At Heinz, Hoping To Leave A Legacy Of Product Safety

FOR wary consumers, 2007 may well be remembered as the year of the recall. Toys may have grabbed the spotlight, but pet food and food for humans ran a close second. One company — the Topps Meat Company in Elizabeth, N.J. — recalled more than 21 million pounds of frozen hamburger because of potential E. coli contamination. The company closed on Oct. 5 and declared bankruptcy late last month.

William R. Johnson

Last spring, the Food and Drug Administration recalled millions of packages of pet food after finding evidence that tainted ingredients in the food, originating in China, had killed at least 16 cats and dogs and sickened thousands of other animals. And that does not count ConAgra’s recall of pot pies and Peter Pan peanut butter after salmonella outbreaks, and the recall by General Mills of thousands of Totino’s and Jeno’s frozen pizzas last month when the pepperoni topping was suspected in an E. coli outbreak.

H. J. Heinz, the Pittsburgh food manufacturer, has had its own recalls in past years but has managed to stay off the hot seat this year.

Recently the chief executive of Heinz, William R. Johnson, discussed product quality and recalls, what consumers have to look forward to and the shareholder activist who has taken a keen interest in the company. Excerpts from the interview follow:

Q. Where does product quality fall in your top 10 concerns?

A. Ensuring the quality of a product is the most important thing a company can do. Quality is to a product what integrity is to a human being. It’s the barometer of success for companies like ours. I’ve always told our people that Heinz brands are synonymous with quality and safety in an uncertain world, and we need to take every precaution so that we don’t have these kinds of problems.

Quality is also a personal passion of mine. It’s one of the legacies I hope to leave in this company, an idea that Henry Heinz, the company founder, started. He was one of the few people in the industry who helped pass the Pure Food and Drug Act in 1906.

Q. How does H.J. Heinz attempt to ensure that its products are safe and avoid recalls in the future?

A. We established a quality council a couple of years ago that reports directly to me. I believe that’s unusual in the industry. I don’t want to speak for other companies, but the quality function sometimes reports to R.&D. or operations or manufacturing. We’ve also upped our funding in the area of quality.

Most recall issues are built around allergens and microbiological contamination. We haven’t had these problems in the last few years and have taken stringent action to counter them. We’ve added electronic scanners along our factory lines to eliminate what we refer to as “rogue” labels. In the case of beans, occasionally a supplier will violate our standards, but we’ve taken action in the last few years to follow up before there’s a problem.

We’ve been implementing a comprehensive quality management system over the last few years that places controls on all aspects of our product sourcing and suppliers, as well as on operations in our factories.

Q. What’s your opinion about the job the F.D.A. is doing in overseeing the food industry?

A. I think the F.D.A. is the finest food agency in the world and has some of the most stringent processes and the finest people, but I believe they’re underresourced.

Q. What’s the threshold for a recall at Heinz?

A. We take immediate action on anything that has to do with consumer safety. One of our last quality issues, in 2006, involved a labeling error regarding milk in a frozen food product in the Northeast. It was a minor incident, but we immediately pulled all of the product off the shelves.

Q. What advice do you have for consumers who may be nervous about the food they eat after the spinach recall last year, and this year’s recalls?

A. I think consumers need to look at brands and understand the people they’re doing business with. Companies have to be stringent in their processes. Even without regulation, they have to insist on the highest standards.

The annual survey by the University of Michigan on customer satisfaction rated the Heinz brand No. 1 again this year. The earnings we announced in November are testament to our quality. Earnings per share are up 20 percent for the quarter, sales are up 13 percent, and we’re doing well all over the world.

Q. The shareholder activist Nelson Peltz and another member of his company, the Trian Group, won seats on your board in 2006. How has it been going?

A. Very well. Nelson is obsessed with quality and we talk about it frequently. He’s an enthusiastic, energetic addition to the board. Nelson has offered a number of ideas, and I bounce things off him occasionally. He has been a positive influence on the company and we get along well. He’s all about us growing even faster.

Q. Shoppers are none too happy about rising food prices. Do you see them dropping anytime soon?

A. Unfortunately, American consumers are going to pay a little more for food as long as food is being converted to fuel. Ethanol is having an impact on the food supply in the United States, and the demand around the world for American commodities like grain is continuing to put pressure on commodity prices. Supply and demand need to equilibrate. But at the end of the day, you have to remember that food as a percentage of expenditures is relatively small, particularly in the United States. There may be some changes from eating out to eating at home more, which is good for our business.

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