Heinz’s UK sales are down 16.3% from 2016 to 2017, but why? We used the Metrico Smart Assistant to find some answers.
Heinz’s Tomato Ketchup sales are down 13% yoy from Jan 2016 to Jan 2017. The UK subsidiary HJ Heinz Foods UK revealed a 16.5% decline in total annual sales from £846.7M in the 52 (2015) weeks up to Jan 2016, to £708.9M up to Jan 2017.
An article in The Grocer suggested the ketchup sales were due to the category’s decline and consumers moving to more premium products and novel flavours. A further Grocer article suggested that sriracha sauce was cutting into the ketchup market.
This all sounds very reasonable, but is it true? It’s hard to say unless you work at Heinz and you have access to category and brand level EPOS data across the Big 6 retailers. The other option is to rely on opinion articles or consumer panel data to estimate trends.
We have another way to investigate what’s going on – Metrico Smart Assistant. From our panel of 200,000 baskets sent by mySupermarket.co.uk and our aggregated retailer data, we can investigate the ketchup market by looking at:
- Price & Promotion trends over the last year
- Availability issues cross the Big 6 grocers
- E-commerce Marketshare data
We can cross-reference this data to make some educated guesses about where Heinz’s problems lie and what they can do to fix them.
Let’s take a look:
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This graph shows the main brands competing for marketshare for Tesco.com. While Heinz has 75% of the marketshare in Tesco.com per our sent basket data, you can see two slight trends.
1) A very gentle downward slope of Heinz’s marketshare in the ketchup category over the last year
2) A steady increase in Tesco own brand market share
Interesting, but it hardly accounts for the decline reported in the company figures. So, let’s keep the same view, but switch from marketshare by value, to marketshare by units…
Now, we can clearly see a downward trend of Heinz marketshare and a rapid upward trend of Tesco own label marketshare.
What is driving this marketshare shift? It’s easy to say ‘consumer behaviour, but that doesn’t give a national account manager anything practical to do with that information. So, instead, let’s get practical…
We asked the Metrico Smart Assistant to plot online marketshare against price and promotion strategy for Heinz and some key competitors.
From March 2017, we can see that Heinz invested in price decreases (presumably promotions to counteract falling sales). But it’s the green line that is of most interested – Hellman’s ketchup has been on deep discount for a long period of time to grab marketshare. In the same timeframe, Unilever also introduced Hellman’s Ketchup Sweetened With Honey.
When prices begin to rise again in March/April, Heinz takes advantage of this and goes on promotion (at least, that’s our likely conclusion from the data).
So, what about availability for e-commerce shoppers? Are there any significant out-of-stock issues that would negatively affect Heinz’s ketchup sales? The graph below plots marketshare against availability in Tesco across all stores; that is picked from for online delivery. We can see there is minimal out of scope issues – Heinz obvious has a great handle on its supply chain, with the biggest OOS being a 1.5% OOS in April 2017.
If we switch retailers quickly to look at Ocado OOS issues over the last year, we can see that Heinz ketchup SKUs have a low level of OOS issues over the year, but 12% out of stocks in April, with similar larger OOS rising from July to August.
Why does this matter? We need to search for ‘ketchup’ in Ocado to understand.
Ocado has prioritised a number of small ketchup brands such as, Gran Luchito and Mr Organic, which will drive larger marketshare for those small brands. Essentially, Ocado’s algorithm is favouring the little guys, which would likely impact Heinz marketshare in future. When Heinz has OOS issues with Ocado, this potential marketshare swing will be exacerbated. In the last 90 days, Heinz’s marketshare of Ketchup in Ocado is 74%, down 5.5% from the previous 90 days.
Luckily, in Tesco the ketchup shelf favours Heinz, showing 8 SKUs for Heinz out of the first 16 on the shelf.
What else might explain Heinz’s ketchup sales decline?
Let’s look at ratings & reviews…
The good news is that Heinz has a strong 4.3 rating.
The bad news is that several of the retailers own brands are also scored very highly. Sainsbury’s own brand is 4.2/5, Morrison’s is 4.1/5. Clearly, the quality of own brand ketchup is improving, and perhaps combined with the grocers pushing own brand SKUs and strong pricing strategies, there’s been an impact on Heinz.
What about share of Favourites. How does Heinz fare there?
What’s great about favourites baskets with the .com grocer retailers is that once you make a purchase, your SKU stays in favourites for a long time. And with 30-40% of shops being based on Favourites baskets, it’s worth checking to see what your share is. Metrico Smart Assistant is the only way to find this information out.
The green areas of the bar charts below show a high penetration of Favourites baskets by Heinz. The grey is own brands. The blue, competitor brands. As discussed above, we can see other brands eating into both own brands and Heinz’s penetration in Ocado. As Heinz has one of the highest penetrations of Favourites in Ocado, there’s a lot at stake. In Tesco, there’s a lower share of Favourites for Heinz, and it’s Tesco’s SKUs that are the threat, not other brands. If Heinz needed to defend itself from Hellman’s, the key place to spend on online ads would be with Asda, where other brands have a larger share.
Another interesting feature of the Favourites analysis available in Metrico is the Share of Favourites feature shown in the second graph above. The green part of the bar charts is where Heinz is exclusively in shoppers’ Favourites baskets, the grey is where the Favourites basket is share with other brands. As a brand owner, you want the ‘exclusive’ share to be high as it indicates contribution from brand equity and that you have a brand that can defend itself against shoppers switching when offered promotions.
Unfortunately, the exclusive share of favourites for Heinz in Tesco.com shops is one of the lower shares. Waitrose is the highest. If you were planning media spend for the next quarter, where would you invest it – in the retailer that delivers lower exclusive share of favourites (and so lower repeat purchases) or in retailers where the exclusive share was higher?
Finally, The Grocer suggested that the entire ketchup category could be in decline due in part to increasing interest in hot sauces like sriracha. So let’s take a look at the evidence that Metrico can see…
This is the Hot & Spicy sauce category:
Heinz’s share is zero from our data. And while established brands like Encona and Tabasco are holding steady, Nando’s hot sauces seem to be plotting an upward trend. Currently, Metrico can’t compare whole categories against each other to see the share (e.g. Ketchup Vs Hot Sauces). We’ll have that capability in the next few weeks. It will be interesting to see what’s happening at a category level.
What this analysis from Metrico tells us is not what the macro consumer trends are, but what we can do about increasing our marketshare in any trading condition. Given the analysis above, Heinz could:
- Reassess its media spend – is it booking the right balance of Favourite Interrupter ads? Is it targeting the right shelves in the right retailers online to get the biggest win?
- Check the supply chain for Ocado
- Discuss with Ocado it’s place in the category
- Devise a price & promotion strategy to combat competitor launches
- Speak with retailers about its place alongside retailer SKUs and how it can add greater marketshare value than its marketshare volume and how that can be leveraged further to maintain its rightful position on the shelves.
I hope this review of the data inspires you to run your own brand and category analysis. If you would like a free demo of Metrico or to discuss our bespoke category and brand insight capabilities, please get in touch with firstname.lastname@example.org
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