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.

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