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H. J. Heinz Co, the US-based global food company, is expecting its sales in China to rise "many times" in the next three to five years through both organic growth and acquisitions.
Selling products such as baby food, ketchup and sauces in China, Heinz expects its sales in this market to grow to about US$100 million in the fiscal year ending in April 2005 from US$80 million in the just concluded year, Heinz's Asia-Pacific President Michael Jon Bertasso told China Daily Monday.
Although it recorded only a modest growth of 5 percent in China last year due to the SARS (severe acute respiratory syndrome) epidemic and some other factors, Heinz is set to multiply its sales as it expands what is now only a small portion of its global product lines in China, Bertasso said.
The company is looking at joint ventures for condiments, soup and frozen food and is talking with a number of potential partners, with major regions, such as Beijing and Shanghai, favored as the locations for the ventures.
Joint ventures, instead of full ownership, are preferred because local partners can provide distribution and consumer know-how while interfacing with the government, Bertasso said, adding Heinz hopes to eventually hold a majority interest in the new joint ventures.
However, it was difficult to say the timing and investment for the acquisitions, which "will depend on what is available," Bertasso said.
Commencing its production in China in 1984, Heinz runs a joint venture for infant rice cereal, and a wholly owned firm for soy sauce, oyster sauce and vinegar in Guangzhou, the headquarters for its operation in the Chinese mainland.
It also has a joint venture for jarred baby food and tomato ketchup and some other sauces in Qingdao, in Eastern China's Shandong Province.
Heinz wants to reach more Chinese babies, as its products are reaching only 5 to 8 million of the estimated 20 million babies born in China in a year, Bertasso said. It is working on a project for selling small packages of its baby food to appeal to families with limited incomes.
Bertasso said Beijing's hosting of the Olympics Games in 2008 is expected to give a boost to Heinz's business in China, as more western people will come, bringing western flavors to the Chinese culinary culture.
(China Daily May 18, 2004)
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