Heinz North America, an affiliate of H.J. Heinz Company (NYSE:HNZ), announced today that it has signed an agreement to acquire two leading brands from Vlasic Foods International, subject to bankruptcy court and regulatory approvals. The brands are Vlasic® pickles, the best-selling brand of pickles in the United States, and in retail channels, Open Pit® barbecue sauce. The acquisition price is a $195 million, subject to closing adjustments.
“This complementary acquisition of two outstanding brands will boost our leadership in the condiments category by making Heinz the No. 1 pickle producer in the United States,” said Joseph Jimenez, president and CEO of Heinz North America. “This acquisition is consistent with Heinz’s growth strategy, particularly in the key area of Flavor/Taste Solutions, where the transaction enhances our ability to give consumers flavor variety and the ability to personalize their food.”
“The Vlasic pickle and Open Pit barbecue sauce businesses are in the same aisle of the supermarket as ketchup, which will enhance our overall leadership in this area and deliver significant synergies. In addition, Heinz intends to drive consumption through product and package innovations. Sales of Heinz’s ketchup, condiments and sauces have grown at a seven percent CAGR since fiscal 1998,” Jimenez said.
Vlasic is the leader in the $1.1 billion retail pickles, peppers and relish category in the U.S., with a 24 percent share in the 52-week period ending November 4, compared with Heinz’s 3 percent share. Annual sales of Vlasic pickles and Open Pit barbecue sauce are more than $275 million. Vlasic pickles products include Vlasic® kosher dill pickles, Sandwich Stackers® and Hamburger Stackers®, which cover an entire burger or sandwich with a slice, as well as a complete line of relishes and peppers.
“The addition of Vlasic pickles, a venerable brand with a history of excellence, quality and market innovation, will provide another condiment category with a No. 1 brand for Heinz,” Jimenez said. “The Vlasic and Heinz pickle brands are a complementary fit. Heinz plans to continue both brands, giving the company a much larger presence in the condiment aisle.”
Pittsburgh-based Heinz has been a major pickle producer since company founder Henry John Heinz introduced his brand in 1871. The popularity of Heinz pickles® led many people to refer to Mr. Heinz as the “Pickle King,” reflecting the brand’s stature.
Vlasic began producing pickles in the 1940’s. It produces approximately 16 million cases a year at two processing plants in Imlay City, Mich., and Millsboro, Del.
“Vlasic and Heinz share a history of leadership in the pickle category,” said Casey Keller, managing director of Heinz North America’s Ketchup, Condiments and Sauces business unit. “Together, our focus will be on driving future pickle consumption in the United States, primarily through Heinz’s emphasis on product and packaging innovation and by leveraging Heinz’s strengths in sales, marketing and distribution.”
Open Pit is the leading barbecue sauce in its core Midwest market of Detroit, Chicago, Cleveland, Milwaukee and Grand Rapids. The U.S. barbecue sauce category is currently a $360 million market.
“This acquisition builds our strength in the important flavor/taste solutions area, where Heinz is already energizing the category and exciting consumers with the recent launch of Heinz EZ Squirt®,” Keller said. “Heinz will now bring innovation to meet consumer needs in the pickle category, including the introduction of pickle relish in squeezable bottles.”
This news release contains forward-looking statements regarding the company’s future performance. These forward-looking statements are based on management’s views and assumptions, and involve risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These include, but are not limited to, sales, earnings and volume growth, competitive and industry conditions, production costs, achieving cost savings programs, acquisitions or disposals of business assets and new product and packaging innovations, and other factors described in “Cautionary Statement Relevant to Forward-Looking Information” in the company’s Form 10-K for the fiscal year ended May 3, 2000, as updated from time to time by the company in its subsequent filings with the Securities and Exchange Commission. In particular, any predictions about this acquisition could be affected by regulatory and bankruptcy court approvals; integration problems; failure to achieve synergies; unanticipated liabilities; participation in new business lines; and changes in competitive environment.
ABOUT HEINZ: With sales over U.S. $9 billion, H. J. Heinz Company is one of the world’s leading marketers of branded foods to consumers everywhere, whether in supermarkets, restaurants or on the go. Its 50 companies operate in some 200 countries, with more than 20 power brands, including the Heinz® brand with nearly $3 billion in annual sales. Among the company’s famous brands are Heinz, StarKist®, Ore-Ida®, 9-Lives®, Wattie’s®, Plasmon®, Farley’s®, Smart Ones®, Bagel Bites®, John West®, Petit Navire®, Kibbles ‘n Bits®, Pounce®, Pup-Peroni®, Orlando®, ABC®, Olivine®, Juran® and Pudliszki®. Heinz also uses the famous brands Weight Watchers, Boston Market and Linda McCartney under license. Information on Heinz is available at http://www.heinz.com.
