Heinz to Launch Low-Carb Ketchup
Excerpt by Deborah Cohen, Reuters Health

H.J. Heinz Co. said it will launch a low-carbohydrate ketchup and other new products, as it aims to expand key products and tap demand for foods popularized by trends such as the Atkins diet.

The new "One Carb" ketchup is the latest variety from Heinz's $1.2 billion ketchup business in recent years. The company recently introduced an organic ketchup, on top of colored versions aimed at children and new packaging such as an upside down bottle.

"We continue to look for opportunities to build scale in our core categories," Chief Executive William Johnson said during a presentation to Wall Street.

The new ketchup has only one gram of carbohydrates, 75 percent fewer than Heinz's regular ketchup, the company said.

Since spinning off its underperforming tuna, soup, baby food and pet food units to Del Monte Foods Co. last December, Heinz has focused on innovation and eliminated unprofitable products and package sizes.

In the past 18 months, it has trimmed about 30 percent of those products from its portfolio, and plans to eliminate an additional 10 percent by its fiscal 2005 year.

Analysts remain concerned, however, about slower categories such as its Ore-Ida frozen potato division.

Other new products Heinz announced on Friday include three Extra Crispy versions of Ore-Ida potatoes and a meat-based version of Classico pasta sauce.

Heinz also backed its prior fiscal-year 2004 earnings and sales growth targets.

Shares of Pittsburgh-based Heinz fell 45 cents to $34.80 in late morning trade on the New York Stock Exchange.

BACKING EARNINGS FORECASTS

The company forecast net sales growth, excluding acquisitions, of 3 percent to 4 percent. It expects earnings in the range of $2.15 to $2.25 a share, in line with Wall Street forecasts.

About 1 percent of the sales growth will come from expected volume increases of 1 percent to 2 percent; 1 percent from higher-margin products such as the new ketchups; and an additional 1 percent from smaller acquisitions in growing areas such as food service, which supplies institutional customers like restaurants, Heinz executives said.

In food service, Heinz is counting on expansion with key accounts such as No. 1 fast-food company McDonald's Corp. to drive growth.

Heinz, which already generates more than 60 percent of its sales outside the United States, is also banking on growth in Asia, with expansion planned for China, Thailand and the Philippines, among other countries.

Heinz is expected to earn 54 cents a share in the fiscal second quarter on average, based on a poll by Reuters Research, a unit of Reuters Group Plc. For the full year, the company is expected to earn $2.20 a share.

Reference Source 89

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