Grupo Herdez has consolidated a solid strategy for, just over a century after its foundation, to extend its business beyond its traditional sauces. The Monterrey company expanded its business into frozen products – such as ice creams – and cafeterias, taking advantage of the experience with its customers in the retail channels. It has managed to transform itself to be competitive in the market and, in addition, expand its different businesses with strategic acquisitions, which allow it to strengthen the group’s brand portfolio in the country’s retailers.
Héctor Hernández-Pons Torres, president and CEO of the group, says that although the company has focused on the food business, the experience of managing other categories – such as personal care products and some chemicals – left innovation in its DNA. continues, to which are added strategic alliances (which it maintains with brands such as McCormick or Barilla pasta, among others), which have allowed it to face some adverse events, such as the health crisis caused by Covid-19. He explains that these alliances and acquisitions have given good results, as they are products that occupy the first places in their categories, that have demonstrated profitability and that ‘fit’ within the gears of the group.
In this constant commitment to new products, Herdez developed its frozen food business, after buying Grupo Nutrisa in 2013, for 2,971 million pesos. This was its entry into this sales channel, which it strengthened in 2015, when it acquired the assets of Helados Nestlé in Mexico.
These moves have already paid off. In 2013, the purchase of Nutrisa boosted 9.8% the group’s sales, to 12,321 million pesos. With the integration of Helados Nestlé, segment sales grew 83%, to 2,139 million pesos, and represented 13% of the group’s total, which that year was 16,356 million pesos.
“A great secret that the company has had is that it first developed a great strength, which is commercial”, explains the manager. “This has definitely been very important because we have gained experience that we did not have in the pasta or ice cream businesses, but it is not only participating in new businesses, but also increasing the part of innovation, which is one of our pillars of growth ”, he points out.
The company consolidated its steps in this category and in 2019 went shopping and added to its portfolio the chain of coffee shops Cielito Querido Café, for 280 million pesos, and the Moyo yogurt ice creams, for 200 million pesos. The integration of both businesses began in 2020, the year of the pandemic.
Hernández-Pons Torres acknowledges that both chains, in addition to the Nutrisa stores, have been affected by the closures to reduce mobility, but with the flexibility of the measures while the epidemiological traffic light advances, he is confident that the profitability of these purchases it will be reflected in the financial statements. At the end of 2020, frozen decreased its income by 19.2%, to 2,608 million pesos.
The hardest hit units of Cielito Querido Café were those located in office centers. The manager affirms that this experience led the group to rethink the strategy to reopen the units that do not depend on this market and recover sales.
“It was bad timing to acquire at this stage, although they were before [the pandemic], but I have no doubt that they have tremendous potential and that it will lead us to significant growth, because together there are more than 600 stores that give us certain competitive advantages ”, he points out.
Innovation, the other key
Innovation at Herdez goes beyond flavors, new products or innovations. The company has managed to cross channels and bring Nutrisa ice creams to retail refrigerators , and also Cielito Querido Café, which already has an ice cream of its classic horchata drink.
Investments in innovation have increased in the last four years. In 2017, Grupo Herdez invested 13.1 million pesos, a figure that grew 180%, to 36.8 million pesos in 2020, according to company data. At the end of last year, these resources represented 0.15% of total sales.
“When it comes to a new product or a new flavor it takes months, but when it comes to canned products it takes more work, they are longer studies and it takes practically a year to innovate. Besides that it requires investment to adapt the factories and all the areas of the group for an innovation ”, points out Hernández-Pons.
