Following today’s announcement of the vote by the Commissioners of the FTC to challenge H. J. Heinz Company’s acquisition of Milnot Holding Corporation (announced February 28, 2000), the H. J. Heinz Company stated that its acquisition of Beech-Nut is in the best interests of American consumers and will result in lower prices, improved product offerings and more innovative competition in the baby food category. Heinz intends to vigorously defend the acquisition in the courts as the best way to inject competition into this category. Gerber has long held an unchallenged monopoly position (with a market share exceeding 70%) because its competition has been divided between two regional players, Heinz and Beech-Nut, each with distribution in less than half of the U.S. A strong number-two competitor is clearly better for consumers than two smaller companies facing a monopoly.
Heinz noted that a combination of Heinz and Beech-Nut will bring nationally available value-priced baby foods and more choices for parents. Heinz’s strategy is to grow its top line by expanding baby food usage and by offering lower prices. The U.S. retail trade also generally welcomes the transaction because more innovation will energize baby food sales and increase competition against Gerber.
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Heinz’s Director of Corporate Nutrition David Yeung said: “American babies have for too long been denied the new ideas, great nutrition and exceptional taste in formulated baby foods enjoyed by Europeans. Heinz is a leading baby food company in Europe and, with the efficiencies and increased reach of a Heinz/Beech-Nut combination, will leverage its global expertise in child nutrition and R&D for the benefit of American babies. European infant food products include new microwaveable meals, new packaging that offers greater freshness and taste and a rigorous quality monitoring system, known as Environmental Oasis.”
As a buyer at a major supermarket chain noted, “this will bring the baby food category to a new level. The two little guys would be able to give the big guy a run for his money.”
Scott Meader, President and CEO of Milnot Holding Corporation, said: “The combination of Heinz and Beech-Nut is in the best interests of American consumers because it is pro-competitive and will result in more innovation to reinvigorate the baby food category.”
Heinz’s annual baby food sales in the U.S. are approximately $100 million, with global baby food sales exceeding $1 billion. Heinz is number one in infant foods in Canada, the U.K., Italy, Australia, New Zealand, Venezuela, China and other markets. Heinz recently announced year-end earnings in excess of expectations, with five of its seven key global businesses recording compound annual growth rates of 5-12% over the past three years.
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By GlobalDataEditor’s note: For the February 28, 2000 news release, visit http://www.heinz.com.
ABOUT HEINZ: With sales over US$9 billion, H. J. Heinz Company is one of the world’s leading marketers of branded foods to supermarkets and away-from- home eating establishments. Its 50 companies operate in some 200 countries, offering more than 57 hundred varieties. Among the company’s famous brands are Heinz, StarKist, Ore-Ida, 9-Lives, Weight Watchers, Wattie’s, Plasmon, Farley’s, Smart Ones, The Budget Gourmet, Linda McCartney, San Marco, Go Ahead!, Bagel Bites, John West, Petit Navire, Boston Market, Skippy, Kibbles ‘n Bits, Pounce, Wagwells, Nature’s Recipe, Orlando, ABC, Olivine and Pudliszki. Information on Heinz is available at http://www.heinz.com.
