H.J. Heinz Co. will boost marketing spending by $50 million, cutting $145 million in trade dollars over two years to fund consumer marketing and R&D.
The shift bumps up Heinz’s consumer marketing budget nearly 19% to $317 million, part of a two-year plan to bolster its core portfolio, cut costs and generate cash.
Heinz has trimmed trade spending in its U.S. Consumer Products division over the past three years; those cuts now extend to other divisions in the U.S. and abroad, especially Europe, which will account for the majority of the $145 million in planned cuts.
Heinz also will cut 2,700 jobs, 8% of its worldwide staff, and close 15 plants in fiscal 2007; that accounts for most of the layoffs, saving $165 million. Heinz may close five more plants in 2008.
The two-year plan includes the launch of 100 new products next year, mostly in its three core segments: Ketchup and Sauces; Meals and Snacks (Ore-Ida, Smart Ones, Heinz, Weight Watchers); and Infant Food. New items include Fridge Door Fit ketchup, Ore-Ida Easy Breakfast Potatoes, Classico sauce line extensions, and Smart Ones entrees and desserts.
“The Heinz plan sets aggressive but realistic goals for the next two years. We have the right strategy, the right brands and the right people to drive the business forward. We are in fighting shape to deliver high quality earnings growth by relentlessly attacking non-value-added costs and innovating and growing some of the world’s best brands,” said Heinz President-CEO William Johnson in a statement.
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