Insperia

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OUR OPERATION TO ADDRESS A CHANGING ENVIRONMENT

During 2015, Grupo Herdez underwent a transformation process to optimize communication, bolster our product portfolio, develop sales channels and strengthen the sustainability of our operations.

ADAPTING OUR COMMUNICATION TO NEW TIMES

One of the Group’s main tasks is to understand our consumers in order to offer them the products that meet their needs. Consumption patterns and family models change constantly, which drives us to transform our business and the way we approach the market. Thus, in 2015, we focused our communication and media campaigns on reaching new consumers.

One of our greatest achievements in terms of communication in the year was the development and launch of the “Herdez: nourishing moments” campaign, which succeeded in audiovisual media by painting a moving portrait of new family models. This was undoubtedly a necessary transformation for the brand, which for more than fifty years has been present in homes around the country and in the minds of consumers.

The campaign began in May and lasted five months on television, press, outdoors, Internet and movie theaters. The main results were a 4% increase in sales volume with 12% growth in home-style salsas and 5% in vegetables.

The advertising of Doña María® mole is another example of this strategy. With commercials illustrating the change within the modern family, we achieved a closer connection with our consumers by offering products that allow them to enjoy traditional dishes in a quick manner.

RESHAPING OUR HEALTHY PORTFOLIO

In the last few years, we have focused on responding to new lifestyles with a portfolio of healthy products. In particular, the integration of Aires de Campo® and Nutrisa® has helped us to transform our range and position us as leaders in the health and wellness segment. During the year, 4% of the Group’s total sales came from this category, through low-fat, low-sugar, low-sodium and organic products.

In shelf-stable products, we modified the formula of McCormick® water and milk gelatins mix to lower the sugar content, and reduced the fat percentage in McCormick® mayonnaise; thus lowering their calorie content.

In addition, we strengthened the promotion of low calorie products in the Nutrisa® portfolio such as the cranberry cone and popsicles. Similarly, we reformulated some products in accordance with the parameters of the Federal Commission for Protection against Health Risks (Comisión Federal Para la Protección Contra Riesgos Sanitarios, COFEPRIS).

DRIVING SALES CHANNELS DEVELOPMENT

One of the strategies to preserve our leadership position consists of expanding the availability of the product portfolio across all sales channels. This task requires the flawless execution of our logistics and distribution plans, ensuring that these efforts translate into growth.

At Nutrisa®, two new store formats transformed our contact with consumers: stores that offer a 50/50 mix of frozen products and commercial portfolio, and kiosks. The aim of the stores is to strengthen brand positioning in the wellness segment; the kiosks open the opportunity to take the brand into open spaces with higher consumer traffic.

At Herdez® Food Service, we established three strategic lines. The first was the creation of synergies with major customers; the second, our chefs provided sales training to our distributors and end-clients to strengthen our leadership in the segment; and the third was new product development. The implementation of these strategies allowed us to reach new customers and resulted in an 18% growth in the channel’s net sales compared to the previous year.

Due to their accelerated growth in recent years, convenience stores represent a strategic sales channel for our portfolio and for developing new consumption occasions for the brands. With presence in more than 16,000 points of sale, we market 21 categories through the following brands: Búfalo®, Del Fuerte®, Herdez®, McCormick® and Ocean Spray®. In 2015 sales in this channel grew 17% compared to the previous year.

SAILING TOWARDS SUSTAINABLE WATERS

Grupo Herdez is committed to the care and protection of marine biodiversity, and therefore we strive to transform our supply chain into a sustainable network. All our suppliers are selected through an evaluation of their operation standards considering social, environmental and human rights criteria.

During the year, 93% of strategic suppliers (according to their contract amounts) responded to evaluation indicators. In addition, all new suppliers adhere to our Code of Conduct for Suppliers, which reinforces the regulatory framework of our value chain.

The Group’s tuna fleet complies with the highest national and international standards and is currently working with the Mexican tuna fleet to obtain sustainable fishing certification from the Marine Stewardship Council, which will allow us to export this product.