Proof big companies

1 Introduction
There are few aisles in a New Zealand supermarket that do not contain a Heinz Watties product. It has 30 brands in its stable, including Watties, Heinz, Lea & Perrins, Chef, Champ, Eta, HP, Farex, Nurture, Greenseas, Weight Watchers, Praise, Oak and Craigs. With over one thousand domestic products, it covers canned, frozen and shelf-stable foods, including canned fruit, tomato and other sauces, baked beans, spaghetti, creamed rice, seafood, dressings, frozen vegetables, soups, jams, baby food and pet foods. Watties also supplies the foodservice industry with quality products,such as tomato sauce, soups, curry bases, canned fruit and vegetables, baked beans, frozen vegetables, dressings, jams, and seafood. Increasingly, the foods that Heinz Watties makes are found in supermarkets and foodservice overseas, with Australia and Japan carrying the brand of its sister companies. Heinz Watties position in the market is the result of its strategic response to market conditions and its ability to interpret and, ideally, anticipate consumer demands. Around 80 percent of products against which it competes are imported. These imported products often have the advantage of lower production costs, due to the higher volumes produced, as well as currently benefiting from an import friendly exchange rate due to the strong NZ dollar. Staying ahead therefore means being agile rapidly adapting to the market.

can be agile
Meal preparers today have fewer cooking skills, on average knowing how to prepare just five basic meals. These meals are often rotated over the week leading to meal boredom Two income households where both householders are working mean there is less time for meal preparation. Most meal preparers are unwilling to spend more than 30 minutes on meal preparation (at 4 p.m., 70 percent of food preparers have not yet planned that evenings meal) Meal preparers now want to assemble a meal using four to five partially pre-prepared ingredients rather than starting from scratch. Insights gained from this type of research allow companies like Heinz Watties to determine both product innovation and communication strategies, as we will now see.

3 The marketplace
Currently, the split between domestic and export sales of products produced by Heinz Watties is around 45:55 a huge increase since 2000 when it was 85:15. Domestic: A significant factor affecting the domestic market is competition from imported goods. Around 80 percent of the products its brands compete against are imported. With an open market and virtually no tariff barriers in place in New Zealand, products manufactured off-shore often have a cost-ofsupply advantage and can be sold at discounted prices. Watties high level of brand recognition and its established reputation provide some buffer against imports, although its most effective response has been to develop products that better meet New Zealanders demands for foods that taste better, are healthy and are convenient products that help answer the questions: What are we going to have for dinner tonight? And for lunch? And when I am away from home? International: Heinz Watties exports a range of products to Australia, Japan and the United States. This arm of its business is growing, thereby providing growth opportunities for local producers and growers who supply Heinz Watties in the Hawkes Bay and East Coast regions, and in Canterbury and South Canterbury in the South Island.

5 Product innovation
Innovation is at the heart of Watties growth and success. Heinz Watties accepts that even companies with recognisable brands and high customer loyalty must invest and adapt to meet new customer expectations. It is energised to identify and exploit new untapped markets ahead of its competitors. But even products such as baked beans and tomato sauce that have been a mainstay for generations of shoppers, can attract new customers when presented in new ways. Examples are Indian and Boston style baked beans, marketed as Bean There Beans. In this way, Heinz Watties is looking to keep products fresh, appealing and relevant to consumers as well as offsetting competitors encroachment on its market share. More importantly, perhaps, its team of chefs, food technologists, researchers and package designers, plus experts in nutrition and quality assurance, is constantly finding new ways to keep up with new products, better nutrition, better taste and consumer value. Recent examples include Watties Toasties, Watties SteamFresh vegetables and meals, pouch meals such as ready-toserve Tortellini and even simple innovations like Watties Fruit Squirtz that are fruit pure in a single-serve pouch format. Toasties utilise New Zealand developed and patented technology to seal the toasted sandwiches, but the refinement of this process involved many months of trial and error to create a product with home-made taste that can be cooked in an upright kitchen toaster. Both the SteamFresh and Tortellini products also meet the growing need for ultra-convenient foods, but neither of these ranges could afford to compromise on flavour. Hence all vegetables used in Watties SteamFresh products are picked at the optimum time and snap frozen, often within two hours of picking to ensure freshness and taste. For the Tortellini range, recipe development took many months and included multiple stages of consumer research to help direct development of the complex flavour profiles that now exist. Both ranges have now been exported to Australia and it is a challenge to keep up with demand. This year Heinz Watties has also introduced a range of soups and meals in microwaveable bowls. Although the soup recipes were developed by a Kiwi for Kiwis, they have found favour with consumers in Australia and the United Kingdom. Again, getting the flavour profile of these products right is the key to success, as no amount of fancy packaging and advertising will help offset poor-tasting food.

2 Background
Watties has been manufacturing high quality food products in New Zealand since 1934. The founder James Wattie (later Sir James) started his fruit pulping and canning business, J. Wattie Canneries, in a four-roomed cottage in Hastings. Watties began as a producer of fruit pulp, then canned seasonal fruit, and has expanded to become a major supplier of food products for both domestic and export markets. Sir James built a company based on sound business principles, creative ideas and the involvement and enthusiasm of his employees. In 1992, Watties became part of the global HJ Heinz Company. From its humble beginnings, Heinz Watties has become a major contributor to the New Zealand economy, with annual turnover in excess of $650 million and a workforce of more than 1,800 including seasonal workers. It has two major production centres, Hastings, where there are two processing facilities, and Christchurch. These are world-scale facilities, with the King Street plant in Hastings having the largest cannery in the Southern Hemisphere. The frozen products plant in Christchurch produces 50,000 tonnes of frozen peas, carrots and beans a year.

4 Consumers
To remain in touch with what New Zealanders want from their food suppliers, Heinz Watties continues to conduct in-depth market research. During the 1990s, Heinz Watties undertook major market research using both international and New Zealand research projects (and the results are undoubtedly still relevant). These projects focussed on changing social dynamics and how these influenced the food and meal preparation of households. The results of this research identified a few key trends that established the basis for both product innovation and marketing over the last couple of decades: The number of meals prepared in the home is decreasing (now less than 50 percent in the United States and around 70 percent in New Zealand)

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Other marketing aims were to encourage consumers to try new products, to increase consumer interest in existing Heinz Watties products and to increase specific product and total sales. Heinz Watties knew that this campaign needed to show an improvement in sales to be sustainable. Heinz Watties wanted its customers to see its products as a complementary and useful collection of convenient food ingredients for everyday meal preparation. The target market was identified as the main meal preparer who was usually also the household shopper. This covered a broad target age-range from young people in flatting situations, to young couples, to families. The market strategy was to reach all New Zealand households. Taken across the whole market, expanding a meal preparers repertoire from five meals to six or seven (or more), and ensuring Watties products were integral to that expanded menu, would amount to a significant increase in specific product and total sales. Another way by which Heinz Watties retains its competitive advantage is through the creation of more complex or high value-added products. For example, rather than use its New Zealand grown crop of tomatoes to compete with plain canned tomatoes imported and sold at low cost, Heinz Watties has created new and interesting combinations and flavours, such as Moroccan style, Pesto style, Smoky BBQ flavour, Tomatoes with Sweet Chilli and Indian Spiced Tomatoes. This thinking led Heinz Watties to the innovative communication strategy of Food in a Minute. This strategy led to the development of a new content, a new format and a new media strategy, and broke many of the traditional advertising conventions.

7 Research and development

Heinz Watties has always taken a long-term view of innovation. This is evident in its proactive approach at Kowhai Farm, a research farm associated with Lincoln University in Christchurch. This is run as a certified organic farm, and Heinz Watties supports this research into organic farming in order to encourage farmers to grow organically and help them make the switch from conventional to organic farming. It is a way of increasing opportunities for organic product in both the domestic and export markets. Indeed with market leadership in over 20 categories and access to quality ingredients, Heinz Watties has established a reputation among Heinz global companies for developing and testing new products. The New Zealand market is an ideal size to allow product concepts to be trialled and rolled out to other markets. Thiswork isundertaken by a team of 40 product and packaging development staff and has resulted in many world firsts coming from New Zealand,includingsauces and pouch meals. A dedicated facility at one of Heinz Watties plants in Hawkes Bay also undertakes research and development work for Heinz Japan. The team here includes staff broughtfrom Japan.

GLOSSARY

6 Innovative communication strategy

Over the years Heinz Watties has continued to produce innovative and successful marketing strategies. One that will be known to most New Zealanders is the Watties Food in a Minute promotion seen daily just before the news on Television One (and earlier on TV2). As the result of research, Heinz Watties realised it needed to help meal preparers throughout New Zealand answer the question Whats for dinner tonight? To provide this help and help sell its products, Watties decided to communicate daily meal solutions and recipes. These recipes needed to be easy to prepare, require a limited amount of time, use readily available ingredients and taste great. Also, for Heinz Watties, they needed to ensure they included a wide range of products that could be used in these recipes and the products needed to be reasonably priced and available in supermarkets across New Zealand. The main marketing objective of the Food in a Minute campaign was:

8 Conclusion
Heinz Watties is a highly successful company in the food sector because of its: Skills in interpreting market intelligence Understanding of its markets, both domestic and international Commitment to providing consumers with high quality product Ability to move quickly on new product development Real passion and commitment to product and marketing innovation. While the television cooking show provided the impact and helped inspire the household shopper to try the recipe, Heinz Watties realised it would need to support the television with other media that more easily gave the specifics of the recipes. This included recipe leaflets, a special monthly feature in Next magazine, where the presenter, Allyson Gofton, is food editor and the Food in a Minute cookbook which is one of New Zealands best sellers in the cookbook range. With the web identified as one of the most important ways of delivering the recipes, the Food in a Minute website was launched in May 2002. Today it is the market leader in the food and beverage segment of the New Zealand web market, with a 30 percent share. It receives over 4 million hits per month. Heinz Watties has new initiatives in the pipeline for 2007, including recipe texting and Kids in the Kitchen. Watties has been a trail-blazer in adopting the web as a key communications tool for promoting its brands and sales. It is a large company whose management style enables it to be agile to move rapidly to keep ahead of the pack.

To encourage the family meal preparer to discover a wide range of simple meal ideas that the family will love.

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Advertising Advertising is bringing a product (or service) to the attention of potential and current customers. Advertising is typically done with signs, brochures, radio or TV commercials, direct mailings or e-mail messages, personal contact and the like. Brand The trading name of a product that has a high level of recognition in the market place. Successful development of the brand and brand mark (identifying symbols and design) is a considerable marketing tool. Innovation A new and creative idea, product or service. The process of converting knowledge and ideas into better ways of doing business or into new or improved products and services that are valued by the community. The innovation process incorporates research and development, commercialisation and technology diffusion. Market research Finding out information about the characteristics of potential customers to solve marketing problems and help with marketing decisions. Marketing The range of activities that relate to identifying, anticipating and satisfying customer needs (profitably) by means of standard tools such as market research and promotion. Objective A measurable goal or outcome. Organic Production of food under a natural system using minimal or zero synthetic chemicals. Research and development (R&D) Future-oriented, longer term activities that result in technological advances based around three stages: research, invention and innovation. Strategic Long-term goals and objectives (usually 3-5 years). Target market The group of customers that a product or service is designed to satisfy. Turnover The amount of money earned by a business through sales of goods and services. Value-add An enhancement to a product or service.