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Heinz Opens Global Innovation and Quality Center To Drive Growth in Company's Core Categories Worldwide; Company to Invest $100 Million in Innovation in North America

Posted on: Monday, 19 September 2005, 12:00 CDT

Calling today a milestone in the 136-year history of the H.J. Heinz Company (NYSE:HNZ), Chairman, President and CEO William R. Johnson celebrated the official opening of the Heinz Global Innovation and Quality Center and announced a significant commitment in product development and quality to better align with consumer desires. "Heinz will dedicate almost $100 million to strategic innovation activities in North America alone over the next five years," he told those attending the ribbon cutting ceremonies.

Located in Marshall Township, north of Pittsburgh, the 100,000-square-foot facility is Heinz's global hub for research and development and home to more than 100 chefs, food technologists, researchers and package designers, plus experts in nutrition and quality assurance. The center provides technical direction, assistance and advice to Heinz business units worldwide.

"The Innovation and Quality Center you see today is testament to our resolve to utilize innovation to spur growth," Mr. Johnson said. "Our global innovation teams are energized, like never before, with a strong focus on delivering new products, new packages, better nutrition, better taste and consumer value."

Prior to this, Heinz researchers and development teams were scattered in a number of 100-year-old buildings in the company's former complex on the Pittsburgh's North Shore. Heinz invested more than $13 million to create the world-class facility located on the Marconi Campus. It signed a long-term lease for the space last year and began construction in November 2004.

Housed at the Heinz Global Innovation and Quality Center is its International Center for Excellence in Ketchup, Condiments & Sauces, a repository of technology and a knowledge base for tomatoes. A multi-national team operates out of key growing and processing regions worldwide and studies all facets of the tomato. They are seeking an understanding of the anti-oxidant lycopene and its means to enhance health and well-being. Botanists and agronomists are developing proprietary tomato hybrids to bolster field yields, enhance color and flavor and to better withstand cooking and packing operations. Heinz technologists are reviewing every production phase from paste to packaging.

Work at the Innovation Center does not stop with Heinz's traditional tomato business. With last month's acquisition of the HP(R) and Lea & Perrins(R) brands, Heinz has new avenues to explore. And, for the Classico(TM) brand, the leading premier pasta sauce brand, its culinarians have the opportunity to explore the boundaries of taste.

Ore-Ida(R) potato products are another example of recent innovation. A team of packaging and food technologists created a breakthrough with the Extra Crispy(TM) line of fries, and then developed a process, package and a custom recipe that, when combined, made possible the very successful microwaveable Easy Fries(TM).

Additionally, Heinz is taking creative products to the rapidly growing chilled market with new Ore-Ida(R) mashed potatoes.

Innovation is a global imperative and not limited to the United States. In Australia the company unveiled a truly inventive soup. This new variety is based on a concentrated puree in a convenient, easy-to-open pouch. New products launched within the past two years now account for more than 14% of Heinz Australia revenues, with similar results in New Zealand.

In the U.K., additional recipes have provided renewed interest in the British standard, Heinz(R) Baked Beans. The new Mean Beanz(TM) products offer zest and kick to traditional canned beans.

Heinz, likewise, has benefited from successful new packaging technology, as exemplified by the global market shares for Heinz(R) Tomato Ketchup, which grew with the launch of the creative upside-down bottle, known as "top-down" in Europe. In the U.S., Heinz(R) Ketchup market shares recently exceeded 60% and in Canada, 80%. In Europe, the success has been even greater. After launching this ingenious package in 18 European countries, Heinz witnessed a 10% increase in overall ketchup sales.

A HERITAGE OF INNOVATION

"While today marks a significant milestone, it does not signal the start of Heinz's innovation and quality journey," Mr. Johnson said. "The H.J. Heinz Company has long been a standard bearer for the highest in purity and ethical food production. We believe, as Henry Heinz did, that creative ideas and superior quality greatly enhance our value proposition with consumers, which is to offer 'Good Food, Every Day(TM)'."

Mr. Johnson pointed to two seminal dates in the company's history. The first was the date of its founding - 1869 - when a young Henry Heinz started his company based on the principle of purity. He packed his first product, horseradish, in clear glass, rather than the standard amber and green bottles that obscured the contents. Unlike less scrupulous competitors, young Henry wanted to showcase the fact that his horseradish was free of adulterants and fillers.

The second date was 1906, when Henry Heinz stood as the sole food processor to back passage of the Pure Food and Drug Act, which heralded the start of the Food and Drug Administration and the birth of the modern food industry. Mr. Heinz believed that an increase in government oversight and regulation would gain consumer trust and, thus, be good for the health of the nation and the prosperity of the food industry.

Mr. Johnson noted that there have been other important milestones. For instance, in 1918, Heinz became the very first company to employ scientific controls and laboratory testing. "We are credited with coining the now pervasive term 'quality control department'," he said.

The Chairman summarized Heinz's business proposition by saying: "We, at Heinz, take tremendous pride in creating new products and varieties. We are especially proud of our ability to market superior foods that contribute to the health and well-being of people the world over. Our products offer nutrition, convenience and great taste, and are associated with good times and family traditions."

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS:

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect management's view of future events and financial performance. These statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond Heinz's control and could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Uncertainties contained in such statements include, but are not limited to, sales, earnings, and volume growth, general economic, political, and industry conditions, competitive conditions, which affect, among other things, customer preferences and the pricing of products, production, energy and raw material costs, the ability to anticipate and respond to consumer trends, the need for product recalls, the ability to maintain favorable supplier relationships, achieving cost savings and gross margins objectives, currency valuations and interest rate fluctuations, the ability to complete and the success of acquisitions, joint ventures, divestitures and other strategic initiatives, the ability to effectively integrate acquired businesses, new product and packaging innovations, product mix, the effectiveness of advertising, marketing, and promotional programs, supply chain efficiency and cash flow initiatives, risks inherent in litigation and international operations, particularly the performance of business in hyperinflationary environments, changes in estimates in critical accounting judgments and other laws and regulations, including tax laws, the success of tax-planning strategies, the possibility of increased pension expense and contributions and other people-related costs, the possibility of an impairment in Heinz's investments, and other factors described in "Cautionary Statement Relevant to Forward-Looking Information" in the Company's Form 10-K for the fiscal year ended April 27, 2005. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the securities laws.

ABOUT HEINZ: H.J. Heinz Company, offering "Good Food, Every Day(TM)," is one of the world's leading marketers and producers of branded foods in ketchup, condiments, sauces, meals, soups, seafood, snacks, and infant foods. Heinz satisfies hungry consumers in every outlet, from supermarkets to restaurants to convenience stores and kiosks. Heinz is a global family of leading brands, including Heinz(R) Ketchup, sauces, soups, beans, pasta and infant foods (representing nearly one-third of total sales or close to $3 billion), HP(R) and Lea & Perrins(R), Ore-Ida(R) french fries and roasted potatoes, Boston Market(R) and SmartOnes(R) meals, and Plasmon(R) baby food. Heinz's 50 companies have number-one or number-two brands in 200 countries, showcased by Heinz(R) Ketchup, The World's Favorite Ketchup(TM). Information on Heinz is available at www.heinz.com/news.

Source: Business Wire

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