street Journal - Aug 23, 2011

H.J. Heinz Co. (HNZ) is adding more products at lower prices to try to draw in lower-income consumers buffeted by economic uncertainty. The company said its earnings fell 6% in its fiscal first quarter.

Heinz executives said they are accelerating the introduction of entry-priced items in developed markets, especially in the U.S., to appeal to consumers with $50 or less to spend on groceries each week. Rather than offer more for less, like last year's deal for 40-ounce ketchup bottles for $1 at Wal-Mart Stores Inc. (WMT), Heinz is trying to cater to the most-vulnerable consumers with smaller product sizes that it can sell for less at convenience and dollar stores.

"It's less about price per ounce, and more about the entry price point," Heinz Chief Financial Officer Arthur Winkleblack said Tuesday. Heinz declined to provide specifics on any products that would meet those consumer needs.

Heinz's plans for lower-priced products have been gestating for about three months, at a time when U.S. consumer confidence has plunged to its lowest point since 1980. Shoppers are also using more coupons and trying to keep their grocery bills down by buying only what they need.

That caution is hurting Heinz's results close to home. The company's North American consumer-products division recorded no sales growth in its fiscal first quarter. (That number refers to "organic" sales, which exclude acquisitions and foreign-exchange impacts.) The North American consumer-products division sells the company's namesake ketchup, Ore-Ida frozen potatoes and other products.

Read Full Article from Wall Street Journal

- Posted: 2011-08-23 11:02:06

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