by Dan Malovany and Andy Hanacek
Like Leonardo DiCaprio in the movie “Catch Me if You Can,” the tortilla category has disguised itself in so many ways over time that it constantly escapes the pitfalls that have hurt so many other snack and bakery categories.
Tortilla producers rolled out low-fat items when that trend was at the peak of its popularity. When low-carb clobbered the white bread segment, the tortilla industry once again reinvented itself. In addition to cranking out low-carb varieties, tortillerias got the word out to non-Hispanic consumers that their products were naturally low in carbohydrates. As for their core Hispanic consumers, the low-carb fad was, for the most part, a non-issue, notes Ricardo Baez, executive vice president of Don Pancho Authentic Mexican Foods, based in Salem, Ore.
|Tortilla/Tostada Chip brands|
(Latest 52 Weeks Ending Jun. 12, 2005)
|Rank||Brand||Dollar Volume |
|% Change||Dollar Share|
|*Including brands not shown|
SOURCE: Information Resources Inc., Total U.S. — F/D/MX (Supermarkets, Drugstores and Mass Merchandisers excluding Wal-Mart)
“Our sales continue to be driven by the explosive growth of the flour tortilla consumption by non-Hispanics as well as the reduced-carb tortillas that are now available for those seeking a lower-carb diet,” Baez says. “While some people say the low-carb trend has slowed, we haven’t seen it. “
Likewise, tortilla powerhouse Mission Foods and its parent company, Gruma Corp., continue to see strong sales despite last year’s carb craze. Like many tortilla producers, Mission quickly rolled out low-carb alternatives. Again, the Irving, Texas-based company benefited because many Hispanic consumers never bought into the low-carb fad.
“Instead of low carb, their impression of health is whole wheat,” notes Asima Syed, Mission’s senior vice president of marketing. “We’re seeing our whole-wheat tortilla sales rising even though we’re not doing anything to advertise it.”
Today, adding whole grains, going organic and eliminating trans fat are the hot buttons among health-conscious consumers, and how has the category responded? It’s jumped on all three of those trends at once with a flurry of organic multigrain tortillas that contain no trans fat.
Fueling sales even more is the menu expansion going on in the in-store bakery/deli and the foodservice channels, Baez adds. Chicken quesadillas, for instance, have become commonplace at roadside diners as they try to compete with casual chains ranging from T.G.I. Friday’s and Chi-Chi’s to quick casual operations like Chipotle and Baja Fresh.
To battle against Taco Bell, Jack-in-the-Box, McDonald’s and Burger King have responded over the years by adding tacos or breakfast burritos with, more or less, some success. More recently, Subway’s introduction of low-carb wraps was hugely successful.
At the other extreme, a variety of gourmet wraps can be found on the menus of five-star hotel beach resorts, such as The Breakers in Palm Beach, Fla. In the back of the house, many upscale restaurants are purchasing a colorful array of red, green, blue and other multicolored pre-cut tortillas and serving them hot out of the fryer with salsa or guacamole as an appetizer or snack at the bar.
As Baez explains, “On the foodservice side, the growth has been fueled … by the expansion of fast-food Mexican restaurants, by the additional items offered by traditional non-Mexican restaurants, by the delis that are offering tortillas as an option as a wrap instead of bread and by the increased awareness of non-Hispanic consumers in using tortillas in meals.”
Taking on New Disguises
It shouldn’t have come as a surprise that contemporary restaurateurs and even consumers are incorporating tortillas into their menu selections. The tortilla industry has been encouraging non-Hispanic Americans to do so for years with a variety of menu suggestions on their Web sites and even on their packages.
At the recent International Dairy-Deli Bakery Association show in Minneapolis, La Bonita Ole Inc. rolled out such wraps as a Sun-Dried Tomato BLT, an Italian wrap with ham, tomato and mozzarella and an Untraditional Corn Dog made with a grilled wiener and mustard wrapped in a hot corn tortilla. The Tampa, Fla.-based company sells restaurant-style flour and corn tortillas under the Tam-X-icos name and flavored and traditional wraps under the Wrap-itz brand.
In addition to branching into non-Hispanic venues, many tortilla companies, such as Don Pancho, are touting their roots and positioning themselves as Mexican food companies. Don Pancho sells not only tortillas, but also taco shells, tortilla chips, uncooked tortilla chips, tostada shells, Mexican cheeses, salsa, chorizo and even an array of Mexican spices.
“We’re moving from being just a tortilla facility to a Mexican food company,” Baez says. “Our core business will always remain the same. What got us to the dance floor were our Hispanic customers. Twenty-five years ago, it wasn’t fashionable for grocery stores or food distributors to offer Mexican food offerings. Now, it’s the hot, trendy thing to be in.”
Baez notes that Hispanics are now the largest and fastest-growing ethnic group in America and that a majority of them are Mexicans, who are heavy tortilla users.
“This demographic pool will permeate society and interact with non-Hispanic friends, acquaintances and co-workers who will become exposed to Mexican foods and cooking and thus facilitate the consumption of tortillas by a non-traditional base,” he explains.
At the Food Marketing Institute show, Ruiz Foods touted itself as the No. 1 Mexican food company when you include all Mexican foods sold, including burritos, notes Mark Hannay, senior vice president of sales & marketing.
Although it currently doesn’t sell packaged tortillas to consumers, the Dinuba, Calif.-based company produces more than 1 billion of them annually. Ruiz Foods has been extremely successful with its Hot-to-Go programs, such as its Go-Go Taquitos business with 7-Eleven. By replacing hot dogs with taquitos on roller grills, Ruiz Foods has transformed how the nation’s largest convenience store chain sells hot food to go. Now Ruiz is working with mass merchandisers and club stores on similar Hot-to-Go programs.
“It’s all about trying to promote a solution to our customers,” Hannay says. “Many of them were unhappy with their roller grills and even looking to pull them out of their stores. They asked us what we can do to promote better sales.”
Taquitos, he adds, “are a crave-able destination food.”
“Young people today think nothing of driving by a C-store and picking up two or three taquitos,” Hannay notes.
Sandwich programs are too complicated to operate for convenience stores. If the line gets backed up too far, it takes too much time to serve the customer. As a result, it defeats the purpose of a “convenience” store.
The Hot-to-Go program is simple to administer, he adds. Store operators just tear open a bag and put out a couple varieties of breakfast taquitos until 10:30 a.m., then switch to southwest chicken or steak fajita taquitos for lunch. To spark dinner sales, operators can switch to other varieties.
“Consumers may stop by two or three times a day if you keep the menu fresh,” Hannay says.
Ruiz is working with its major customers to develop new varieties. In some cases, it may create a nacho flavor for spicy barbecue flavor of its tortillas. In other cases, it may change the fillings. To attract late-night sales, Ruiz has developed an apple-cinnamon taquito that serves as an evening dessert.
New Stealth Competitors
The ongoing popularity of tortillas has attracted many companies, such as producers of pitas and other bread products, to venture into the category. Brooklyn, N.Y.-based Aladdin Bakers, known for its pitas, or more commonly called “Greek-style flatbreads,” initially came out with 12-in. wraps about five years ago. The wraps, which have a 60-day shelf life, come in a unique shipper that can be opened easily and displayed throughout the retail store. To display the wraps’ name and varieties, the packages are rolled up like newspapers and placed vertically inside a cardboard rectangle shipper.
Saline, Mich.-based Flatout’s flatbread has been a hit with many delis, with its oval flatbread that’s a hybrid in texture between a tortilla and a pita. The oval-designed bread supposedly makes it easier to make wraps with more filling and without any of the waste and mess that’s found with many round tortillas. The flatbread can be made into pinwheels, chips, salad bowls, quesadillas, pizza and even grilled sandwiches. The latest varieties come in Multigrain, Salsa-Ranch and Chipotle-Lime.
Meanwhile, Brooklyn, N.Y.-based Damascus Bakeries’ Roll-Ups are reduced-carbohydrate flatbreads that are thicker like pitas but flexible like tortillas. Like Flatout’s breads, they can be used to make pinwheels, paninis or thin crust pizza.
As newcomers compete against the tortilla industry, Gruma Corp. reports that tortillas sales are as robust as ever. To keep up with demand, the company purchased CHS Inc. and its tortilla and tortilla chip operations in New Brighton, Minn., Ft. Worth, Texas, and Phoenix.
Gruma Corp. plans to open a $33.9 million tortilla plant this summer in Wright Township, Pa., to help it branch further into the Northeast, where tortilla penetration is the lowest in the nation on a per capita basis. The plant also will provide Mission with much needed capacity, especially in the wheat-flour tortilla segment.
To promote tortillas this summer, Gruma’s Mission Foods division teamed up with Disney to celebrate Disneyland’s 50th Anniversary. Mission Foods introduced Kid Sized Tortillas with edible Disney character tortilla decals. The special summertime promotion runs through August.
Stacked in a special Sleeping Beauty’s Castle display, the tortillas come with 25 decals of Mickey Mouse, Tinker Bell and other Disney characters. Kids simply moisten the tortilla with water or butter and place the decal on the tortilla. The tortilla can be heated to make quesadillas or simply filled with meat, cheese and vegetables to make a taco or burrito, Syed says.
Rainbow of Tortilla Chips
In the tortilla chip category, Frito-Lay originally rolled out Doritos Black Pepper Jack chips for a limited time, but after heavy consumer demand, the flavor earned a more permanent slot in the company’s portfolio.
“The reason this is such a big hit with consumers is because we went directly to consumers for the flavor,” says Charles Nicolas, director of public relations. “In ‘Lay’s Tastes of America,’ more than 500,000 people voted on the next flavor they wanted Frito-Lay to come out with. Doritos Black Pepper Jack was one of the winners.”
This event tied in with the Plano, Texas-based, company’s overall strategy of “Occasion-Based Innovation.” This strategy cuts across all product lines and looks at the entire “macrosnack” category, explained Irene Rosenfeld, chairman and CEO of Frito-Lay North America, at a presentation to the Consumer Analyst Group of New York (CAGNY) on Feb. 24, 2005.
Rosenfeld said Frito-Lay needs to move up a level and build upon the 65% dollar share in the $15 billion salty-snack category by branching out into the $90 billion macrosnack category, in which Frito-Lay has a 15% dollar share. That category, Rosenfeld added, includes the standard salty snacks, but adds cookies, crackers, snack bars, nuts, yogurt, meat snacks and other snackable products.
Through its “Occasion-Based Innovation” strategy, Frito-Lay will take a consumer-centric approach to its products.
“‘Occasion-Based Innovation’ reflects the main consumer trends of healthfulness, portability and great taste,” Nicolas adds. “Our approach is flexible, as Frito-Lay’s product [and packaging] portfolio is already well-represented in these key areas.”
In the better-for-you arena, the organic/all-natural tortilla chip has some staying power, according to Joe Papiri, vice president of sales and marketing for Snak King Corp., based in City of Industry, Calif.
“I think more and more guys are jumping on the bandwagon, and consumers are starting to watch for that a lot more,” Papiri explains. “More of the [so-called] trends have been fads. One long-term trend is definitely natural and organic. It keeps creeping up every year.”
Papiri believes that the explanation as to why consumers are asking for healthier foods lies with the consumers themselves.
“The general public has become much more educated as far as foods go,” he says. “With the advent of all the cable channels and the Food Network, your average person has a grasp and an interest in different things now, more so than in the past.”
That, of course, means consumers are more willing to try different flavors, and Papiri says Snak King, based in City of Industry, Calif., has played with different combinations of flavors in its latest launches, including a jalapeño-based chip, which actually has the jalapeños mixed in with the base corn and is seasoned with a completely natural cheese.
“You get different layers of taste,” Papiri says. “You have the topical piece, and that pepper is more of an underlying, subtle taste in the background, so it doesn’t just grab you like a topical seasoning would. It’s more of an overall experience.”
Meanwhile, Brewster, Ohio-based Shearer’s Foods, Inc., found success in the past year with its tortilla chips, and the line was expanded when the company added an organic, blue-corn tortilla chips with sesame seeds infused into it.
By positioning their products as more healthful, nimble tortilla and tortilla chip manufacturers are demonstrating over and over again that they can adjust to almost any situation.