At Grupo Herdez, innovation is in our DNA.
We innovate our products and the sales channels we use to put the full flavor of our portfolio within reach of our consumers. This allows us, on one hand, to reach more Mexican families and, on the other, increase the value of the categories in which we participate.
Innovation in Products and Packaging
In Grupo Herdez, we keep a close eye on consumer lifestyle trends so we can anticipate any change in their consumption habits. During 2017, we launched a solution for people who want the best taste from a balanced diet but have little time to cook: four varieties of Herdez tuna in pouch, two in alliance with McCormick and Kikkoman.
Furthermore, we renewed the image of Herdez canned tuna with a fresh look that speaks to superior quality and is easily identifiable on the shelf. This initiative was accompanied by a digital education program to highlight our nutritional and quality aspects, which reached 7.3 million people and enabled us to increase our market share in this category.
During the year, we focused our attention on improving the visibility of our three brands of pasta products at points of sale with prefilled pallets. This initiative helped grow the category by 30 percent in our portfolio.
We continue to promote responsible consumption habits, this year with the successful launch of the recycling campaign, Por un mundo más vivo (For a World More Alive), in which we invite consumers to deposit empty aluminum cans in collection machines located in twenty Walmart stores in Mexico City.
We used the collected cans to manufacture ecological stoves that benefitted eighty families in the Mazahua community in Estado de México.
The response from consumers to this initiative surpassed all our expectations. In 2018, we will expand our coverage to include additional stores in Mexico City and others in Guadalajara and Monterrey. This campaign is an example of our commitment to waste reduction and responsible management.
In Grupo Herdez we are focused on creating experiences with unique flavors for our consumers. The Presume tu Salsa (Show off your Salsa) campaign has made a decisive contribution towards growing our brand at a rate almost twice that of the category, increasing market share at national level and strengthening our leadership.
The five finalists representing each region of the country presented the winning salsas. These will feature among the Herdez launches for 2018.
McCormick was also part of the innovative force of Grupo Herdez in 2017 with the launch of Mil Islas (Thousand Island) mayonnaise. The new variety is part of the promotion campaign for flavored mayonnaise.
Mil Islas mayonnaise seeks to repeat the success of bacon and habanero chili flavors, launched in 2016, and is part of the Mayonesa McCormick strategy to strengthen brand recall, increase market share and consolidate its leadership in the category.
Focus on increasing the value of the categories in which we participate
The initiatives mentioned above demonstrate our focus on innovation and allow us to continue to add value to the categories in which we participate. As a result, the majority of the portfolio achieved growth above the industry average.
Mayonesa McCormick recorded higher growth than the category. The positioning of this product is such that its increase in sales represents 90 percent of the entire category’s growth. Del Fuerte tomato puree had a similar story, with growth in 2017 that represented 74 percent of the category, despite competing against very low prices for fresh tomatoes.
We successfully launched five varieties of McCormick special selection teas, made with a triangular, fabric bag that allows the ingredients to release more flavor and aroma. In addition, towards the end of the year, we presented functional teas as a new option for our consumers. Both launches made a significant contribution to the value of this category, which is undoubtedly one of the biggest growth bets in our portfolio.
Our growth in pastas represented 40 percent of the category’s growth and was 1.3 times higher than other competitors. The launches of Barilla Collezione, a new line of pasta, and Mulino Bianco, a sweet and savory snack line, helped to increase our market share and add value to the category through relevant innovation.
As a result of all of the above, in 2017 the Preserves division grew 10.5 percent compared to the previous year, generated a total of 15,953 million pesos and represented 80 percent of the Group’s consolidated net sales. The best performing categories during the year were pastas, home-style salsas and vegetables.
In addition, the National Wholesale Grocers Association (ANAM) named us Best Supplier of 2017 in Business Plan Innovation, while H-E-B gave us the Strategic Partner Award 2017 for our continuing contribution to optimization in sales, profitability and level of service.
Execution in Sales Channels
Wholesale is a constantly evolving sales channel. Thanks to our results-based approach, a profound understanding of the market and the indisputable negotiating ability of our business team, in 2017 we once again surpassed the year’s target and grew double digits.
Retail sales volumes during the year remained stable and during 2018 we will exploit the areas of opportunity we have detected to continue strengthening our position in this channel.
Our growth rate in convenience stores has meant our sales in this channel have doubled over the last five years; in 2017 we once again recorded double digit growth.
Superb product portfolio management, innovative presentations and efficient media campaigns have contributed to the price club channel representing close to 10 percent of Grupo Herdez’ total revenues. In recent years we have gained deeper insight into this channel, giving us an advantageous position going forward.
As far as digital business, in addition to investing more than three times the amount channeled into digital media in 2016, last year we focused on two fronts that support the innovative movement of Grupo Herdez: on one hand, we worked with three of our major clients on the development of their digital platforms; on the other, we explored two important personal shopper platforms to improve our positioning in e-commerce. Our indicators in this channel are promising and we are convinced that 2018 will be a good year.
