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Heinz consolidates sales
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October 4, 1999: 11:49 a.m. ET
Food giant to trim units, station sales teams with its major retailer customers
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NEW YORK (CNNfn) - H.J. Heinz Co. said Monday it will restructure its sales organization, a move that will cut about half the headquarters staff for its Star-Kist Foods Inc., StarKist Seafood and Heinz Pet Products divisions, and move the remaining jobs to its home base in Pittsburgh.
Under the plan announced Monday, Heinz (HNZ) will consolidate its five separate sales organizations into one group, to be known as Heinz Sales Co. Heinz also will station sales teams with major supermarket operators such as Kroger (KR), Safeway (SWY) and Wal-Mart (WMT).
The new division will he headed by David Moran, a 41-year-old who joined the company only 18 months ago.
Heinz's move follows similar initiatives by rival food processors such as Quaker Oats (OAT), and it part of an ongoing reorganization process at the company. It consolidated its Ore-Ida and Weight Watchers Gourmet Food Co. into Heinz Frozen Food Co. in July, moving those divisions to new headquarters in Heinz's Pittsburgh North Side complex. Last week it completed the sale of its Weight Watchers division.
The company announced in February that it would take $900 million in charges over the next four years as part of this restructuring, with $552.8 million coming in the fiscal year that ended April 28.
The cost of relocation and severance related to this move will be included in those charges, said Debby Foster, director of corporate communications. She said about 425 employees work at the Newport, Ky., headquarters of Star-Kist and the pet products division and the company expects about 200 to 225 will take the offer to relocate to Pittsburgh.
With major grocery chains consolidating, food companies like Heinz, with $5 billion in North American sales among these divisions, are finding greater pressure on them in pricing and other contract terms, according to analysts.
Heinz's statement said the reorganization will allow it to respond more quickly and efficiently to its customers' demands.
"Our sales force will become strategic partners with customers, thereby building greater trust and influence," William Johnson, president and chief executive of Heinz, said in its statement. "We will tailor the location and composition of our account teams to fit our customers' differing requirements. We will devote more resources toward our customers and broaden our sales capabilities and influence beyond merchandising to assortment, pricing and shelving."
But the Heinz brands had a fair amount of clout with the chains even without the reorganization. So the move did not generate significant excitement on Wall Street Monday.
"It seems to be sensible in a period of consolidating grocery trades," said William Leach, analyst at Donaldson, Lufkin & Jenrette. "When you go with the entire organization behind you, I'm sure it gets some advantage, but I'm not sure it will make a big difference."
Heinz's stock was up 3/16 at 43-13/16 in late morning trading.
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H.J. Heinz
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