Tortilla market stabilizes

Throughout 2008, the economic impact on the tortilla market vacillated. The rising cost of raw ingredients proved challenging while more consumers making meals at home was a boon.

“Because of rising raw ingredient costs, many changes I saw last year were end customers downsizing orders. Some customers began asking for slightly smaller tortilla packages. It was either increase your prices or reduce your count or individual product size. We saw that with corn items, but not with flour,” says Helen Chavez-Hansen, president and founder of La Tapatia Tortilleria, Fresno, Calif.

However, as the recession drives more consumers to cook at home, traditional flatbreads, such as flour and corn tortillas, are seeing an increase in demand.

“The corn tortilla is branching out beyond ethnicities, entering U.S. households for their natural health benefits. They are low fat, low sodium, high fiber alternatives to wheat/flour-based bread products. Consumers are finding new, unique ways to incorporate corn tortillas into their diets beyond Mexican cuisines,” says Alberto Gonzalez, senior vice president-marketing, Mission Foods, Irving, Texas.

The fluctuating tortilla market also has taken a toll on equipment manufacturers. “While the market did take a dip, today our customers are asking for equipment that will allow them to produce more products at a higher rate of speed, reduce overhead and reduce energy costs at the same time,” says Ron Meade, C.E.O., Casa Herrera Inc., a manufacturer of tortilla equipment in Pomona, Calif.

Beyond borders

To help stabilize sales and limit the recession's impact, U.S. tortilla makers are looking beyond the country's borders.

“On the domestic side, the supermarket area is very good right now in all of California and throughout the Pacific [Coast],” Chavez-Hansen says.

Casa Herrera is seeing a 3 to 5 percent growth in the flour tortilla production area in the United States. However, in the United Kingdom and Europe, it is seeing 22 to 25 percent growth in some markets, Meade notes.

Helping spur the growth in the United Kingdom and Europe is the diversity of the population, as flatbread is a staple for many ethnic diets.

The growth for flour tortillas in these regions is spurred by convenience, flavor and utility. A consumer decides to try a package of tortillas rather than make their own flatbread at home and likes them. Then they start using tortillas instead of baking from scratch. “There's a lot of crossover growth going on in Europe and the UK,” Meade says.

For Mission Foods, knowing what sells in certain markets is key to weathering the economic storm. For instance, flour tortillas and wraps tend to be the most popular with consumers in the Northeast and Southeast, but sales of corn tortillas are higher on the West Coast.

The industry also is beginning to reach a new base of consumers that are entering the category due in part to the explosion in wraps and tortilla menu items at QSR and fast casual restaurants. This trend is a great opportunity for growth, Gonzalez says.

Addressing changing lifestyles

While offering a full spectrum of tortilla products, Mission Foods also is filling consumers' desire for more healthful versions. Several new lines of flour tortillas have helped the company capture additional sales as consumers' attitudes have shifted about health and nutrition and the way tortilla products are used. “Mission Foods' Plus! Line of tortillas including Life Balance™, multigrain, 96% fat-free and Carb Balance^® have helped consumers view tortillas in a totally different light and given them permission to use these products in new, healthier ways,” Gonzalez says.

“One Life Balance tortilla has as much calcium as a glass of milk, or 20 percent of the daily recommended intake. It also contains DHA omega-3, which is one of the most significant contributors to brain health,” he adds.

La Tapatia also is addressing consumer health concerns. “We always use canola oil in our tortillas, and we are very well known for our stone ground yellow corn tortillas. We make our changes internally, becoming more efficient with equipment improvement and training programs. If you do a good job inside and turn out a good product, you have a good loyal customer base,” Chavez-Hansen says.

Because of increasing demand for more environmentally friendly production methods, Casa Herrera is seeing a growing demand for its latest Odyssey ovens. “These are a unique, proprietary design to us and a real energy saver for our customers. The Odyssey oven is drawing continuing interest, as people become more energy conscious. It is much more efficient to operate than a traditional flour or corn tortilla oven,” Meade says.

Casa Herrera also is incorporating AOI (automated optical inspection) in its equipment. This diversification is a natural expansion of the company's goal to continue to help streamline customer processes, reduce labor and enhance end product quality.

Future of tortilla market

“Retail sales are up. Consumers are shopping, whether they are cooking more at home or perhaps stocking up. I would say we can rely on this for at least another year, but after that, we will see. I say enjoy it while it lasts. The market is always changing,” Chavez-Hansen says.

As the Hispanic population continues to grow in this country, and as the popularity of Latin/Hispanic foods and menu innovations grows, Mission Foods expects tortilla products to remain its top-selling items. This rising demand for all forms of tortilla products is bringing about a need for more equipment with higher volume and quality control capability. Currently the tortilla market is a win-win situation for the equipment manufacturer, the tortilla maker, foodservice/supermarkets and the end consumer.

TOP 10 Brands: Dollar and Unit Sales (millions)

Refrigerated Tortilla Brand Names	Dollar Sales	% Change Year Ago	Unit Sales	% Change Year Ago
Mission	$191.7	7.4%	74.3	2.4%
Azteca	28.7	4.3	17.8	10.5
Private Label	21.2	12.2	15.2	3.8
Pepito	11.6	2.4	4.9	1.0
Cruz	8.4	2.7	3.6	3.6
Tamxicos	7.5	14.2	3.0	12.4
Guerrero	6.4	3.7	2.5	3.5
Mex America	4.6	1.8	2.4	5.4
Pinata	3.7	4.1	2.1	7.1
Wrap Itz	3.1	12.3	1.2	12.2

Source: Infoscan Reviews, Information Resources, Inc. (IRI), June 14, 2009

Fresh Bakery Products	52 weeks ended Jun. 14: $ Sales	% Change Prior Year	52 weeks ended Jun. 14 Unit Sales	% Change Prior Year
Cakes (no snack/coffee cakes)	$704,374,100	3.34%	134,129,800	0.83%
Pies (excl Snack Pies)	209,576,200	2.03	43,968,710	2.59
English Muffins	548,965,600	4.22	219,984,100	0.00
Rolls/Buns/Croissants	1,083,316,000	10.98	443,554,900	1.31
Bagels/Bialys	553,740,000	8.15	182,412,300	2.11
Bread	6,681,409,600	5.71	3,007,295,800	5.16
Donuts	651,184,300	3.82	252,597,600	0.62
Muffins	316,053,200	4.98	105,556,700	4.36
Pastry/Danish/Coffeecakes	658,540,200	0.23	272,176,200	5.83

Refrigerated Bakery Products	52 weeks ended Jun. 14: $ Sales	% Change Prior Year	52 weeks ended Jun. 14 Unit Sales	% Change Prior Year
Bagels/Bialys	$60,613,020	9.19%	38,018,480	3.92%
Bread	3,871,073	2.08	1,276,323	5.31
Cakes (excl Snack/Coffee)	73,154,320	0.11	9,580,980	0.56
Dinner/Sandwich Rolls/Croissants	1,104,790	26.74	472,797	35.62
English Muffins	38,477,150	5.96	19,675,690	1.41
Muffins	87,939	44.23	16,926	49.33
Pastry/Danish/Coffeecakes	7,174,129	5.53	1,823,982	0.68
Pies (excl Snack Pies)	22,553,480	1.85	3,975,699	4.74
Snack Cakes/Donuts	5,133,236	9.93	1,136,738	5.85
Cheesecakes	107,596,400	3.37	13,747,070	0.93
Biscuit Dough	381,170,700	7.30	289,517,400	0.57
Bread/Rolls/Pastry Dough	269,799,000	3.83	127,091,700	1.91
Pastry/Dumpling Dough	321,614,200	5.91	134,011,600	0.27

Frozen Bakery Products	52 weeks ended Jun. 14: $ Sales	% Change Prior Year	52 weeks ended Jun. 14 Unit Sales	% Change Prior Year
Bread/Rolls/Pastry Dough	$129,938,300	8.75%	40,659,580	2.01%
Cookie Dough	5,241,983	2.19	1,233,055	8.99
Fresh BakedBread/Rolls/Biscuits	552,606,400	6.09	209,182,800	0.99
Bagels	72,825,030	40.57	37,982,450	7.74
Muffins	24,416,440	54.94	7,282,330	49.05
Cookies	283,352	243.69	78,672	200.31
Cheesecakes	66,439,140	1.51	12,234,330	9.45
Sweetgoods (excl Cheesecakes)	212,450,100	0.47	55,095,980	5.54
Pie/Pastry Shells	125,490,200	9.85	50,953,030	1.05
Pies	336,032,300	3.79	75,065,350	14.90

Source: Infoscan Reviews, Information Resources, Inc. (IRI), June 14, 2009