future challenges for the food industry · 2013. 1. 26. · categories ketchup & sauces infant...
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Future challenges for
the Food Industry
NIGEL DICKIE
The HJ Heinz Company
World-class iconic brands
Global portfolio with sales in excess of $11b
Strong profitable growth in emerging markets
Excellent cash flow and return to shareholders
Experienced and proven global leadership team
Tradition of quality
Celebrating 144 years
as the original
Pure Food Company
“To do a common thing uncommonly well
brings success,” Henry J. Heinz
Focused portfolio
Geographies
Categories
Ketchup & Sauces
Infant / Nutrition
Meals & Snacks
Developed Markets
United States
United Kingdom
Western Europe
Italy
Australia/ New Zealand
Canada
Emerging Markets
Brazil
Russia
India
China
Indonesia
Latin America
79% of Sales 21% of Sales
Based on 9M YTD FY12 sales from continuing operations
94% of Sales Are in Three Core Categories
3 core categories in Europe
Ketchup & Sauces 40% of Sales
Meals & Snacks 37% of Sales
Infant / Nutrition 18% of Sales
Note: Percentages are of FY11 full year sales from continuing operations.
Global Ketchup UK Beans
UK Soups
Italy - Plasmon
UK & Russia - Heinz
Key Areas of Focus
No.1 brands
No. 1 Food brand in UK
No. 1 Infant Feeding in Italy
No. 1 Ketchup across Europe
No. 1 “Preferred” Food brand in Poland
No. 1 in 7 categories in Netherlands
No. 1 in K&S & Infant Cereal in Russia
No. 1 in Category
No.1 Brands Represent 70% of European Sales
One of the nation’s favourites
Food manufacturing
Part of a world-class industry
The largest manufacturing sector
3.6 million UK jobs
14% of UK employment
15% of UK manufacturing output
Up 3% over the last 10 years
UK food exports worth £14 billion, up 7%
Future challenges
1. Health and Wellness
2. Sustainability and Food Security
3. Food Safety
4. Communications
5. Economic Outlook
Challenge 1
Health and Wellness
Health and Wellness
£5.1 billion
Health and Wellness
36% adults 25 – 34 years
Health and Wellness
>50% adults overweight and obese
Getting the balance right
Project Neptune
Auditable data shared with FSA
10% YoY reduction for soups &
sauces for 3 years
Pan manufacturer collaboration
No competitive advantage
What we’ve
achieved
40%
-40%
Salt reduction
success
Salt reduction
success -40%
53% -53%
Salt reduction
success -40%
-53%
39% -39%
Salt reduction
success -40%
-53%
-39%
-63%
63%
Challenge 2
Sustainability and food
security
UK food chain impact
18% of all UK GHG emissions
8% direct GHG emissions from agriculture
14% of energy consumption from food industry
7m tonnes of CO2 pa
UK food chain impact
25% of all HGV kilometres in the UK
>5m tonnes of waste food and drink packaging
10% of all industrial use of water
Sustainable palm oil
RSPO Roundtable on Sustainable Palm Oil
Review of the Year
WRAP film
Carbon Trust
film
Challenge 3
Food safety
Food Standards Agency
2011
1,714 food and environmental incidents
209 more than 2010
Natural chemical contamination incidents rose 25%
Allergen incidents rose 44% to 114
Those relating to milk rose from 9 to 27
Microbiological contamination – 16% of all incidents
Food safety
Commitment to food safety rooted in the vision and
values of Henry Heinz, a prominent advocate for the
adoption of the US Pure Food & Drug Act in 1906
Processes designed to ensure that our food products
meet stringent quality and safety specifications
Food safety
Heinz supplier auditors consistently enforce
our quality and food safety standards
Our goal is to maintain compliance levels at 100%
Best practices shared with our Emerging Markets
businesses to drive consistently high food safety
standards
Challenge 4
Communications
GMOs
Irradiation
Nanotechnology
Acceptance of novel technologies
Heinz policies
GM Heinz remains committed to taking every possible step to ensure that Heinz varieties remain free from ingredients
derived from genetically modified (GM) crops.
Where there is the potential for GM material to be present, or where ingredients are derived from soya or maize, we
source non-GM, identity preserved ingredients through carefully audited suppliers. In addition, independent testing is
carried out.
BPA Although UK and European food authorities have stated that minute levels of BPA in can coatings are safe, Heinz
remains committed to moving to alternatives.
We do not use BPA in any Heinz Baby packaging. This pledge here in the UK is part of our global programme to phase
out its use.
Heinz continues to advance research into alternative coatings in response to consumer opinion but safety remains our
first priority before making any changes.
Challenge 5
Economic challenges
Inflation - has eroded real income
c.£3,300 versus 2008
Above the official target of 2% for most
of the past 5 years now 2.7% CPI, 3% RPI
Economic challenges
Grocery Inflation now at 3.5% and projected to
increase again
Rising food prices highest ranked
‘budget’ concern for the next 12 months?
Economic challenges
26% of consumers say they have no
spare cash after essential living
expenses (Nielsen Q3 2012)
86
140
0
20
40
60
80
100
120
140
160
No
v-0
6
Ap
r-0
7
Sep
-07
Feb
-08
Jul-
08
De
c-0
8
May
-09
Oct
-09
Mar
-10
Au
g-1
0
Jan
-11
Jun
-11
No
v-1
1
Ap
r-1
2
Sep
-12
UK Average Petrol Price P / Lt (unleaded 95 octane)
AA fuel price report
Rental Inflation 4.5% (LSL property)
Gas Prices +40% in five years Electricity +24% in five years 4m hh’s in ‘Fuel Poverty’ (pay 10% or more of their income on heating)
FPAG 2012
Economic challenges
23% of grocery spending @ Round Pound
20% growth in on-line grocery shopping
Kantar
Over 20% growth in On line shopping YoY – significantly ahead of total grocery sales
£ %
Ch
ange
23% of Grocery Spending - & Growing - @ Round Pound Prices £1 - £4. £1 now up to 11.5% of all spend
What are people making
size growth
Roast chicken 24m +42%
Bubble and Squeak 19m +36%
Veg stew/casserole 24m +33%
Stir Fry Oriental Dish 24m +33%
Vegetable curry 91m +23%
Sweet & Sour 15m +22%
Chicken curry 228m +21%
Risotto/Paella 50m +13%
Lasagne 130m +13%
Beef Stew/Casserole 57m +10%
Meat Balls 36m +9%
size
Chicken curry 228m
Shepherds/Cottage pie 209m
Spaghetti Bolognaise 174m
Lasagne 130m
Chilli 127m
Vegetable soup 113m
Vegetable curry 91m
Chicken Stew/Casserole 84m
Pizza 63m
Stir Fry Oriental Dish 62m
Quiche/Flan 61m
Future challenges
1. Health and Wellness
2. Sustainability and Food Security
3. Food Safety
4. Communications
5. Economic Outlook
Future challenges for
the Food Industry
NIGEL DICKIE