Turning to tortillas
April 29, 2014
by Eric Schroeder
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It may be difficult to nail down who is supplying who, but one thing is sure: Tortilla demand is on the upswing.
Thanks to the quickening pace in which taco chains are getting into the breakfast daypart, tortilla makers are finding an outlet for their products that complements what has been solid growth in the retail marketplace.
In late March, Taco Bell unveiled a national breakfast platform that features a number of items with tortillas in a starring role. Items include the A.M. Crunchwrap, featuring scrambled eggs, cheese, a hash brown and creamy jalapeño sauce with the choice of sausage, bacon or steak, wrapped in a flour tortilla and grilled flat, as well as A.M. grilled tacos and breakfast burritos.
Another taco chain, Del Taco, is expanding its morning menu with the addition of value tacos. Priced at 75c to $1.75, the tacos are made with grilled eggs, grated cheddar cheese and bacon, sausage or carne asada steak in a flour tortilla.
Taco chains are not the only ones giving tortillas greater play on menus. McDonald’s and Burger King have offered breakfast burritos for years.
Raul Cavazos, chief financial officer of Gruma S.A.B. de C.V., earlier this year made mention of the growing potential that tortillas have in the food service market. He said the Mexico City-based company’s food service business is doing “quite well.”
“We have a strong relationship with our main clients, and we are developing those products that they are increasing the volumes,” he said. “And we are increasing for the year food service volumes in that space. We already have orders, and we are developing some products. We are working quite close with our clients in order to have these new products for them. And they are quite grateful for us on that in the food service. That’s going to be maybe one of the main drivers for growth on our volumes.”
Jim Kabbani, chief executive officer of the Tortilla Industry Association, Arlington, Va., elaborated on the growth in food service.
“This has created a demand for high-volume production of tortillas used in wraps such as breakfast burritos served at fast-food and drive-thru restaurants,” Mr. Kabbani said. “This in turn has created strong new sales growth for both large and mid-sized T.I.A. member companies. There are several hot trends in this industry, mainly expansion of variety in product offerings and possibly some form of enhanced in-home consumer production similar to the individual cup serving machines seen in the coffee industry.”
Chipotle is part of another trend: Changing recipes to meet the needs of consumers.
“We continue to make progress on our quest to use only non-G.M.O. ingredients in our food,” Steve Ells, chairman and co-chief executive officer of Chipotle Mexican Grill, Inc., told analysts in a mid-April conference call. “Just over a year ago we became the first national restaurant company to voluntary disclose G.M.O.s in our ingredients and vowed to find non-G.M.O. replacements. To date we have eliminated virtually all of the G.M.O. ingredients in our food.
“Our corn and flour tortillas are the only foods we currently serve that are made using ingredients that contain or could contain trace amounts of G.M.O.s. And now we are testing new non-G.M.O. recipes for these tortillas, and we hope to be able to roll them out by the end of the year.
“Removing G.M.O.s is just one of the many improvements we are making as we continue to pursue the sourcing of high quality sustainably raised ingredients. We are proud of these efforts, and we are also proud of the marketing which is designed to encourage people to be more curious about their food and where it comes from and how it is raised.”
Beyond food service, another driver for growth in the tortilla industry is innovation.
“We are promoting our brand,” Mr. Cavazos said, adding that Gruma’s efforts have sparked competition in the U.S. tortilla market, increasing the likelihood that the category may see volume increases in the year ahead.
In the 52 weeks ended March 23, dollar sales in the fresh hard/soft tortillas/taco kits category increased nearly 5% to $2,123,504,000 over the prior 52-week period, while unit sales rose 4% to 947,321,300, according to Information Resources, Inc., a Chicago-based market research firm. Pacing the growth was Mission Foods, Inc. A division of Gruma, 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.
“We launched last year a new formula for wheat and corn tortillas,” Mr. Cavazos said. “The soft tortillas for both have been very well accepted by the consumers, and they are (choosing) our products (more) than the products of our competitors. That also is one of the drivers for growth. And even if we decrease or we eliminate s.k.u.s, we have been keeping our shelf space in any store.”
La Tortilla Factory, Santa Rosa, Calif., is another tortilla company innovating. The company has added to its product lineup with the launch of a low-carb flour tortilla. The new product is high in fiber, low fat and contains zero grams of trans fats.
The new low-carb flour tortillas are made with unbleached wheat flour, cellulose fiber and expeller pressed canola oil. They contain 70 calories per serving and provide 5 grams of protein and 36% of the recommended daily value of fiber.
The tortillas are available in four varieties: original whole wheat, large-size whole wheat, garlic and herb, and traditional flour.
“We’re dedicated to providing our customers with great new products, and our low-carb flour tortillas have both the flavor and nutrition our customers want and expect,” said Sam Tamayo, chief executive officer. “La Tortilla Factory created the entire low-carb tortilla category, and we feel like this variety will complement our current one very nicely.”
The debut of low-carb flour tortillas coincided with the unveiling of new redesigned packaging for the entire La Tortilla Factory low-carb product line.
La Tortilla Factory’s line of low-carb tortillas is available at independent grocers and supermarkets nationwide. The suggested retail price is $4.59 for a bag of 8 tortillas.
“The tortilla industry continues to be the fastest growing sector of the baking industry, with double-digit growth and an $11 billion revenue figure for last year,” Mr. Kabbani said. “Fueled by demand from both Hispanic and non-Hispanic consumers, hot trends include non-traditional formulations such as organic, gluten free, etc.”
T.I.A. annual meeting set for next month
LAS VEGAS — The Tortilla Industry Association will hold its annual convention and expo May 30-31 at Caesar’s Palace in Las Vegas. The convention is recognized as one of, if not the, most important event for tortilla producers and suppliers.
“Attendees can expect to see just how developed the tortilla industry is,” said Jim Kabbani, executive director of T.I.A. “Many people don’t realize the machinery, advanced technology and ingredient science that goes into tortillas.”
For more information email: Info@Tortilla-Info.com.