Ketchup wars

Consumer appetite for healthy, local and 100% Canadian is good for business

Text by  Theresa Rogers

The New Year started with what has been dubbed “The Ketchup Wars”, when a Facebook post prompted a mess in the condiment aisles of grocery stores all over the country.

Seizing consumers’ appetite for “Canadian” ketchup, Primo Foods entered the fray, launching its own product. Primo is best known for its pastas and sauces, offering about 400 different products. The company is owned by Sun-Brite Canning Ltd. out of now-famous Leamington, ON, which also owns the Unico brand. Unico’s 500 products mostly span cooking oils, tomatoes, beans, peas, fish, marinades and rice.

“I think we’re going to get more and more of this discussion of Canadian-made products,” says John Porco, COO, Unico Inc. and Primo Foods. “It’s important for the economy. We can’t allow these plants to continue to shut down and move to the U.S. We have to support our brands. If we do that, people will think twice about closing these facilities. They’re good jobs.”

Growth for the Sun-Brite set of companies has mostly been found through investments in efficiencies and technologies, not acquisitions. It’s something owner Henry Iacobelli, President and Founder of Sun-Brite, believes in strongly, says Porco. Originally from Italy, Iacobelli started the cannery with his wife, Lina, in 1973. Next year will be Unico’s 100th anniversary while Primo is 60 years old. Porco says the strength of the brands and the ownership’s traditional business mentality has served the company well over the years.

Efficiency is important, he emphasizes, especially in Canada where the costs of being a mid-size player are always challenging. Here, everything from listing costs to advertising to labour to marketing boards can be prohibitive. Now, social media has levelled the playing field a bit.

“Social media and this whole movement toward Canadian-made, that’s our advantage, that’s our angle, because really, we’re all-in.”

Let’s start with the launch of your newest product: ketchup. You’re on record as saying you wanted to enter the category before but thought you’d “get killed”. How long have you been looking into it?

Heinz was a great corporate local business with a great product so there was really no point in trying to compete with that but once they got out of Leamington, we started a bit of thinking around it. We noodled it for a while and then last year we launched a foodservice size, just for restaurant trade, locally, and the reaction was very positive. We weren’t sure how to approach retail because retail is a competitive segment. You’re dealing with big, national retailers so how would we be able to get in there with things like listing requirements, but also how would we support it through marketing and advertising? Although we had formulated a product we thought was exceptional from a quality standpoint, when we saw the reaction to the French’s ketchup issue and the fact that they were using Canadian paste that was made with Canadian tomatoes, we thought, we’re actually more Canadian in the respect that we buy Canadian tomatoes and process them in our facility in Leamington, obviously our employees and most of our ingredients are Canadian, our packaging; we’re really the Canadian brand. We thought, ‘If Canadians really want a Canadian ketchup that’s 100 per cent Canadian, we’ve got it!’ We expedited our plans and because we had a formula already in place, we got a bottle lined up, we developed labels and within a short period of time, four to six weeks, we were out in the market.

Isn’t that fast for this industry?

Yes. The most important part is the formulation. You have to formulate a product that’s really good quality and we pride ourselves on that in all our products. Here, we had the formulation in place, we just had to push the button on the packaging and the labels but we turned it around really quickly.

You mentioned the foodservice testing. Are you still going to be selling it through those channels?

Yes, we’re going full out on that. We have restaurants in southwestern Ontario that are using the ketchup in their restaurants.

Are you looking to grow that? A&W uses French’s ketchup, now.

Yes, if we could, sure.

And which retailers are carrying the product?

It’s been literally a week (Editor’s Note: this interview was conducted in April, 2016) but there are many stores in southwestern Ontario, in particular. There’s Remark in London and Windsor. We have some Food Basics stores in western Ontario and some FreshCo stores. In the Toronto area, Longo’s is going to carry it, Highland Farms, Coppa’s, Garden Basket, and now we have some stores in Ottawa. We’re getting some support. The product performs well. People like it. Again, Heinz is a fantastic product. Ours is different but people love the taste and the taste profile comes across very well.

What will you be launching in terms of marketing and advertising?

In ketchup, obviously Heinz has been around for a long time. They’re part of a huge multinational organization; we know what that’s all about. French’s is owned by Reckitt Benckiser out of the UK. They have deep pockets so how do we market our product against them? We try to do it through our in-store activity. We do small-scale sampling or take out advertising in local media. We’re very selective as we don’t have the deep pockets that these people have.

What kind of market share are you striving for?

I couldn’t even give you an answer on that. Heinz is so dominant I couldn’t even tell you. We’re just trying to get it out there and let people try it and hopefully they’ll come back and continue to ask for it at the store level.

Who is your target consumer?

We’d say, ‘Canadian consumers that love ketchup, give us a chance and see how it stacks up to what you’re buying currently.’ At the end of the day, the message is clear: Canadians have to support Canadian-made products and not only on ketchup. There’s pasta coming in from Turkey and places like that that are undercutting us. Our tomato products are all out of southwestern Ontario. We do all our canned products out of our plants in Ontario. Our vegetable oil is Canadian canola oil. The best way to support the Canadian economy is to look for Canadian-made products.

This has obviously come to the fore with this issue but it’s a macro trend too where people are wanting to eat local, know what’s in their food, etc. How important is this to Canadian consumers?

I think it’s very important and it’s gaining a lot of momentum. We call ourselves Canadian but we could also call ourselves local. We’re actually local Canadian. I think it’s important from a consumer standpoint. People are more concerned about their health now than ever. Our government, our CFIA, they’re very good at what they do and they regulate what we do with our food products but we’re not sure how some products are being regulated in some of the countries they come from… to me, when you’re putting something in your body, you really need to know and understand where it comes from.

Do you have a social media strategy? How does that play here?

I think that’s really what got us going. Once we saw the reaction to the French’s issue, we thought, ‘Maybe that’s a way to get at this and get support.’ The big question in our business is always how do we get this stuff on the shelf? The listing costs, advertising, it’s so cost-prohibitive for a company of our size. We’re not small but we’re not a huge multinational. How do we compete against these big players? Social media and this whole movement toward Canadian-made, that’s our advantage, that’s our angle, because really, we’re all-in.

I think consumers are enjoying this new voice with this medium that maybe they didn’t have before.

Yes, this really opened our eyes. We said, ‘OK, I think this is our time to go’ so we got together with our ownership, our marketing people, and we moved very quickly. I’ve had people in the marketing/advertising industry say, ‘You guys were brilliant to do it quickly and effectively and you delivered not only a great product but good value.’

There must be a lot of learnings here for any new launches you might have.

Absolutely. We’ve realized first and foremost you have to have a good quality product. We don’t compromise our quality. Our brand is very important to us. Our ownership believes in it. We have Primo but we also have a sister company called Unico and both companies believe in the same principles about quality. Our pasta is made only with number one hard durum semolina from western Canada. Our tomatoes are number one Ontario-grown tomatoes that we put in our cans and sauces so it’s all local, good-quality stuff.

About the pasta. Where are we with gluten-free? Still a trend or is it mainstream?

I think there’s a place for gluten-free and it’s something that consumers do look for. I think it’s here to stay. Regular pasta is also still a main staple of Canadian consumers. We’re seeing a big uptake on variety. People love pasta but it’s no longer just spaghetti. They want orechiette, taglitelle, papardelle. These are fancy things when you go to a restaurant but we’ve got them.

Are sales stable? With the consumer wellness trend, are people eating carbs?

I think there was a point several years ago but at the end of the day people need to eat healthy and manage that and regulate what they eat. They still love certain foods and pasta is interesting and exciting. It’s a good value food that people can experiment with so the opportunities from my perspective are endless.

You sell a lot of canned goods. Where are you on the issue of BPA in liners?

We’ve been using BPA because that’s the industry standard. The amount of BPA that’s required to really affect consumers based on Health Canada’s values was so minute. We are looking now to 2017 to be using BPA-free liners. We’ve made that commitment just recently that that’s what we’re moving toward.

With all of your cans?

Yes.

What is the alternative?

What that liner did was prevent any erosion and corrosion that would affect the food. That’s why the liner was invented in the first place. Now there’s a different type of material that we’ll use. Right now what you see inside is a white enamel. That will be replaced with a clear lining that has no paint so that’s where the benefit comes.

You sell a lot of pulse products. It’s the International Year of Pulses. Have you seen a bump in sales?

Yes, our pulse business has been fantastic. The growth has been very strong for the past several years, both from the Primo and Unico brands. They’re very good for you obviously. We’ve carried these for 50, 60 years but now it’s just taken on a whole life. At the end of the day, it’s good value. A can of our beans can be bought in the retail store for around the dollar and you can use the beans in so many different ways. They’re high protein, so in some cases people reduce their meat intake, and it’s a good, healthy alternative.

Are they all grown out west?

Yes and we were the first company. Twenty years ago, all the chickpeas were imported from places like Mexico, Israel and Turkey. We went to Canadian farmers and they started to produce Canadian chickpeas and we’re the largest chickpea buyer in Canada and our brands are number one on the shelf. Now that’s happening with lentils, our red kidney beans, white kidney beans, black beans; it’s phenomenal. Great success there.

What can we expect to see on the shelves in the near future by way of new products or line extensions?

The way we’re approaching our business is to ask, ‘What’s complementary?’ We got into ketchup but what’s next? First of all, we’re not into junk food; we’re into nutritious, good value foods, so now what we’re looking at is more convenience. We’re also looking at no salt in many of our categories because people are demanding it. We’re working on things behind the scenes now.

What is your model for ongoing innovation and successful commercialization of those products?

We all know what’s happening to manufacturing in this country. In the province of Ontario in the last 20 years there are probably 50 food manufacturing facilities, maybe more, that have exited the province. How do we compete against these big multinationals? We compete because we have good quality and we’re very efficient. We’ve never had an issue with the quality of the products we produce in Canada. Where we may lose at times is some of the restrictions we have in this country; we have to overcome them in order to compete.

Can you be more specific?

A lot of these big multinationals have Canadian plants and when they downsize or decide to close plants, the Canadian plants are at a major disadvantage. They have overheads their U.S. counterparts don’t have. Energy is a big one. The cost of labour in Canada is another. It’s just the way it is. We have marketing boards that the U.S. doesn’t have – whether it’s the chicken, the egg, the cheese, the milk, the vegetable marketing board – they regulate everything and generally speaking, we’re paying higher prices because it’s driven by the agricultural communities. Ultimately, it makes your product less competitive, the way we see it.

How does your company compete?

We’re definitely using the most efficient machines. We’ve invested in our technology. Primo has the most updated pasta-making machines in the world. We have a new machine coming on board at the end of April. It will arrive at our facility from Italy where they make the machines. We know what we’re doing and when it comes to investments in machinery – both in pasta and our tomato processing – we’ve got advanced technology. We’ve spent millions and millions of dollars to upgrade our facilities. In tomato processing in Ontario, there are really only a handful of companies that do it. Twenty years ago, there were lots, but now there are big plants in California that turn out tomatoes like no tomorrow. The only way we could compete was to invest in technology. Our ownership is very committed to that and right now we’ve got the biggest tomato processing facility in Canada. Our facility is state-of-the-art.

And you remain committed to Canada?

We’re not going anywhere. This is our homeland. We’re all-in. We have no intention of moving our facilities. This is where we live and where we do business. We support the Canadian economy.

 

Interview has been edited for space and clarity.