Business Lunch: Heinz Ketchup

If you prefer a brand of ketchup other than Heinz ketchup, we’re going to have words. First introduced in 1876, Heinz continues to dominate the market; Heinz has a 59 percent share, dwarfing store brands, which account for 21.8 percent, and Hunt’s, with 15.1 percent. In his 2004 article in The New Yorker, “The Ketchup Conundrum,” Malcom Gladwell stated that ketchup appeals to all fundamental human tastes: salty, sweet, sour, bitter, and umami – a condiment that pushed all five of the primal buttons. However, just as any business must evolve and mature over time to strengthen its brand and generate loyal customers, Heinz is a great example of a longstanding successful company to learn from.

Ketchup with balsamic vinegar, launching November 14, 2011. Not only is it interesting that Heinz is producing a new version of its ketchup, but it’s also trying out a new selling tactic as well. As the label states, “Heinz tomato ketchup, blended with balsamic vinegar,” is the first new Heinz ketchup flavor variation in almost a decade. Do you remember the Heinz “Blastin’ Green,” “Funky Purple” and “Stellar Blue” ketchup colors featured in EZ Squirt bottles? Then Heinz admitted to a likely cannibalization of existing products, but it’s now claiming that the new balsamic ketchup is unique enough that consumers will buy it in addition to the bottle already in their refrigerator door. As for the selling tactic, it will only be available for sale through the Heinz Ketchup Facebook page before further distribution in December.

Dip and Squeeze packaging, launching January 2012. Heinz for decades has searched for better single-serve packets and has landed on a new version aimed to solve existing complaints about its packets being messy, hard to open and not providing enough ketchup. Heinz believes that this new packaging will increase orders for fries at drive-thrus and hopefully dramatically expand its market share by having McDonald’s feature its brand of ketchup. Apparently, a supply spat between Heinz and McDonald’s during a 1973 tomato shortage resulted in a Heinz lockout from most McDonald’s U.S. locations; more here on Heinz’s courtship with McDonald’s. (Interesting too, here’s a tasty bit of trivia on McDonald’s brand of ketchup.) Trouble is, the new packaging is more costly to produce, and when ketchup is generally thought of as free to customers, an increase in cost matters a lot.

Worldwide condiment domination. This year more than 20% of Heinz’s revenues will come from emerging markets such as China, India, Indonesia, Russia, and Brazil, versus less than 5% a few years ago. From soy sauce in China to a ketchup in the Philippines made from bananas, longtime Heinz CEO Bill Johnson describes his strategy for growing sales in developing economies through different modes of due diligence and a focus on diversification that helps mitigate not only the political risks but also currency risks. With such a mature brand, and one that is so successful, it’s interesting to learn how Heinz continues to evolve by entering into new markets around the world. Click here to see an acquisition timeline, it’s amazing to see how they’ve distinguished the core condiment for each culture.

From a small business perspective, there’s a lot to emulate from Heinz’s operations. Heinz may be an incredibly large and financially successful business, but it continues to develop new products, adapt its packaging to meet market demands, and expand its reach globally to access new customers. None of these concepts are foreign from what a small business owner thinks about daily, it’s just that Heinz has a lot more money to play with when doing so (and they play on a much larger playing field). Not every move that Heinz has made has been a home run, but it’s interesting to acknowledge what they thought about going into each tactic and what they learned from the experience. It’s often hard to rest with the fact that, even though we have an immense amount of information at our fingertips, time and experience grants answers so many questions. And with Heinz, it has had a lot of time to mature.

Video courtesy of The Early Show.

Advertisement

Business Lunch: The McRib

Scarcity. It’s a great marketing tactic to create demand, and McDonald’s does it well with the McRib. You can’t get this sandwich whenever you want, it’s only offered once a year and at specific locations at limited times. And unlike the In-N-Out secret menu, which you can order from at any time of the year, the McRib is truly a marketing engine playing off of the basic economic principle of supply and demand – and, well, quirkiness since the McRib actually contains no ribs.

Per this TIME article, the McRib was introduced in 1982, disappeared in 1985, and then periodically introduced again and again in McDonald’s here in the states and abroad. The McRib hadn’t been sold nationally since 1994 until it was formally reintroduced last year in November. It’s a chemistry lab creation of 70 harmonious ingredients, including 980 mg of sodium, 26 g of fat, 10 g of saturated fat, and 500 calories. And this saucy number is all the rage.

Here’s an interesting tidbit, the the guy who won McDonald’s $1 million Monopoly grand prize last year was ordering — you guessed it — a McRib.

Interestingly enough, it’s up to McDonald’s franchises to determine when and if they want to sell the McRib, except in Germany where it is always available. Have no fear, there is a McRib Locator that tracks its availability nationwide.

So what product or service in your business can you promote with a little scarcity? Scarcity can give you an opportunity to deepen customer loyalty and offer you the chance to highlight and reward your VIP customers. Regardless, the perception of value and differentiation is of utmost important and it’s imperative that you follow-through on the offer. Beyond that, using scarcity as a marketing tactic is simply that, at tactic. And some work better than others.

…And sometimes, playing ‘hard to get’ is just plain fun.

Photo courtesy of geekosystem.

Business Lunch: Pumpkins

October has set upon us, Halloween is just around the corner, it’s pumpkin season.

But pumpkin farmers are a bit wary this fall. Unfortunately, those on the east coast have experienced a season of drenching storms from Hurricane Irene causing farms to throw away waterlogged pumpkins molding faster than usual. Scorching hot temperatures this past summer also sliced the Texas pumpkin production in half. For most of the nation, the hot dry summer ripened crops early and the rains in the early fall drenched them. Simply put, pumpkins will cost more this year. And because of the wet fall, they’re not going to last very long either.

All the more reason to embrace the the spirit of supporting local. We’re lucky in Washington to have local farms selling pumpkins and businesses thinking seasonally.

• Snohomish Festival of the Pumpkins: Your guide to ‘agritainment’ activities surrounding the jack-o-lantern.
• Not close to Snohomish? There’s a site that aggregates Washington State pumpkin entertainment too.
• It’s hard to miss infamous Starbucks pumpkin latte. There’s even a Facebook page devoted to the drink with a contest pitching U.S. customers against those in Canada.
• We love our beer festivals in the NW. Check out the Elysian Pumpkin Beer Festival (Oct. 8-9). The Huffington Post also assembled their pumpkin beer favorites too.

Celebrate the season and support your local farmer! Particularly how weather dependent this season has been, local farms certainly appreciate your support. Make the time to visit a farm, get in the dirt and have fun ‘picking’ your pumpkin. It will make you smile every time you walk up to the front door.

Photo courtesy of The Telegraph, it’s a 1,647 pound pumpkin found in Shoreline, WA.

Business Lunch: Food Truck Consulting

Find an obstacle, create a way to lower the barriers to entry. That’s what Matt Cohen of Off the Grid did. Originally wanting to start a food truck business serving the ramen noodle dishes he learned to prepare in Japan, he encountered obstacles when trying to obtain permits to operate his business. Like many cities trying to engage in and regulate the food truck revolution, he ran into city bureaucracy that made it more difficult for him to move forward. Instead, he built a for-profit food truck business that supports a rapidly expanding network of about 100 mobile food vendors at weekly events around the Bay Area.

Reshaping the way food trucks operate, Off the Grid is a soup-to-nuts, vertically integrated operation, assisting mobile food vendors with everything from location scouting to social media tricks to truck aesthetics. His consulting arm has even won the hearts of the city as his clients receive expedited permits. Off the Grid also works with the local Parks Department to open spaces for food truck events, creating even more business for its clients.

In Seattle, operating a food truck business is just as tough. However, this year the Seattle City Council recently voted in favor of new rules, which allow food trucks to sell beyond private lots. For a breakdown of these new, more relaxed, regulations, see this Seattle Times article. Prior to this new regulation, I also wrote about food truck business models.

Time and time again, we’re confronted with obstacles that challenge our vision or progression forward with an idea. The real challenge is possibly refocusing and changing direction. Sometimes the obstacle itself may present an unmet need, as it did with Mr. Cohen. While it may be frustrating to shift gears, the process of thinking through alternatives might highlight a profitable avenue for both you and your customers. It may just become your win-win cash cow.

Photo courtesy of Off the Grid.

Business Lunch: Food Wine

Shouldn’t wine always go with food? That seems to be an obvious question, but wine is not always presented or produced with that goal in mind. Sure, varietal and terroir are important, but wine making for the express interest of pairing with specific food? Lettie Teague’s latest post in the Wall Street Journal, “The World’s Best Food Wines,” made me think twice about how to value wine. And it made me think even harder about valuing products and services sold by businesses.

The article talks about how Italian wines are bright with acidity and have an edge of bitterness, both complimentary with food. It also talks about the fact that the Italians make wines to go well with food. Drinking the wine with food is the end goal. I love this focus.

When I think of Italians drinking wine, I think of a Tuscan landscape with a family around a dinner table with wine. It’s a cultural mindset. Applying this to a business concept, is your business focused in the sense that it offers a product or service that fits naturally within your customers’ lifestyles? What are those lifestyles anyways, and are there any constraints against them? It’s a shift in thinking, but how much easier would it be to market your business if there was a seamless fit?

Photo courtesy of the Wall Street Journal.

Business Lunch: Beans

Beans. Last week PepsiCo announced that its participation with Enterprise EthioPEA (USAID press release), an initiative that aims to dramatically increase chickpea production in Ethiopia to improve both the economic and nutritional security in the country. PepsiCo also has a vested interest in the project that goes beyond just helping Ethiopians; the company wants more of a chickpea supply for its products, including its Sabra hummus product.

As PepsiCo receives relentless attacks for profiting on sugary drinks claimed to contribute to obesity in our country, it’s a no brainer that it decided to invest in a mutually beneficial initiative to improve its ‘healthy’ products revenue. This partnership improves the Ethiopian food inventory and agricultural practices while increasing PepsiCo’s short and long term financial goals.

Shrinking the scale and applying this program to small business, think of the mentorship and coaching opportunities between employers and employees. What’s the ‘chickpea solution’ to provide a mutually beneficial relationship that improves employee skill-sets and productivity while increasing revenue potential?

Photo courtesy of Daily Perricone.

Introducing Business Lunch: Canal House

I’ll admit, I’ve been away a bit. As I say to all bloggers (and blogging hopefuls), maintaining a blog is the biggest challenge to having one. Regardless, it feels good to be back. I have great ideas, I’ve been inspired by great minds, and I’m eager to share them with you.

In this post, I introduce ‘Business Lunch,’ a new category of posts as part of my blog. As with everyone, we’re all busy, but eager for information in a short format. This post series does that. I was inspired by a blogging series by the Canal House ladies who provide an almost daily dialogue on what they eat for lunch. My tastebuds not only flair upon knowing what Christopher Hirsheimer and Melissa Hamilton make for lunch each day, but my mind is continually impressed with their discipline to practice and hone their culinary craft. And that’s just it, the opportunity to finesse a strength is key.

So with this Business Lunch series, I’ll include frequent tidbits of information that apply to small business interests and business professionals in short form. (You might also be interested in my Spotlight on Business series highlighting the success strategies of noted businesses, stay tuned for new spotlights coming up.)

Like a fresh ripe tomato with a bit of mayonnaise on crusty bread, sometimes the most successful pairings work best in a simplistic form. Cheers to lunch and information sharing ahead.

Photo courtesy of the Canal House.