Heinz says DTC service will not impact customers
The comments followed the launch of the baked beans and ketchup producer’s DTC service ‘Heinz to Home’ last weekend.
Heinz said the service – which offered bundles of beans, spaghetti hoops and soup sent directly to consumers’ homes – was mainly focused on helping frontline workers that didn’t have the time to buy food from stores.
“We are offering free delivery and priority shipment for them,” said director of corporate and government affairs Nigel Dickie. “We also recognise that others who are vulnerable and self-isolated may struggle to get access to our brands.
“Since it is very difficult for us to identify this group, the online shop is open to everyone, but with cost of packing and delivery on top.”
Supply shortages
However, there have been some concerns raised by retailers that Heinz’s move toward DTC could lead to more shortages in stores.
One wholesaler told The Grocer magazine that the timing was surprising, as Heinz had been struggling to supply its normal routes-to-market and that the price it was selling its bundles for was undercutting retailers.
In response to these claims, Dickie said Heinz had revisited the fair share allocation to double-check any gaps in availability and allocated more to the independent and wholesale channels.
“We have reviewed our shift pattern too and revised it to allow for less Sunday loading, but a small increase in pick for vulnerable communities or enforced limitations,” he added.
Expanding capacity
“We have also expanded our loading capacity and, over the course of the next two weeks, we will be removing truck allocations and reducing lead time back to our standard order to delivery lead time.”
Heinz is the latest in a growing number of companies that have opened DTC channels for their products, many with successful results.
Dairy giant Arla – which launched its one DTC service in 2018 – said the channel was accelerating. With the rise of Generation Z and digital natives, it believed there was significant reason to believe the market was at a tipping point of exponential growth.
A report in 2017 claimed that manufacturers could boost their sales by 5% by opening DTC supply channels and said it was an excellent way for smaller businesses to establish market demand and drive growth.
Richard Walters, principal consultant with LCP Consulting, described it as a key channel that enabled a more intimate relationship with the end-consumer, which can be a real value driver.
