Heinz zeroes in on innovation; set to launch 100 new products

July 3, 2006

Pittsburgh-based H.J. Heinz Co. announced June 30 that it has issued its Annual Report to Shareholders titled "Growth Through Innovation," featuring the Heinz Global Innovation and Quality Center located outside Pittsburgh.

"This year's report is dedicated to the talented men and women at the Heinz Innovation and Quality Center and our other global development centers who are carrying on Heinz's unparalleled 'Pure Food' legacy," said William R. Johnson, Heinz chairman, president and chief executive officer.

The report notes Heinz is sharply focused on its leading brands in three food categories where it adds the most value for consumers: Ketchup & Sauces; Meals & Snacks; and Infant Foods.

Recent new foods to come out of the Innovation Center kitchens include Ore-Ida chilled mashed and au gratin potatoes and macaroni & cheese; Ore-Ida Roasted Potatoes; expanded varieties of Classico sauce, including new organic varieties; "to-go" packaging for the Delimex and Bagel Bites brands in the Heinz Hot Snacks family of brands; and new varieties of Weight Watchers Smart Ones meals for breakfast, lunch, dinner and snacking occasions; as well as new varieties of soups for the foodservice market.

Heinz's commitment to innovation and attentiveness to trends in health and wellness are generating growth in its flagship ketchup category, the report points out. New varieties such as Organic, Reduced Sugar, No Salt and Hot and Spicy Ketchup Kick'rs, together with novel packaging, have helped increase ketchup sales in the U.S. at a compound annual rate of 7 percent over the past three years. Similar efforts are producing record market shares in ketchup in several markets across the globe.

The firm's latest innovation, debuting this summer, is its Fridge Door Fit bottle — the most convenient large-size bottle of Heinz Ketchup ever, according to the company.

This year's Annual Report highlights a sampling of the individuals who are producing the sustainable top-line growth at the heart of Heinz's "Focus on the Core" strategy of the past four years.

Much of Heinz's new product momentum follows from increased collaboration among cross-functional teams that combine strengthened market research with increased culinary expertise. Data-driven processes consult consumers at each stage of product development from 'ideation' to launch, resulting in new product success rates in the U.S. business that have increased from 58 percent in 2000, to 87 percent in 2004, the latest year for which trailing two-year data is available.

Heinz plans to continue to increase research and development spending in each of the next two years and increase marketing and advertising support by 19 percent in Fiscal 2007.

The new Innovation Center is home to more than 100 chefs, food technologists, nutritionists, packaging engineers and quality assurance specialists in a state-of-the-art facility. Features include test kitchens and tasting rooms with two-way mirrors for consumer observation by marketing and research professionals; an efficient new pilot plant that enables rapid factory prototyping from small test batches; and a packaging development lab that includes a vibration and drop simulator to evaluate how new packaging concepts will hold up during shipping and handling.

The report can be viewed on the Heinz home page at www.heinz.com. Those interested in learning more about Heinz's aggressive, but realistic plan for increasing shareholder value over the next two years, can visit www.heinzsuperiorvalue.com.

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