Heinz: Going right to the sauce

With a more than 50-year history in Japan, there probably aren’t many consumers who don’t know the name Heinz. Surprisingly, while ketchup might be the company’s most famous product, in Japan, it is not the No. 1 seller. Heinz does better with its cooking sauces, pasta sauces and the Ore-Ida frozen fried potato and vegetable brand.

Heading up the Northeast Asian operations for Heinz is Paul Mori. Born in northern California, Mori came to Japan with Heinz 15 years ago and has been managing director for the past three years.

Japan Today editor Chris Betros visits Mori at the Heinz offices in Tokyo’s Taito Ward to hear more about the business.

Has 2014 been a good year so far?

It’s been an up-and-down year. We saw a spike in sales before the sales tax hike in April and then a little drop after, but it has evened out. We are growing over 2013.

What are your best-selling products?

Not ketchup, as you might think, but demi-glace sauce and white sauce cooking sauces. Our sales are strong to both the retail and food service trade. We also sell pasta sauces, gratin and hamburger sauces, soup in pouches, as well as frozen hamburgers in sauce. One thing consumers may not know is that we own the Ore-Ida frozen fried potato brand and have over 50% market share in Japan.

How come you don’t have many canned soups?

We dropped that line several years ago, though you can order some imported canned soups on Amazon We decided to concentrate on soups in pouches and flavors that are more traditional in Japanese homes.

How do you market the brand?

It depends on the product. We’ve done some TV commercials for Ore-Ida. With other products, we are doing more with social media. Because our best-selling products are cooking sauces, recipes are very important. We have updated our web page to have a more user friendly recipe site. And we have done activities with a local recipe internet site cookpad.com. It’s a way to reach more consumers and target them better than traditional marketing methods.

Are any products unique to the Japanese market?

Most of our products are unique to Japan. The demi-glace and white sauces were developed over 40 years ago specifically for Japan. Now they are getting popular in other Asian markets, such as the Philippines, Korea, Taiwan and Hong Kong.

How do you get feedback from consumers?

We have a call center for consumers to contact us with questions and comments. And we are using the Internet a lot more with questionnaires. For our food service business, we do a lot of cooking events, which are organized through our wholesalers and distributors.

How do you develop products for Japan?

We have focus groups and do concept testing and use the results to develop new products at our Innovation Center. It has a test lab and kitchen. We have a chef in house who creates recipes that use our products.

What are some unique characteristics of the Japanese market?

The product life cycle is very speedy in Japan. There are two windows to launch products in Japan – the spring window and the fall window. Another trend is that this market is very strict on best-before dates. Also, if cans have a dent or a torn label, you can’t sell them. For the past 11 years, we have been donating those products to Second Harvest Japan, a local food bank.

How is your retail penetration rate?

We are in most supermarkets and high-end outlets all over Japan. In convenience stores, we don’t have a large presence right now but it is a channel that we are looking at to see if we have products that would fit within their needs.

Competition for shelf space must be tough.

It is, especially in supermarkets because there are a lot of new product launches from domestic competition. Our sales teams are constantly meeting with buyers. Even to retain shelf space, we have to provide a lot of data in terms of buy rates, present them with promotional plans and new products to help secure more shelf space.

What about the food service trade?

With hotels and restaurants, for the bigger national chains, we’ll meet with the buyers and present menu ideas and new products, and we’ll also meet with distributors and teach their sales people how to sell the products.

What is your distribution system?

We use a lot of wholesalers. Most of our products go from our warehouse to a distributor’s warehouse and then either to a secondary wholesaler or directly to the retailer.

Where do you see growth potential?

I see growth potential in both the retail and food service sectors. For some of our categories, there is not a high household penetration rate or consumers only use our products a few times a year. So we have to work on getting consumers to use our products more often. For example, with Ore-Ida, we have a very high share of the frozen fried potato market in Japan but the household penetration rate for fried potatoes in Japan is around 20%. People just don’t eat French fries at home much.

What about online business?

It’s growing. You can buy a lot of our products on Amazon. Beverages or Classico pasta sauces in bottles tend to sell well online because they are heavier.

Tell us about your team.

We have about 150 staff in Japan, mostly in Tokyo. We have sales offices in most major cities.

What’s a typical day for you?

I get in around 8 a.m. and check emails and sales figures first. After that, there are various meetings. On weekends, I sometimes go to supermarkets to see what market trends are and what competitors are doing.

How do you like to relax?

I play a little bit of tennis and have two boys who are active, so I attend their sporting events on weekends.

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