Heinz

• 1. Introduction

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  The H. J. Heinz Company, known to most people as Heinz, owes its most famous number to a sign seen from a train. In 1896, founder Henry J. Heinz was riding an elevated train in New York City when he noticed a shoe store advertising 21 styles. He turned that idea into the slogan 57 Varieties, even though his company already made more than 60 products. Accounts of the choice differ. In one telling, 5 was his lucky number and 7 belonged to his wife. In another, he simply liked the sound of 7 and cited its psychological influence on people of all ages. Either way, the slogan lasted.

  Heinz grew into a food maker with factories on six continents and customers in more than 200 countries and territories. It claimed 150 brands that ranked first or second worldwide, and it held more than half of the American ketchup market. Its headquarters stood at One PPG Place in Pittsburgh, Pennsylvania. Yet the company is now defunct as an independent business. How did a small food packer reach that scale? Why did communities in Canada, Australia and Britain each have reason to feel let down by it? And which buyers ended its independence?

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• 2. Horseradish and Hope

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  Anna Heinz came from Haunetal, in Hesse-Kassel, and her husband came from Kallstadt, then part of the Bavarian Rhenish Palatinate. The two met in Pittsburgh, where their son Henry J. Heinz was born. In 1869, the young man began packing food on a small scale in Sharpsburg, Pennsylvania. With a friend, L. Clarence Noble, he formed Heinz Noble & Company. Their first product was horseradish made from Anna's recipe. It carried the Anchor Brand name, chosen for its biblical meaning of hope, and Heinz made it in the basement of his father's former house.

  The hope did not hold. The firm went bankrupt in 1875. The following year, Heinz started a new company, F & J Heinz, with his brother John Heinz and a cousin, Frederick Heinz. Among its first products was Heinz Tomato Ketchup, and the business kept growing. In 1888, Heinz bought out his two partners and reorganized the firm as the H. J. Heinz Company. From then on, his own initials sat in the company name.

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• 3. Purity and Pipe Organs

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  The 27th of July 1900 is the date the H. J. Heinz Company was incorporated in Pennsylvania. Henry Heinz served as its first president and kept the post for the rest of his life. Under him, the firm pioneered methods of sanitary food preparation. It also led a successful lobbying push for the Pure Food and Drug Act in 1906. Heinz treated problems such as bacterial contamination as something technology could solve, and he worked with the Food Administration during World War I.

  He also tried to guarantee purity through the people who handled the food. Women working with the products received hot showers and weekly manicures. Those perks were part of his personal effort to manage the cleanliness of what left the plant.

  The Pittsburgh plant held a large service building with three dining rooms and an auditorium seating 3,000. The auditorium had a pipe organ, and the company employed an organist to give recitals and musical programs. The Pittsburgh floods of 1936 severely damaged that first instrument. Its replacement was a Kimball organ with four manuals and 57 sets of pipes. The damaged original was restored and installed in Grace Methodist Church in Sharpsburg, the town where the company had begun.

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• 4. Boardroom Shifts

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  In 1930, Howard Heinz, the founder's son, met the Great Depression by selling ready-to-serve soups and baby food. Both lines became top sellers. During World War II, Jack Heinz led the company as president and CEO. He aimed to help the United Kingdom and offset food shortages, and for a time the Pittsburgh plant built gliders for the War Department. After the war, he opened plants in several other countries and acquired Ore-Ida and Starkist Tuna. By 2003, the Ore-Ida label held 46% of the frozen potato sector.

  In 1959, long-time employee Frank Armour Jr. became president and COO, succeeding H. J. Heinz II. He was the first person outside the family to hold that job since 1869. Tony O'Reilly joined the UK subsidiary in 1969 and soon became its managing director. He moved to Pittsburgh in 1971 as senior vice president for North America and the Pacific. Heinz made him president in 1973, CEO in 1979 and chairman in 1987.

  Between 1981 and 1991, Heinz returned 28% a year, double the average annual return of the Standard & Poor's index. In 1998, O'Reilly left after trouble with the company's performance. Corporate governance groups and pension funds, including CalPERS, had challenged him. His deputy, William R. Johnson, took over.

  By 2000, grocery chains had consolidated, retailers such as Walmart had spread, and private-label brands were fighting for shelf space. Seven retailers, including Walmart, Albertsons and Safeway, accounted for half of Heinz's sales by volume. The pressure on prices was also blamed on a weak response to demographic change, notably population growth among Hispanic Americans and the rising spending power of African Americans.

  In 2001, Heinz bought the pasta sauce, dry bouillon and soup business of Borden Foods. Johnson said of the brands, "They fit very well with our tomato-based expertise." On the 22nd of August 2001, the company announced it would acquire the branded lines of Anchor Food Products, including the Poppers appetizers and licensing rights to TGI Fridays frozen foods. That deal closed on the 25th of September. In 2002, Heinz sold the StarKist and 9Lives brands to Del Monte Foods.

  Billionaire Nelson Peltz began a proxy battle in 2006, which ended in a vote on five nominees he had put forward. After the final vote, two of them joined the Heinz Board. They were Peltz himself and Matthew Craig Walsh.

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• 5. Across Oceans

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  Heinz opened its first overseas office in London in 1896, and its first British factory followed in Peckham, south London, in 1905. In 1914, Heinz Salad Cream was invented in England. A second London factory opened at Harlesden in 1919. German bombs hit it twice in World War II, yet it kept producing until 2000. In 1946, production began at a former munitions factory at Standish, near Wigan. The Kitt Green factory near Wigan opened in 1959. In 2013, the Discovery Channel listed Kitt Green among the world's five largest manufacturing units. It was Europe's largest food factory and supplied more than 1 billion cans every year.

  In 1999, Heinz bought a 65 percent share of PT. ABC Central Food in Indonesia for US$70 million. The result, PT. Heinz ABC Indonesia, is based in Jakarta. By the early 21st century it was the company's largest business in Asia, with 3000 employees, 3 production facilities and 8 packing facilities. Its leading products were Syrup ABC, a fruit syrup, Kecap ABC, a sweet soy sauce, and Sambal ABC, a hot chili sauce.

  In India, Heinz had to adapt to regional tastes. It sold Tomato Ketchup and a Tomato Chili Sauce, and it took over the foods division of Glaxo India, gaining brands such as Complan and Glucon D. In 2019, it sold part of that business, including Complan and Glucon-D, to Zydus Wellness for $627.18 million. In China, Sanquan Food agreed in February 2013 to buy the Heinz subsidiary LongFong Food, leaving Heinz China to focus on infant foods and sauces.

  In Australia, the head office stood in Melbourne, and canned baked beans were popularized by the "beanz meanz Heinz" campaign. On the 27th of May 2011, Heinz announced it would close its factory in Girgarre, Victoria, and downsize two others. More than 300 jobs were at stake. The Girgarre tomato sauce plant closed on the 6th of January 2012, and 146 workers lost their jobs. It was the second to last tomato sauce factory in Australia, and its closing ended 70 years of tomato processing by Heinz there. A local group offered to buy the site, but Heinz rejected its first offer.

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• 6. The Leamington Revolt

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  Leamington, Ontario, calls itself the Tomato Capital of Canada, and in 1908 Heinz set up shop there in a former tobacco factory. The area is the largest tomato-processing region per acreage in the world. The plant usually processed more than 250,000 tons of tomatoes a year. Ketchup was the main product, but it also made tomato juice, mustard, vinegar, baby food, barbecue sauces, canned pastas, beans, gravies and soups. Heinz Canada was the major supplier of single-serving condiments for most fast food chains in the country.

  On the 14th of November 2013, Heinz announced that this facility, the second largest in the company, would close in May 2014. Ketchup processing was to move to US locations. More than 800 local jobs were lost, because the plant was the town's largest employer. Residents tried to save the 105-year-old plant, starting with a Facebook page to gather support. On the 27th of February 2014, Highbury Canco Corporation signed a letter of intent to take over the site. In April, it received a one-year license to process tomatoes there, which saved some 250 jobs.

  A rival, French's, then began making its own ketchup from Leamington produce and marketed it with an appeal to Canadian patriotism. A grassroots Facebook effort urged shoppers to buy it. In a mature market, Heinz's Canadian share fell from 84 to 76%. In 2018, Canada placed tariffs on certain American exports, including ketchup made in the United States, in retaliation for US tariffs on Canadian steel and aluminum. Heinz launched a belated public relations campaign, but a wave of sentiment favoring a boycott of American goods made it harder.

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• 7. Public Stumbles

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  In July 2001, the Food Standards Agency of the UK government found Heinz canned baked beans contaminated with bisphenol, a hormone disruptor. Five years later, a different problem hit British shoppers. After Heinz acquired HP Foods and closed the Aston factory in Birmingham, it moved production of HP Sauce and Daddies to Elst, in Gelderland in the Netherlands. The Elst factory struggled to absorb the work. Severe supply problems followed, and UK retailers gave the company heavy negative coverage. To get product back on shelves, Heinz bottled sauce in Spain, using ready-made sauce shipped from Elst.

  In June 2008, Heinz launched a UK campaign for its New York Deli Mayo products. The advertisement showed two men kissing in a family setting and drew 200 complaints to the Advertising Standards Authority. On the 24th of June 2008, Heinz pulled the advertisement, which had been planned for five weeks. The company said some customers had expressed concerns. Critics accused it of homophobia, and the gay rights group Stonewall called for a boycott of its products. Many were surprised that so few complaints had moved the company, given an estimated 3.6 million gay and lesbian consumers in the UK. MP Diane Abbott called the withdrawal "ill-considered" and "likely to offend the gay community".

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• 8. Takeover and Merger

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  On the 14th of February 2013, Berkshire Hathaway and the Brazilian investment firm 3G Capital agreed to buy Heinz for $23 billion. Counting assumed debt, the deal was valued at $28 billion. Heinz called it the largest deal in food industry history. The buyers paid $72.50 a share and would each own half, with 3G running the company. They quickly named Bernardo Hees, former chief executive of Burger King Worldwide, as CEO.

  The changes came fast. On the 13th of August 2013, Heinz announced the loss of 600 jobs in North America. On the 25th of October 2013, McDonald's said it would end a 40-year relationship with the company. The announcement came after Hees, a former leader of rival Burger King, became CEO.

  On the 25th of March 2015, Kraft Foods Group announced a merger with Heinz, arranged by Berkshire Hathaway and 3G Capital. Berkshire became a majority owner of Heinz on the 18th of June 2015. It exercised a warrant to buy 46 million shares for over $461 million, lifting its stake to 52.5%. The merger was completed on the 2nd of July 2015, creating the Kraft Heinz Company, the fifth largest food company in the world.

  Under the new name, the company made animal welfare pledges. In 2016, it announced a move to 100% cage-free eggs in North America by 2025, later widened to the whole world. Reports put 64% of its global egg supply at that standard, with 100% of European eggs coming from free-range hens. It also set goals aligned with the European Chicken Commitment, targeting 2024 in the US and 2026 in Europe. In 2024, Carlos Abrams-Rivera took over as CEO of Kraft Heinz.

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