Heinz sales hit by Atkins diet

THE growing popularity of low-carbohydrate diets such as Atkins has hit sales of Heinz frozen foods.

Wed, 26 Nov, 2003 - 00:00

Chris Burritt

Sales of frozen foods such as Ore-Ida potatoes have declined, H.J. Heinz said yesterday after reporting a 9.7% drop in second-quarter profits.

Heinz, the world’s biggest ketchup maker, said net income declined to $191.5 million, or 54 cents a share, from $212.1 million, or 60 cents, a year earlier. Sales in the three months ended October 29 fell less than 1% to $2.09 billion, the Pittsburgh-based Heinz said.

Frozen foods sales fell for a fourth straight quarter, while sales of its top-selling Heinz ketchup and Classico pasta sauces increased in the US and Canada.

“This reflects the impact of the low-carbohydrate phenomenon,” said Heinz chief executive William Johnson. Heinz eliminated some Boston Market side dishes and Hot Bites frozen snacks and plans to introduce lower-carbohydrate products including Smart Ones frozen entrees.

“Consumers are demanding more healthy foods, and companies need to give them choices,” said Daniel Popowics, who helps manage about $30 billion, including about 147,000 Heinz shares, at Fifth Third Bancorp in Cincinnati.

Heinz plans to begin selling Ore-Ida Extra Crispy frozen potatoes this quarter and a low-carbohydrate version of its ketchup in February to attract the growing number of health conscious consumers interested in diets like the one popularized by the late Dr Robert Atkins.

Shares of Heinz fell 7 cents to $35.60 at 9:49am in New York Stock composite trading. The shares had risen 8.5% this year.

The year-earlier results included profit from discontinued operations of $43.5 million, or 12 cents a share. In December 2002, Heinz spun off its North American tuna, pet food, private-label soup and baby-food businesses in a combination with Del Monte Foods, valued at about $2.9 billion.

Heinz said sales excluding divestitures and acquisitions rose 7.7%, with 6% of the gain reflecting the weaker dollar against currencies in Europe and the Asia Pacific region.