PORTLAND, Ore. (AP) - H.J. Heinz Co knows that every penny counts in this economy.
The world's biggest ketchup maker's second-quarter profit fell yet narrowly beat expectations on an adjusted basis Friday as it focused on fast-growing emerging markets. But in struggling developed markets such as the U.S. and Europe, the company is shrinking product sizes and selling lower-priced products such as ketchup for 99 cents and beans for around a dollar to appeal to budget-stretched shoppers.
Heinz also announced plans to close three more plants - not identified yet - as it tries to keep its own costs under tighter control.
Consumers are struggling with continued pressure from high unemployment and food costs. As a result, many people are living paycheck to paycheck buying only what they can afford rather than bigger bottles or cans of food that might be more cost-effective.
Heinz said to meet consumer's needs, it is selling pouches instead of bottles of some of its condiments, reintroducing bean products to the U.S.
and selling a bag of french fries for family dinners at $1.99.
In Europe, it will soon sell baby food around 1 euro and give free packs of its popular beans and soup to customers who buy four other cans of its products in the U.K., one of the areas hardest hit by the global economic woes.
Compelling price points seem to be best way to connect with today's concerned consumer, Heinz Chairman, President and CEO William R. Johnson said Friday.
"Consumer confidence declined in virtually every market we operate in in the developed world last quarter. It went up in the developing world, where we are really focusing a lot of our efforts," he said.
Heinz's fiscal second-quarter net income fell almost 6 percent as strength in emerging markets and higher prices offset a volume decline.
The company raised prices more than 4 percent to offset higher costs for ingredients and other commodities, which the entire industry is facing. However, as many companies beginning to see, those price hikes can scare away some of the most cost-conscious shoppers and hurt sales volume.
The company also struggled with softer sales in Australia where intense discounting, competition and other issues remain a challenge for the company
Heinz's sales volume fell nearly 3 percent in the quarter. While its sold roughly 2 percent fewer products in the U.S. and Europe and nearly 5 percent less in the Asia-Pacific region due to troubles in Australia, the company saw sales volume jump nearly 6 percent in the rest of the world.