Tortilla segment hitting its stride

by Eric Schroeder
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For the second year in a row, dollar sales in the fresh hard/soft tortillas/taco kits category increased 5%.

It’s safe to say that the tortilla segment is clicking on all cylinders. For the second year in a row, dollar sales in the fresh hard/soft tortillas/taco kits category increased 5%, exceeding $2.2 billion in sales, according to Information Resources, Inc., a Chicago-based market research firm. Unit sales also grew at a nearly 5% clip, and if the category continues to increase at its current rates it will surpass the 1 billion unit mark by the end of this year.

Mission Foods, Inc., a division of Gruma Corp., maintained its position atop the category with dollar sales of $678,506,496, according to I.R.I. The company’s sales increased nearly 11% behind strength in the base Mission Foods brand (up 9%), as well as Mission Carb Balance (up 17%) and Mission Estilo Casero (up 7%).

Mission Foods had dollar sales of $613,540,700, up 12% from a year ago, while unit sales increased 11%. The rest of Gruma’s tortilla business posted dollar sales of $345,309,300, up 5% from a year ago, according to I.R.I.

In the first quarter of fiscal 2015, Gruma Corp.’s sales volume increased 4% to 425,000 tons, driven by U.S. operations.

“Corn flour grew by gaining share within customers that produce tortillas, driven by the better quality of our corn flour in comparison to other brands, and increased consumption in restaurants,” Gruma said. “The U.S. tortilla operations rose due to the retail segment, resulting from increased distribution, shelf space gains, product assortment optimization, and the increasing popularity of some of our tortillas, whose improved formula continues to be well accepted by consumers; and the food service segment, resulting from organic growth and the expansion of some Mexican food restaurant chains, the introduction of dishes made with tortillas by several restaurant chains, and new customers among food service distributors.”

In with the Old El Paso

General Mills, Inc., Minneapolis, posted hard/soft tortillas/taco kits dollar sales of $249,742,992 in the 52 weeks ended March 22, up about 7% from the same period a year ago, according to I.R.I. The company has seen strong consumer response to its Stand ‘N Stuff soft flour tortillas that were added to its Old El Paso portfolio in late 2013. The product is bowl-shaped and flat-bottomed, allowing for easy filling and eating. In addition, General Mills has kept the Old El Paso hard-shell Stand ‘N Stuff Taco line fresh with the addition of nacho cheese flavored taco shells.

For General Mills, though, the real gains for the Old El Paso brand are taking place outside of the United States.

“Mexican food is popular around the world, and with retail sales of nearly $700 million in measured markets, sales for our Old El Paso brand outside the U.S. exceed domestic sales,” Chris O’Leary, executive vice-president and chief operating officer of international at General Mills, said in February. “Old El Paso holds strong share positions, and we have been driving growth with high-quality dinner kits that work well across countries. Our Stand ‘N Stuff tortillas are another great example of first-to-market innovation in Europe and Australia.”

Flowers ‘eager to grow share’

Flowers Foods, Inc. may not be a major player in the tortilla industry, but the Thomasville, Ga.-based wholesale baker gradually has strengthened its presence in the category since entering the market a little over 20 years ago with its Mi Casa brand. Five years ago, in 2009, Flowers acquired Leo’s Foods, Inc., a family-owned tortilla manufacturer with one facility in Fort Worth, Texas. At the time of the acquisition, Leo’s Foods manufactured flour and corn tortillas as well as tortilla chips that were sold nationwide to food service and institutional customers. But Flowers has made changes to the Leo’s business over the past year, closing the Fort Worth facility and exiting certain food service tortilla businesses.

Through all the change, executives at Flowers Foods still see a category with great potential.

“Tortillas are … seeing strong growth,” Brad Alexander, chief operating officer of Flowers Foods, said in an April 14 Flowers Foods’ investors day presentation at the New York Stock Exchange to Wall Street analysts. “With high household penetration and strong volume growth we are eager to grow our share in this segment with our three brands. The demographic appeal of flatbreads is widening, and since incremental consumers are entering the category without brand history we have a great opportunity to gain share by demonstrating quality and service. Following the sale of Leo’s Foods we transferred two flour tortilla lines to our San Antonio bakery. These lines are up and running and doing well.”

Flowers Foods’ three tortilla brands are Mi Casa, Frestillas and Cobblestone Bread Co. Mi Casa is the company’s top selling brand, according to I.R.I. Dollar sales in the 52 weeks ended March 22 were $20,158,372 on unit sales of 9,732,524.

“We’ve gotten things right in the tortilla business with the disposition of our Leo’s facility,” said R. Steve Kinsey, executive vice-president and chief financial officer. “We’ve seen those margins come back.”

Refrigerated tortilla sales cool

Azteca Foods, Inc., Chicago, is the leader in the refrigerated tortilla market with dollar sales of $28,982,228, according to I.R.I. But unlike the hard/soft tortillas/taco kits category, sales in the refrigerated tortilla category slumped in the 52 weeks ended March 22. At $108,519,592, sales were down 5% from the same period a year ago, according to I.R.I. And at Azteca, sales were down nearly 12%.

To help generate growth, Azteca last summer launched a new product platform featuring an assortment of “healthier for you” refrigerated tortillas. The platform is anchored by four No Preservatives flour options, available in fajita, taco and burrito sizes, as well as a mini snack size that the company said is perfect for portion control and snacking for children. All Azteca’s No Preservatives flour options contain no high-fructose corn syrup, artificial colors or flavors.

The platform also includes tortillas with added calcium and vitamin D, a tortilla option made with Ultragrain whole wheat flour, organic, whole wheat, low carb and more. All Azteca tortillas are refrigerated during every step of the process.

“Our no preservatives tortillas are an exciting addition to our entire new platform of healthier for you products,” Julie Nargang, vice-president of marketing and innovation at Azteca, said at the time of the product line’s launch.

One refrigerated tortilla maker that was able to buck the negative sales slide over the past year was Circle Foods, San Diego. Dollar sales of Circle Foods refrigerated tortillas increased 36% in the 52 weeks ended March 22, according to I.R.I., boosted in part by the launch last summer of TortillaLand Cheesy Uncooked Tortillas.

The Cheesy Uncooked Tortillas, available in packages of 10 tortillas, feature a combination of cheese and tortillas, made with cheddar cheese, zero grams trans fat, and 5 grams of protein. In addition to the Cheesy tortillas, the TortillaLand Uncooked Tortillas are available in a flour and corn variety.

Meanwhile, SkinnyPop Popcorn L.L.C. on April 21 bulked up its portfolio with the acquisition of the Paqui brand of tortilla chips and tortillas. Financial terms of the transaction were not disclosed.

Made by stone grinding non-bioengineered corn, Austin, Texas-based Paqui’s tortillas are available in buttermilk, roasted jalapeño, cilantro, and pumpkin and spice flavors.

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READER COMMENTS (1)

By bob mcelroy 5/18/2015 2:25:57 PM
your mom