Heinz To Raise Spending Cap To Keep Ketchup Flowing

by David Goetzl, Friday, August 21, 2009, 6:42 PM

H.J. Heinz Co., which saw a 3% increase in marketing outlays in its most recent quarter, expects a larger jump in the coming months as it looks to continue expanding its core ketchup brand and to jump-start its Weight Watchers Smart Ones line.Heinz's most recent quarter ran from May through July. CFO Art Winkleblack said last week that the company would increase consumer marketing by 4% to 6% for its fiscal year that runs through next April.The company did not provide specific details, and its percentage ups and downs are based on global outlays. But speaking on a conference call with investors to discuss recent results, Winkleblack said that "in the back half of the year, we expect increased innovation in consumer marketing," with support for the U.S. retail business "a key part."Heinz had some $17 million in domestic ad spending during the January-May period this year, according to TNS Media Intelligence. Those are the latest figures available.

In the most recent quarter, Heinz increased TV spending behind the ketchup brand as well as Classico and Lea & Perrins sauces.Sales for Smart Ones fell in the May-July quarter. Winkleblack said that was partly because of the correlation with consumer confidence -- and as a result, sales in the U.S. have been down for more than a year. He said advertising has been light recently, but is expected to accelerate.Smart Ones has been a strong performer in Canada, Winkleblack said, and the company "fully expect(s)" a "rebound over time" in the U.S.Earlier this year, Heinz said it expects global organic growth for ketchup to come this fiscal year -- even after a 9% increase in fiscal 2009.For the May-July quarter, revenues fell 4% to $2.47 billion and profit dropped 7% to $212.6 million.

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=112074

McD's focus back on beef with Angus launch

By: Emily Bryson York Aug. 03, 2009

(Crain’s) — Lest you're thinking it's all about lattes, salads and chicken sandwiches, McDonald's Corp. is putting beef back at the center of its marketing agenda.

The Golden Arches has recently promoted its Quarter Pounder and Big Mac sandwiches, but Angus Deluxe is its first burger launch since 2001. The 1/3-pound sandwich, made with Angus beef, a higher-quality bun and choice of toppings, will be top dog in McDonald's burger category. However, many experts wonder if this is the best time for promoting premium.

"We listened to our customers, and we know what they're looking for," said Marta Fearon, director-marketing, McDonald's USA. While the chain has spent years building credibility in chicken, salads and coffee, she said, "we know that even in this type of economy, McDonald's is all about value, and to be able to know that you can go to McDonald's and get a third-pounder with quality ingredients at an incredible price is truly compelling for the consumer."

Anecdotal evidence from the Chicago market seems to support the thesis that Angus is selling quickly. But McDonald's President-Chief Operating Officer Ralph Alvarez admitted it was a challenge to sell a $4 sandwich in a call with investors last month. "Timing's not perfect on Angus, I will tell you," he said. "But customers love the product."

Edgy creative

Creative for the burger, breaking tomorrow, attempts to create an "edgy" personality for the product, which McDonald's has been perfecting for the past two years or more. But don't look for scantily clad women or controversial jokes. This is still McDonald's.

The burger comes with a sweet-tasting bun and a choice of toppings including bacon and cheese; mushroom and Swiss; or the classic lettuce, tomato, onion, pickle and mayo. The patty itself is a force to be reckoned with. "There's this moment when you sit there and behold it," said Bill Cimino, group creative director, DDB Chicago. "You look for the best point of entry, how to start this thing."

For that reason, he said the agency chose to build ads around the first-look Angus, and where to bite first. A custom-made helmet camera records burger consumption from the eater's perspective. And since McDonald's wanted an edgier, more humorous personality for Angus, Mr. Cimino said DDB came up with "rules to live by" for burger fanatics, such as "your sleeve is not a napkin."

It should surprise no one that McDonald's held Angus in the wings. As the undisputed leader in the burger and fast-food categories, the brand has borne the brunt of industry criticism as well as better-for-you activism. As a result, Mickey D's has spent years launching salads, white-meat chicken nuggets and better-quality coffee. It's also conducted a multiyear effort to address parental concerns about nutritional content, through its Moms Quality Control Panel. But now, weighing in at 750 calories and 39 grams of fat, Ms. Fearon described Angus as a product whose "time has come."

Wide appeal expected

Ms. Fearon and Mr. Cimino also said they expect the product to have broad appeal, and not to discount the product's potential with women. McDonald's has, as usual, ordered different creative for each of its major marketing segments. For the African-American market, the work focuses on flavor. For the Asian market, ads focus on toppings. And for the general market, McDonald's focuses on the three ways Angus can be ordered.

The chain will run its first wave of TV commercials for four weeks, and bring Angus back in October, as the centerpiece of its Monopoly promotion. McDonald's won't conduct its usual mass giveaway efforts for Angus, but will offer an online coupon for free fries and a drink with purchase of the new burger on MySpace, YouTube and Ad.com partner sites.

In addition to DDB, Chicago, for the general consumer market, McDonald's agencies for Angus include Tribal DDB, Chicago, for digital; Alma DDB, Miami, for Hispanic; Burrell Communications, Chicago, for African-American consumers; and IW Group, San Francisco, for the Asian market.

(This story originally appeared on the Web site of Crain’s sister publication Advertising Age.)

http://www.chicagobusiness.com/cgi-bin/news.pl?id=35002

How LinkedIn's founder got started

Reid Hoffman talks about his path from academia to social media.

Interview by Alyssa Abkowitz, reporter

August 25, 2009: 5:29 AM ET

(Fortune Magazine) -- My dad wouldn't let me have a computer because he didn't think it was relevant. I was in college before I actually got one. I think if he knew then what he knows now, I would have had one much earlier. But I've always had an interest in how we improve people's ecosystems -- whether it's civics or education or economics. When I was an undergrad at Stanford, I thought the way to do that was to be an academic. Then I saw that wasn't the right way, because you become a scholar and publish in an area where only, like, 50 people will read it.

Find ways to reach people.
How do you change lives for millions of people? At Oxford [as a graduate student in philosophy] I decided software entrepreneurship was the way.I came back to Silicon Valley and worked for Apple and then Fujitsu before starting Socialnet, an early social-networking site. After a while I didn't agree with the direction it was going, so I talked to Peter [Thiel, co-founder of PayPal], whom I knew from Stanford. He said, "Come join us. Help us at PayPal."

Improve users' lives.
What I realized before PayPal was sold was that there was going to be a confluence of two forces. One was how the world of work is changing -- every individual is now somewhat entrepreneurial. They're getting the next gig themselves. The other was the Internet, which could empower all these individuals to establish profiles online so that people can find them. You'd be able to use your network to get access to people to better chart your path. I started LinkedIn because changing people's professional lives is a massive transformation. In 2003 we got financing from Sequoia Capital, and we started to get more and more people into our service. Everyone began to realize the value. That's when I was, like, "This could work."

Secrets of my success

• It's okay to be brief
When people ask me about work/life balance, I just laugh. But I try to be time-efficient by scheduling meetings in appropriate increments --15 minutes or less sometimes. I've also tried to build a culture that understands writing brief e-mails is not emotional coldness.

• Be willing to change course
Entrepreneurs tend to believe, "I've got my idea, I'll go until I die." But I advise them to take seriously the questions about whether their [business] plan is irredeemably flawed and whether they need to change what they're doing. Be diligent about failing fast so that you don't spend five years doing something that's just going to fail.

• Don't be a perfectionist
I frequently tell Internet entrepreneurs, "If you're not somewhat embarrassed by your 1.0 product launch, then you've released too late." There's value in launching early, getting engaged with customers, and learning from them. That can direct your progress.

http://money.cnn.com/2009/08/24/technology/linkedin_reid_hoffman.fortune/index.htm?postversion=2009082505

Yum! Brands (YUM): A Promising Pick For 2009

Dec 22nd, 2008 | By Mike Caggeso | Category: Stock Market Investing

While most companies are bracing themselves for difficult times in 2009, Yum! Brands Inc.(NYSE:YUM) is aggressively expanding its international operations. The fast food group has China at the core of its growth strategy for 2009. Mike Caggeso says this could make Yum! one of the most promising investment stories in the coming year.

Yum! Brands Inc. (NYSE:YUM) expects another year of double-digit profit growth.

For nearly everyone else, 2009 won’t be just “another year.” Nearly every economist expects the first half of the New Year to bring more of the same, a deepening global financial crisis that’ll throw an even bigger, wetter blanket on economic growth than it did this year.

Indeed, even more than in 2008, next year will be a real-life case study of thesurvival of the fittest. And Yum’s certainly fit for the fight.

“Our industry is better-positioned in times like this,” Yum Chief Executive OfficerDavid C. Novak told The Wall Street Journal. “We’re better-positioned than most other categories and industries.”

Already, we’re seeing companies slash work forces, trim (or abolish) dividends, and lock the safe that stores their spending money, sell off holdings or even shut down completely.

Yum’s not immune from the downturn. It, too, is cutting $60 million in operating costs from its U.S. business. It’s also putting a hold on buying back shares next year to preserve cash.

But unlike most, Yum hasn’t red-lighted its 2009 expansion plans – it’s still planning to build as many as 1,400 restaurants in international markets. About 500 of those new stores will be in China. That’s part of the reason the overall company is projecting at least 10% profit growth in 2009.

More broadly, Yum is expanding in the world’s fastest-growing economies and is making its menu part and parcel of every foreign country in which it operates. Two factors have imbued the company with a corporate killer instinct that’s enabling it to survive and thrive in the face of the current harsh economic environment: The innate strength of its own brands and a proven ability to adapt to any market it decides to pursue.

For marketing muscle, the Louisville, Ky.-based Yum has an army of brands – Pizza Hut, Kentucky Fried Chicken, Long John Silvers and A&W – plus its own line of Yum Restaurants that it operates outside the United States.

And its overseas franchises – especially Pizza Hut and KFC – are especially adept at making themselves the people’s favorite local flavor, instead of just their favorite American flavor.

Here’s a look at some of the items on Pizza Hut’s China menu: tuna fish pizza, roasted squid, zesty shrimp soup, a variety of rice-and-meat dishes (kimchipork, curry beef and Hungarian beef rice), green tea, and chocolate mousse cake.

The bottom line: Yum’s stronghold and growth potential in China is shaping up as one of the most promising investment stories of 2009.

CHINA STRONGHOLD

As far as Yum Chief Financial Officer Richard T. Curucci is concerned, the company’s target for 10% profit growth should be easy to hit.

“We can get these numbers without heroic sales performance” at existing restaurants in China, Carucci said on a Webcast from the company’s analyst meeting, Reuters reported.

While Carucci says that Yum is “still not sure how China’s going to respond to a slowing economy,” he is certain of the company’s master plan which makes the Red Dragon the centerpiece of its growth strategy.

As of now, the United States accounts for 41% of Yum’s operating profits. China accounts for 28% and the rest of the company’s operations around the world account for the remaining 31%.

By 2013, China will account for 40% of Yum’s operating profit, while the United States and the rest of the world will each account for a 30% share, according to company projections.

As this plays out, Yum should outdistance some of its rivals, especially McDonald’s Corp. (MCD). That’s because Yum has done a better job penetrating the China market.

From 2002 to 2007, Yum opened 1,678 new stores in China, for a total of 2,558. In that same span, McDonald’s added 330 stores, giving the Golden Arches’ owner a total of 876 stores in China.

Yum has even stolen McDonald’s thunder in the mascot department. Its KFC mascot, a chicken character (naturally) named “Chicky,” roams stores and interacts with children. And the company’s Chicky program includes in-store birthday parties, kids’ fun camp and school tours of its stores. No wonder that Novak, the Yum CEO, boasted to Business Week two years ago that Chicky had already become “the Ronald McDonald of China.”

“We’re on the ground floor of a booming market, just like when Colonel Sanders started KFC and Ray Kroc started McDonald’s,” Novak told Business Week, noting that he one day wants to have as many restaurants in China as he does here in the United States.

STATESIDE STRATEGY

Novak said last week that the United States market was the lone problem the company has had in 2008.

Not only does Yum face a wider number and variety of competitors, but also fighting the headwinds of recession.

In addition to cutting $60 million from operational costs and suspending the company’s share buyback, Yum will offset the planned opening of 200 new U.S. restaurants by closing about the same number.

Other strategies will appear on the menu.

At Pizza Hut, the company is adding lasagna to its new Tuscani pasta line.

At KFC, it’s rolling out a grilled chicken option, a menu item Novak called a “transformational product” at an investor conference last week, The Associated Press reported.

The chicken chain will also create and promote a value menu, featuring items costing from $0.99 to $1.99.

www.contrarianprofits.com/articles/yum-brands-yum-a-promising-pick-for-2009/10425