Tuesday, November 24, 2009

Mexico's Taste for Ketchup

Mexicans eat more ketchup by sales value than consumers in all but eight other countries. Many of them slather the thick red sauce on chicken, pasta and eggs—even pizza.

At the start of 2007, U.S. ketchup giant H.J. Heinz Co. held less than 1% of the Mexican ketchup market. In fact, Mexico was such a low priority that Heinz had fewer than 10 salespeople in the country, which is nearly three times as large as Texas. Tuesday, when Heinz releases quarterly earnings, its executives plan to boast that Heinz now accounts for 12% of the ketchup poured in Mexico, where a spokesman says the company now has 150 ketchup sales and marketing employees.

Mexicans love sweet food, and as the middle class grows, they seek out foods that represent that sort of progress: Mexico is one of Coca-Cola's biggest markets.

Though Heinz doesn't break out its ketchup sales in Mexico, the entire Mexican market for ketchup is a tiny fraction of the company's total annual sales of around $10 billion. Still, Heinz is excited about Mexico because the company's combined retail and food-service sales of ketchup there are growing at an annual rate of 25%, and Mr. Johnson said he expects that growth rate to continue for the next five years. By contrast, Heinz's overall sales, excluding the impact of currency translation, grew 5.5% during the fiscal year ended April 29, 2009.

In April 2005, Heinz's Latin American management bought a small manufacturer in Guadalajara that supplied its own ketchup, mustard and hot sauces to restaurant chains. Among its clients were Mexican outlets of Domino's Pizza Inc., Burger King Holdings Inc. and Yum Brands Inc.'s KFC brand.

Soon, Heinz began to see how popular ketchup was with Mexicans. Janet Aceves, a 28-year-old office worker is a case in point. At a Domino's one day last week, Ms. Aceves poured Heinz ketchup all over her cheese pizza before taking a big bite. The pizza sauce didn't provide enough zing for her taste buds, she said, adding, "It needs more."

I can not imagine putting ketchup on pizza; that's what powdered garlic and red pepper flakers are for, but, that's me.

Heinz's Mexico team scored a coup in mid-2006 by winning the contract to supply Domino's. Although the ketchup would be distributed in Domino's-branded packets, Mr. Pocaterra said the contract introduced millions of Mexican consumers to the taste of Heinz, which is a bit sweeter in Mexico than the company's U.S. ketchup formulation.

Sodas are sweeter in Mexico, too, than in the US (and that is incredible).

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