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Weight Watchers contribution to Heinz exceeds $100 million annually: O'Reilly.

Weight Watchers Contribution to Heinz Exceeds $100 Million Annually: O'Reilly

The Weight Watchers line has become H.J. Heinz Company's second-largest brand, surpassed in sales dollars only by the Heinz label itself, reported Chairman Anthony J.F. O'Reilly.

"Weight Watchers brand sales explanded 20% in the past year, and we plan to continue or to exceed this growth rate worldwide over our next five-year business cycle," he said.

The Pittsburgh, Pa., U.S.A.-based outfit's overall growth is reflected in its five-year compound rate of 7%. Sales topped $5.2 billion in fiscal 1988. During the same period, net income rose by 12.5% to more than $386 million.

In discussing Weight Watchers operations, the chairman revealed that Heinz purchased the label and its related companies 10 years ago for $100 million. This year, the brand's operating income is expected to exceed that purchase price. Now No. 1 in the competitive reduced-calorie entree segment, some 60% of total sales are derived from food products.

Although the United States still represents the primary market for Weight Watchers, Heinz is very active in Canada, the U.K. and Germany. In addition, it has positioned itself in Italy, Australia, Switzerland and New Zealand.

"Eurofitness is a rising tide we feel we can ride into the '90s," the chairman commented. "The growing popularity of frozen, microwaveable meals, combined with diminishing trade barriers and an improved standard of living in Europe, presents Weight Watchers with a chance to reprise its American experience of the past decade."

In the U.K., the company markets the "Weight Watchers from Heinz" brand. Launched one year ago, the Weight Watchers Genniesserplan holds a 20% share of its category in West Germany, where the brand name has attained an awareness level of 70% among consumers.

Gearing up for a changing retail environment, O'Reilly told stock analysts that a $90 million modernization program has been approved for the company's original factory in Pittsburgh. Similar projects are under way at Heinz-U.K. plants.

On the other side of the ledger, the company has divested some properties. In the past year it sold a chilled salad operation in Europe, restaurant and wine businesses in Australia, and a poultry processor in Canada.
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Title Annotation:includes related article on diet frozen foods; H.J. Heinz Co., Anthony J.F. O'Reilly
Publication:Quick Frozen Foods International
Date:Apr 1, 1989
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