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October 5, 2012 4:21 pm
Heinz is looking to spice up stir-fries as well as french fries as the world’s largest ketchup maker seeks to buy local Chinese soy sauce companies to boost its market share of the country’s favourite condiment.
Food historians date ketchup’s origins as emerging from Chinese fish sauce, but Heinz’s tomato variety has never been a big seller in China beyond western fast-food chains. That has made soy sauce, a staple in Chinese households, a vital ingredient for Heinz as it competes in the world’s biggest consumer market..
“We can go with the buy-and-build strategy to get into other markets that are difficult to get to organically,” William Johnson, Heinz’s chief executive told the Financial Times. “It’s a very fragmented market and fragmentation is an opportunity to create equity and consolidate.”
Soy sauce sales total about $4bn a year in China, towering over ketchup sales, which generate $100m-$200m in annual sales. Heinz currently sells a sweet soy sauce across about 20 per cent of China, but Mr Johnson hopes to enter more provinces and break into dark soy sauce through acquisitions.
Heinz made its first splash into Chinese soy sauce two years ago, when it acquired Foodstar, a company based in Guangzhou that makes soy sauce and bean curd.
The $165m Foodstar acquisition has been a success so far, the company says, but Mr Johnson said it has been difficult to do more deals in China because of the country’s different accounting system, regulatory concerns and local resistance to foreign takeovers.
Heinz is also trying to develop its infant nutrition business in China, and Mr Johnson said the company has not given up on ketchup, which is becoming increasingly popular as chains such as KFC and McDonald’s spread across the country.
“As the quick-serve restaurants continue to expand and as westernised diets make more of an inroad, the use of ketchup is a natural extension of those habits,” Mr Johnson said.
“When the middle class grows, they want to emulate what they see elsewhere, and ketchup will be a bigger part of diet as people dine on western foods.”
Meanwhile, Heinz is taking ideas from emerging markets back to the US. Mr Johnson said that he hopes to introduce “doypacks”, the pouches used for ketchup and mayonnaise in Russia, to American grocery stores.
“This is something from the emerging world we are morphing to the developed world,” Mr Johnson said. “My own view is that pouch and spout will be an important part of our business.”
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