The CEO of Heinz on Powering Growth in Emerging Markets

How I did it.. Group 1

Prabaha Jati PGP04026

Praveen Prabakar PGP04028

Rajagopalan Sadagopan

PGP04031

Rajiba Tiria PGP04032

Rohit Gupta PGP04035

Abhishiktha Sarella PGP04038

• Situation: 1993

Emerging Markets? no moreGrowth in the developed Markets were slowing downNeed to diversify RevenuesImportant to have a footprint in newer MarketsInfrastructure- Standard of Living

Importance of Emerging Markets:Existing Markets: Western European and North American marketsNew Markets : China,India,Russia, Indonesia

Understanding Diversity

Diversity,Significance of New Markets AAA Strategy

APPLICABILI

TY

•Suiting the Local Culture•China-Soy Sauce•Korea-Ketchup on Pizza•Philippines-Banana flavoured

AVAILABILIT

Y

•Relevance of Distribution Channels to the company•Changes made•Modern Grocery and Supercenters- Safeway, Kroger and Walmart 100%•China Chain Grocers 50% Market Share, Russia 40%, India < 15% Market share

AFFORDABIL

ITY

•Present Western Markets, Target Consumer is rich and buy giant bottles•New Markets, Lesser Spending Capacity-newer Packaging, smaller SKUs, in range of 3 cents

Understanding Pulse of Local Working Environment.Reliance on Local Managers to understand Local Employees, and customers.Lowering the Number of Expat ManagersTraining given to Local Managers to do things the Heinz way.

AFFINITY

Diversity,Significance of New Markets AAA Strategy

Organizational Life Cycle of Heinz

• In Developed Heinz was pretty old

company.

• Saturated market.

• Lots of competition.

• New emerging market like BRICK nation,

Argentina, Venezuela were growing rapidly.

• Only option left is Diversification

Growth in emerging market through acquisitions1999

• ABC Indonesia

• World’s largest soy sauce brand

2001

• Productos Columbia, Costa Rica

• Banquete sauces maker

2004

• 50.1% of Heinz foods South Africa, a JV With pioneer foods

2005

• petrosoyuz in Russia

Heinz always focused on Concentric Diversification

Heinz Strategy of acquisition

Look for strong synergy and consistency

Solid brands with good local management.

Growth, Scale , Scope and their synergies.

Price and premium on the basis of sustainable growth.

Local Tax system, Market, Regulatory system, currency trend and political condition

Strength of economy of nation.

Success mantra of Heinz in Emerging market

Risk minimization by diversificationAlmost equal investment in all BRIC nation and others.

Product according to local taste and Local management.

Product Packaging and Pricing accordingly.

Patience: As Indian business took 7-8 years to rebound.

Committed workforce and Good relationship with Govt. and bureaucrats.

Awareness about new product in developing nation

Thank You….!