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Squeezed by consumers' focus on fresh foods, Heinz revamps frozen meals [The Pittsburgh Tribune-Review :: ](Pittsburgh Tribune-Review (PA) Via Acquire Media NewsEdge) Aug. 24--A group of H.J. Heinz Co. researchers and marketers, gathered around a table covered with frozen-food trays, were tasting different formulations of Nancy's frozen quiche at the food company's Innovation Center in Warrendale. On the other side of the room from this evaluation and tasting area is a formulation lab, where food scientists spend countless hours concocting recipes of frozen dinners and snacks -- an important part of Heinz's more than $11 billion in annual sales. Known primarily as a maker of ketchup and condiments, Heinz is a major player in the $50 billion frozen food industry, with brands such as Ore-Ida potatoes, Bagel Bites, Weight Watchers Smart Ones, T.G.I. Friday's and Nancy's. But the industry has lately experienced a slump in sales, as consumers give frozen fare a cold shoulder and increasingly choose fresh foods they perceive as healthier. That's put more pressure on Heinz and others in the industry to revamp products. And it comes at a time when the new owners of Heinz, which was taken private in a $28 billion buyout last year by Warren Buffett's Berkshire Hathaway and Brazilian investment firm 3G Capital, are intent on boosting profitability. CEO Bernardo Hees is the former chief executive of Burger King Worldwide and was credited with slashing costs and revamping the fast-food chain's menu. Hees is putting his imprint on Heinz, with management changes, factory closings and layoffs. He declined to be interviewed. But Kurt Deibel, vice president of innovation, food safety and quality for Heinz, said there is an increased focus on collaboration, among other things. Researchers are tasked with not only coming up with more desirable foods, but they must get them to market more quickly and efficiently. "It's a constant evolution," said Deibel, who led a Tribune-Review reporter and photographer on a tour of the research center last month. Deibel, who has worked in food research for three decades, joined Heinz four years ago after stints with Gerber, General Mills and Pepsi. About 250 people work at the center, performing research and development for Heinz in North America. The Dip & Squeeze ketchup packet was made at the center, along with new ketchup flavors such as jalapeno and balsamic vinegar varieties. Among a host of projects, Deibel and his team of researchers have spent the past several months reworking on the Smart Ones line to boost natural ingredients, add more protein and fiber and significantly cut the number of ingredients in a typical frozen meal. "We had to totally recreate all the meals," Deibel said, noting that his team cut in half the number of words on a typical Smart Ones ingredient list. The new meals will begin showing up in supermarkets this fall, he said. Heinz declined to provide specific sales figures for frozen foods. In the first half this year, the company reported overall sales of meals and snacks, including most of its frozen foods, fell 8 percent to $1.85 billion. Sales of ketchup and sauces were $2.74 billion in the first half, up 2 percent from a year earlier. According to Chicago-based market research firm IRI, Heinz's sales of single-serving frozen dinners and entrees, such as Smart Ones and T.G.I. Friday's meals, declined 15 percent to $439.2 million in the 12 months ended July 13. It's a struggle being felt across the industry. Frozen-food sales were $50.3 billion in the 12 months ended in July, according to research company Nielsen. That was down 0.2 percent from the previous 12 months' sales of $50.4 billion. Heinz's competitors are feeling the slump. Sales of Lean Cuisine, made by Nestle SA, declined 11 percent last year, to $987 million, according to Bloomberg News. ConAgra Foods Inc.'s Healthy Choice declined 16 percent. "The food industry is looking for growth," said Harry Balzer, chief industry analyst at NPD Group, a market research firm in Chicago. Consumers want healthy, natural food, Balzer said. Frozen food is perceived as unnatural and highly processed. "There are companies doing well, and generally those are the ones that are concentrating on natural and organic (foods)." Balzer said increasing protein content and the number of natural ingredients help in marketing prepared foods to consumers. "Many marketers are on board with this issue of how do I make it natural," he said. "There is this whole movement toward simple ingredients." To that end, Heinz researchers are working on ways to increase natural ingredients in the company's Classico line of pasta sauces. This year, they replaced dried basil, garlic and onions with fresh herbs in several top-selling tomato sauces. The company plans to update the rest of the line with more fresh ingredients during the next six months, Deibel said. Heinz is looking beyond foods for ways to boost revenue. In June, it announced a deal with Ford Motor Co. to study whether tomato skins left over from the foodmaker's ketchup manufacturing can be turned into plastic to make car interior components. Deibel said the Innovation Center underwent a physical transformation earlier this year meant to increase efficiency and collaboration. Just like in its Downtown offices, walls came down at the center and workers sit in an "open office" environment. The office went paperless. A three-dimensional printer was purchased that allows the center to make its own prototypes of new bottle designs, he said. A prototype can be made in-house in eight hours now, rather than waiting weeks for an outside shop to build it. And even Heinz's most well-known and established product, ketchup, is the focus of innovation. Deibel said his team is the process of evaluating 30 different flavors that could possibly join some recently introduced varieties. The company, spokesman Michael Mullen said, is "trying to expand occasions and host foods for ketchup." Heinz is always asking, he said, "How can we expand usages of ketchup?" –––– Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or [email protected]. ___ (c)2014 The Pittsburgh Tribune-Review (Greensburg, Pa.) Visit The Pittsburgh Tribune-Review (Greensburg, Pa.) at www.triblive.com Distributed by MCT Information Services |