Loblaws plays catch-up after consumers see red
Grocer abandons plan to pull Canadian-made French’s ketchup from its shelves
If it was mustard, no one would care. But it’s ketchup — and Canadian pride is on the line.
Grocery giant Loblaws said this week it would stop selling French’s ketchup, which boasts that it’s made entirely from Canadian tomatoes. That’s a subtle jab at rival Heinz, which moved production to the United States in 2014.
Public backlash quickly ensued. Online posts blasted Loblaws. French’s ketchup was trending on Twitter. And politicians got into the act, with Liberal MPP Mike Colle threatening a boycott of Loblaws and its stores over the unpatriotic move.
“I think your company has made a huge miscalculation and underestimated the value that we put on supporting local foods and local jobs,” said Colle in a letter to Loblaws president Galen Weston Jr.
Hours later on Tuesday, Loblaws reversed its decision. “We will restock French’s ketchup and hope that the enthusiasm we are seeing in the media and on social media translates into sales of the product,” said Kevin Groh, vice-president of corporate affairs, in a written statement.
“Companies make decisions for all kinds of reasons,” said French’s president Elliott Penner in an interview from New Jersey. “We thought with the groundswell that we were seeing from consumers . . . our ketchup would be back on their shelves.
“We never thought it would be this fast,” said Penner. For weeks now, demand for French’s ketchup has such a surge that retailers are calling for extra shipments, with pallets just sitting in the aisle, not even being shelved, he said. “We’ve been scrambling to find everything from more bottles, to more caps, to more labels, to more tomatoes,” he said. While things will settle down eventually, Penner conceded it may be difficult to fill every order in the next 60 to 90 days.
Officials with Heinz declined to comment.
French’s, best known for its yellow mustard, started muscling its way into the ketchup market last year, targeting Heinz, synonymous with ketchup. “We always wanted to be in ketchup, but we didn’t have a point of difference,” said Penner, who grew up in Cambridge, Ont.
But French’s is now focused on using locally sourced ingredients, with no preservatives. At the same time, Heinz was launching its own condiment war with its own mustard.
In 2014, Heinz shut down its century-old plant in Leamington, Ont., moving ketchup production to the United States. It put almost 750 employees out of work, and many local tomato growers lost contracts.
But the processing plant was saved when Heinz plant manager Sam Diab joined with private investors to acquire the facilities under the name Highbury Canco and opened that summer. It started with about 250 employees, who are earning a lower wage than under Heinz, making items specifically for Heinz such as tomato juice and baby cereal as well as foods for other brands.
Highbury is adding two new highspeed production lines this spring to make sauces, condiments and vinegar, and another for pasta sauce and salsa. The workforce now numbers more than 400 employees, with hopes of further growth.
“We were approached by French’s looking for a Canadian source of tomatoes for their requirements,” said Diab. “For us, tomato paste is a commodity, and we make it for many other customers, who take the paste and make their end product — barbecue sauce, soups.”
French’s began using Highbury’s tomato paste for its ketchup last summer — though the condiment itself is made in Ohio and imported. The packets used in restaurants are produced in Toronto. “Without a doubt, we will be adding tomato growers,” said Diab, but said the actual number is not yet finalized.
French’s says it is tripling its order for tomato paste to 3.1 million kilograms in 2016 — and may add other plants to process ketchup, because Highbury is barred from doing that under its deal with Heinz.
John Mumford, general manager of the Ontario Processing Vegetable Growers, said farmers are hopeful French’s decision to go with Leamington’s tomato paste will result in more contracts. “We’re not sure quite yet. It’s a little early,” he said and noted processors don’t start contracting until the first week of April. Demand for tomatoes dropped sharply when Heinz pulled its ketchup line from Leamington, but it is picking up. In 2015, 95 Ontario farmers had tomato contracts for 405,783 tonnes, up from 85 growers for 348,768 tonnes of tomatoes in 2014. But that was down considerably from 2013, with 119 growers for 461,687 tonnes.
Leamington Mayor John Paterson argued it’s important to protect Ontario’s farming community and the local food-processing industry. “It’s up to individuals to choose what they want,” he said. “I would ask people to remember that Heinz is making the ketchup in (the) United States with tomatoes from other places.”