CONSUMER BEHAVIOUR: More On Consumer Coupon Clipping

According to an article in the Wall Street Journal, H.J. Heinz Co. CEO William Johnson said that coupon clipping has become more of a new behaviour and less a temporary phenomenon. He adds that retailers have to work to trim the variety of products from shelves in order to match consumers' shift "back to basics."
What adjustments have you made in response to changes in consumer spending? How did you determine how to make these changes?

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Heinz Sees More Coupon Clipping

By ILAN BRAT

H.J. Heinz Co. Chief Executive William Johnson said Wednesday that consumers have settled into a money-saving mind-set, including using coupons substantially more than in the past and preparing more meals at home.

He said the behavioral changes, particularly prominent among families with children, would benefit Heinz and other packaged-food makers.

"This is not a temporary phenomenon, but rather a new behavior," he said, speaking at a food-industry conference in Florida.

Mr. Johnson also said that consumer-goods makers and grocery retailers have to work to trim the variety of products from shelves in order to match consumers' shift "back to basics." He said that doing so would help leading brands increase sales while helping them and retailers reduce costs.

In a release, the company raised its projections for earnings per share in its fiscal year to $2.82 to $2.85 from $2.72 to $2.82. The company said that the amount of food it sold in its fiscal third quarter grew 4% in its U.S. retail segment. That growth is far ahead of results at many of the largest packaged-food makers.

Heinz also said it expects to increase its marketing spending in fiscal 2010 by 20%, up from a previous projection of 7% to 10%.

Food makers are trying to spur people to buy more food in order to drive sales as consumers have become less willing to accept price increases amid the weak economy.

Mr. Johnson also announced that Heinz would enter the infant-formula market in China later this year using ingredients sourced only from outside the country. He said Heinz aimed to take market share from competitors already selling infant formula in China.

Source: Wall Street Journal