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Food Growth Strategy Framework: Gruma, Mission & Guerrero

Food Growth Strategy Framework: Gruma, Mission & Guerrero

23% Growth for Ubiquitous Tortilla Brand

Tortilla market leader Gruma, with its Mission and Guerrero brands, is a good illustration of using a successful food growth strategy framework. Tortillas are growing in the US, both in retail and foodservice, and Gruma is a recognized 2020 Growth Leader, with $2 billion in retail revenue, up 23% in sales and 15% in volume. 

Tortillas Are a Popular Choice for Breakfast, Lunch and Dinner

In our Southern California household, we most often start the day with tortillas for breakfast. We find tortillas tasty, and also a healthier option than bread, English muffins or bagels. 

While Guerrero Riquisimas are my favorites, other family members are more likely to choose Mission. As a result, both Gruma tortilla brands are pantry staples in our household. 

When going out for lunch and dinner, tacos of all sorts are highly popular in California, along with sandwich wraps. For us, fish tacos, burritos and caldo at Ensenada’s Surf & Turf Grill are regular weekly choices.

Popularity of Tortillas Forecasted to Keep Growing

Tortilla’s increased popularity goes well beyond Southern California. Consumption among non-Hispanic households of tortillas grew in 2020 for Gruma, during the pandemic, at 26% in Massachusetts, Michigan, New York, Ohio, Pennsylvania, and Washington DC.

Drivers of this growth include both consumer demand and increasing in-store visibility:

  • versatility of tortillas, with more people eating at home
  • “healthier” consumer trends favoring carb-balance and gluten-free tortillas
  • increased shelf-space and distribution
  • incremental displays in fresh areas of grocery stores, benefiting super-soft wheat flour tortillas.   

Raul Cavazos Morales, Gruma chief financial officer, says,

“The enhancement of growth at our Super Soft and more particularly, at our Carb Balance segment, which has shown double-digit growth over the last two years in the US, has convinced us that the trend that started with the familiarity of the tortilla as a healthy and versatile product for all cultures’ diet and the preference of value-added products has remained and expected to keep increasing over the time even in a post-pandemic market.”

Food Growth Strategy Framework: Gruma, Mission & Guerrero

Food Growth Strategy Framework: Product Strategy with Category Expansion

Gruma’s overall food growth strategy framework goes beyond corn flour, corn tortillas and flour tortillas to other wheat flour based product categories, including:

  • Flatbreads
  • Wraps
  • Naan
  • Pita bread
  • Chapatti
  • Pizza bases

There is also anticipated growth beyond wheat flour derivatives into other food products, such as:

  • Rice
  • Snacks
  • Pastas
  • Condiments
  • Palm hearts

As an example of growth beyond tortillas, in 2021, Gruma is introducing Fresh Signature products from Mission: flatbread, naan, pita and roti nationwide in the US. Specific items are: Mission Fresh Signature Naan, Mission Fresh Signature Mini Naan, Mission Fresh Signature Flatbread, Mission Fresh Signature Pita: Original, Mission Fresh Signature Pita: Whole Wheat, and Mission Fresh Signature Roti. The initial launch is in the Northeast, followed by a nationwide rollout.

Success of product launches in the US is critical, as the US is Gruma’s largest market, representing 58% of total sales in 2020, up from 55% in 2018. 

Food Growth Strategy Framework: Mission, Vision and Values

The Gruma business growth strategy framework includes the mission, vision and values as described in 2015. There are clear call outs for sustainability with its “For a Better Tomorrow” program. 

GRUMA Mission: “To contribute to the quality of life of our customers and consumers everywhere we operate, by offering high-quality products and services that fit their lifestyles, cultures, and needs, generating dynamic and profitable long-term growth to create the greatest value for our shareholders, focusing mainly on our core businesses: corn flour, tortillas, and flatbreads.”

GRUMA Vision: “To be the absolute worldwide leader in the production, sale, and distribution of corn flour and tortillas, as well as one of the main producers of flatbreads and other related products in Mexico, the United States, Central America, Europe, Asia, and Oceania.”


Food Growth Strategy Framework: Investment in Manufacturing

Gruma has continuously invested in manufacturing capacity to service the increased demand in the US market, including:

  • Northeast tortilla plant construction, acquisition of 4 plants in MN, TX, AZ and San Francisco in 2005
  • Completed new tortilla plant in Southern California along with capacity expansions and technology upgrades from 2008 to 2010
  • Opened one of its largest manufacturing facilities in Dallas in 2018
  • Ps. 185 million investment in additional manufacturing capacity with a new plant in Indianapolis planned to open 2026.

Mission reports 20-22 tortilla and related products plants and 12,000+ employees in the US. Gruma also called upon Mexican plants to service surge capacity needs in COVID.

 “considerable increase in demand for Mission and Maseca products in the United States, which it was able to effectively meet with the help of its plants south of the border in Mexicali, Tijuana, and Monterrey.”

In addition to manufacturing plants, Gruma invests consistently in equipment operations and technology at  Ps. 140 million+ annually from 2018 to 2020.

Gruma manages manufacturing costs and risk, focused on key ingredients, specifically corn flour (32% of 2020 cost of sales) and wheat flour (8% of 2020 cost of sales) using futures, swaps and options contracts and fixed-price supply contracts.

Food Growth Strategy Framework: Gruma, Mission & Guerrero

Food Growth Strategy Framework: Distribution

In the US, Mission Foods distributes its products primarily through DSD (direct store distribution), and “to a much smaller extent through warehouse distribution.” The distributors are independent “service providers” and not employees. These independent distributors own their own delivery trucks and are paid through commission.

“As a Mission Foods route owner, you get your income through commission. It depends on the total gross profit you make for Mission Foods route per week. You can finance your business by getting a loan from the route loan business, but as the route owner, you must be careful not to put your business in huge risk by loaning with ridiculous interests. If you are unable to get a safe loan, you can go into vendor financing. This is when a customer loans a route owner, and the customer gets his money by collecting inventories or services from the route owner. There is no necessary interest rate, and if you will pay interest, it would not be expensive. Mission Foods route is one flourishing business.”

According to one published online example, a Mission tortilla route in Denton, Texas is for sale for $40,000, and will yield cash flow of $51,000 on an estimated $381,000 in sales. The $51,000 considers an estimated $62,000 in gross commission, less an estimated $11,000 per year of fuel, state or damaged product, computer costs, vehicle maintenance and insurance.

In its public financial statements, Gruma also recognizes there is a risk in these distributors being classified as employees.

Food Growth Strategy Framework: Target Tortilla Consumer, Marketing, Sub Brands

Gruma puts most of the marketing focus on its Mission brand. 

Mission has a broad product line, including a range of better-for-you tortillas ranging from organic, carb balance, gluten free and more.  There are sizes for every end dish application (e.g., tacos, burritos, fajitas) and flavors (e.g., Hawaiian street taco).

According to company documents, Mission targets “every type of consumer,” also known as the general market. Within this broad target, there is a better-for-you interested subsegment that commands higher pricing.   

Regular, ongoing video recipes, such as fish tacos, serve to promote the versatility of tortillas, and to give consumers who may not be as familiar new ways to make tortillas into end dishes. The recipe videos likely focus more on dinner occasions for the primary meal preparer and shopper, often a female.

Recent marketing initiatives for Mission include Cinco de Mayo promotions, Indy 500 promotions, “Fast & Tasty” motorcycle racing promotions and video recipe ideas. 

Since Mission has a large product line beyond tortillas, notably tortilla chips, the brand focuses on snacking occasions and likely more male consumers for those occasions (racing). 

Guerrero, by comparison, receives much more limited marketing support. According to company documents, Guerrero focuses on the US Hispanic consumer. Marketing is much more limited, with a Bunuelos recipe video. Historically, while the female is the primary purchaser, there was also some emphasis placed on the male brand influencer.

On-package tagline for Guerrero is “un pedacito de Mexico,” to evoke a sense of nostalgia and authenticity.

  Target tortilla consumerUS Hispanic consumer, female primary purchaser and male brand influencer National brand oriented to “every type of consumer” aka general market, female primary purchaserConsumers interested in “Better-For-You,” following keto, paleo, vegan or gluten free diets  
  Tortilla sub brands  None notedOrganicCarb BalanceWhole WheatProteinGluten Free
Recent marketing programsBunuelos recipe video Limited marketing supportRecipe videos and ideas, e.g., fish tacos, grilled kebab tacosEvents, e.g., Cinco de Mayo on Main“Sync up your Cinco” promotionSponsorships: Indy 500 driver, American Flat Track motorcycle driver “fast, tasty
Tagline on package“Un pedacito de Mexico” (a little piece of Mexico)None noted
Tortilla product deliveryThin flour tortillaFlour and corn, many sizes, flavors, grainsMost tortillas are thicker than Guerrero
Other productsPork rind snacks, Crisp pork rindsWraps, Tortilla chips, Snacks, salsa & dips
OtherNo breakout of retail compared with foodserviceIn 2020, 81% of sales were to retail, including supermarkets, mass merchandisers, membership stores and smaller independent storesFood service customers include major chain restaurants, food service distributors, schools, hospitals and military

We noticed that one video reviewer took exception to Mission’s long ingredient list (i.e., vegetable shortening, caramel color), so there may be an opportunity for the brand to offer clean label choices.

Since Gruma has consistently placed in the top 10 growth leaders in 2020, 2019, 2018, 2017, 2015, 2014 and 2013, the company has a proven good growth strategy framework. 

In addition to their strong business system capabilities, the company’s focus on innovation stands out and positions it strongly for the future. The innovation commitment and delivery is particularly impressive when compared with other CPGs who have delayed new product launches and put innovation on the shelf in 2020 and early 2021. 

It will be instructive to see how Gruma chooses to manage their two national tortilla brands in the future (Guerrero and Mission), or whether Guerrero is more of a regional brand.

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