Saucy move turns HJ Heinz rivals green with envy

Stuck in an unfashionable industry where growth is hard to come by? Wondering how to increase your profits from a 125-year-old brand? Try turning your product green. It sounds an unlikely strategy, but this week HJ Heinz declared that its EZ Squirt ketchup - available in "Blastin' Green" as well as the conventional tomato colour - had seized a 6 per cent share of the $500 million (€571 million) retail market for ketchup in its first seven weeks and was on track to hit its annual sales target in 90 days.

Heinz executives, who are more accustomed to dealing with sluggish industry growth of 2 to 3 per cent a year, delight in accounts of bottles flying off supermarket shelves like Play Station2 machines.

Mr Brendan Foley, Heinz's general manager of global ketchup, says his neighbours have been buying EZ Squirt bottles to send as Christmas presents.

Mr Bill Johnson, Heinz's chairman and chief executive, describes EZ Squirt as one of a batch of breakthrough products demonstrating a new commitment to innovation at Pittsburgh's venerable condimentmaker. Cynics may wonder whether food dye can count as much of an innovation but Heinz's garish invention is evidence of a change in the way the food industry approaches products, packaging and marketing.

Food industry executives now like to say they are selling "meal solutions". The challenge of catering to rushed consumers has spawned a range of products designed for convenience, portability, functionality and fun. General Mills, the US cereal group, has produced Gogurt, a yoghurt that can be eaten without a spoon; Heinz's new tuna in a pouch saves customers from reaching for the can opener; and flour is being sold in resealable bags.

Consumers are also gravitating towards "functional" foods, which accounts for the popularity and proliferation of cerealbased snack bars and for Heinz's decision to fortify EZ Squirt with vitamin C.

Redesigning such humble staples as flour and ketchup is a rare way for food manufacturers to increase prices in a low-inflation environment. A 24-ounce bottle of EZ Squirt typically sells for $1.79 - a 20-30 cent premium on Heinz's standard ketchup.

In the case of the new ketchup, however, the main "solution" Heinz has attempted to provide is making mealtimes more interesting for children between six and 12 and, by implication, less of a trial for their parents. New bottles for both green and red ketchup feature a conical nozzle to encourage children to draw shapes on their food.

Heinz describes this as a way of unleashing children's creativity at the dinner table. The unspoken fact is that such doodling is also likely to encourage children to use more of its product.

Youngsters in the United States already consume 5 billion ounces of ketchup a year - more than half of all the ketchup sold in the US - but until recently Heinz had done little to market the product direct to them.

"Kids are a very persuasive audience," says Lisa Allen, of the Grocery Manufacturers of America, who says that food companies are becoming more sophisticated in the way they appeal to children. "It used to be toys and crosswords on the back of cereal boxes but now the fun is in the food itself," she said.

The child market may be an alluringly large one but it is also notoriously fickle. Heinz consulted 1,000 children while developing EZ Squirt but green ketchup does not have universal appeal.

"I was excited when I brought the product home but my 10 and 13-year-old boys tried it once and it still sits in my refrigerator," says John McMillin, a food industry analyst with Prudential Securities.

For now, the McMillin children are an exception. But this year's hot product could easily end up as next year's gimmick.

Heinz, however, says it has plans to keep the product exciting. Blue ketchup cannot be far behind.)