Gruma to take Mission brand into new markets as net sales grow 17% in Q1

By Vince Bamford contact

- Last updated on GMT

Photo: iStock - OlgaMiltsova
Photo: iStock - OlgaMiltsova

Related tags: Corn flour, Tortilla, Us

Tortilla and corn flour supplier Gruma – owner of brands including Mission and Guerrero – has reported a 17% year on year hike in net sales in the first quarter of 2016.

Stating its performance had been driven by strategies designed to create value, the company added it would continue to tap the growing popularity of Mexican food  in the US, European, Asian and Oceania markets.

Our strategy is to focus on our core business - corn flour and tortilla - as well as expand our product portfolio towards the flatbreads category in general​,” said the company’s management in a statement. “We will also continue taking advantage of the adoption of tortillas by the consumers of several regions of the world for the preparation of different recipes other than Mexican food​.”

Extending the Mission brand

Gruma added it would extend the Mission brand into new markets, and would encourage manufacturers to switch from traditional cooked-corn method to a dry corn flour method.

We view the transition from the traditional method to the dry corn flour method of making tortillas and other corn-based products as the primary opportunity for increased corn flour sales​,” it added. “We are also working to expand the use of corn flour in the manufacture of different types of products​.”

Overall sales volume increased 2% to 946,000 metric tons, driven by corn flour business GIMSA. The 17% increase in net sales to Ps.15,831m ($908.6m) was primarily: a combination of this volume growth;  the weakness of the peso, which benefited from Gruma USA sales when stated in peso terms; and price increases to reflect higher raw material costs.

Flat USA sales

Sales in Gruma’s USA division were flat at 327,000 metric tons despite a 4% increase in corn flour volumes as a result of the growth of the tortilla industry and market share gains. Volume in its US tortilla business fell 2%, with growth in retail offset by the foodservice channel, where Gruma is reducing SKUs to focus on high margin products. Foodservice sales volume was affected by weaker performance of some customers, said Gruma.

Net sales at Gruma USA were up 1% year on year to Ps.8,562m ($491.5m), driven by the change in the sales mix towards retail, and towards wheat flour tortillas. This was partly offset by lower corn costs impacting corn flour prices.

Sales volume at Gruma Europe were down 9% year on year, primarily as a result of technical upgrades at its Italian mill, which partially suspended production in November 2015 and is due to be back in operation by the end of this month. This drove a 2% decline in net sales to Ps.1,116m ($64.1m), with value falling at a lower rate than volume as a result of the sales mix changing in favor of tortillas, which are priced higher than corn flour products.

Gruma’s Centroamérica business was hit by competition for corn flour in Honduras, with volume down 5% year on year. Net sales increased 15% to Ps.1,082m ($62.1m) as result of high prices and the peso depreciation effect.

Growing corn flour demand

Gruma corn flour business GIMSA saw increased demand from the USA division, which contributed to a 7% hike in sales volumes. GIMSA also benefitted from strengthening of commercial initiatives aimed at improving customer service, said the company, and growing popularity of new types of retail corn flour targeted for specific Mexican dishes. GIMSA net sales were up 7% year on year to Ps.4,110m ($235.9m).

Gruma invested $51m in capital expenditure in the first quarter on projects including its new tortilla plant in Dallas and plant upgrades in the US; expansion of plants in England and Spain and its new plant in Russia; and technical upgrades at GIMSA.

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