Commerce News: Tortilla Kings Claim New Mexico Conquest

GRUMA’s expansion in the US has been a contentious one, with rivals sometimes claiming unfair competition.

Courtesy: reliableplant.com

(LAS CRUCES, N.M.) - The world’s dominant tortilla and corn flour manufacturer has purchased a once locally-owned tortilla and chile company in New Mexico.

In an Easter announcement, the Monterrey, Mexico-based Grupo Maseca (GRUMA) said that it had acquired the Albuquerque Tortilla Company for $8.8 million. Founded in 1987, Albuquerque Tortilla Company employed 180 people and had a reported sales stream worth $14 million in 2010.

The company supplies wheat and corn tortillas, white corn posole and frozen chile products to clients in New Mexico, Arizona, Texas, Colorado, Nevada and other states.

GRUMA’s acquisition of Albuquerque Tortilla Company plunges the transnational giant into the anemic New Mexican chile business, which is expected to witness less production this year because of water shortage problems and high international cotton prices that are encouraging some farmers to plant the fluffy white stuff instead of the state’s hot staple food. Last year, New Mexican growers harvested 8,700 acres of chile-the lowest on record in 37 years.

In 1999, as part of a business deal that exempted the firm from paying property taxes for 20 years, Albuquerque Tortilla Company received a $6.8 million industrial revenue bond. In return, the Martinez family-owned company pledged to hire employees from city of Albuquerque-recognized workforce development programs that focused on employing welfare recipients and other low-income residents.

Most recently, in 2008, the company unveiled a new frozen prepared foods plant at its Albuquerque location.

While Albuquerque Tortilla Company’s frozen foods will reportedly retain the original company name for now, the new GRUMA-owned outfit will carry the name Authentic New Mexico. According to a local news account, GRUMA has retained 40 New Mexico employees and offered jobs to the others with the Mission Foods division of the huge transnational.

Locally, Albuquerque Tortilla Company’s principal competitor is Bueno Foods, which also runs a Duke City plant and produces a very similar product line of tortillas and frozen chile.

Owned by the Baca family, Bueno Foods also utilized industrial revenue bonds, as well as grants from the old Housing and Urban Development agency and Economic Development Administration, to grow its landmark business. But with GRUMA now in the game, any future competition is on decidedly unequal turf.

Enjoying a business presence in 105 nations, GRUMA employs 20,000 people and has facilities in unlikely places such as England. The 62-year-old company reported net sales of $3.8 billion in 2010.

In 2009 GRUMA controlled an estimated 75 percent of the strategic corn flour market in Mexico, supplying thousands of small tortilla makers with an industrialized flour. In the same year, GRUMA dominated 85 percent of the corn flour market and 35 percent of tortilla sales in the US, according to a report by DCP Services LLC.

Long before the Albuquerque Tortilla Company buy-out, GRUMA sold tortillas under the Mission and Guerrero brand names in this country.

More than two-thirds of GRUMA’s revenues come from sales outside Mexico. In a major 2010 report on Mexican corn policy since the North American Free Trade Agreement, University of California researcher Libby Haight analyzed Mexican government subsidies to large food processing companies like GRUMA.

According to Haight, a GRUMA subsidiary received about $30 million in payments from the federal government’s ASERCA Marketing Support Program in 2008. Haight, however, cautioned that her numbers might not report the full extent of subsides since there was “limited public access to corporate ownership and subsidy data.”

Publicly traded, GRUMA’s major stockholder is Monterrey businessman Roberto Gonzalez Barrera, who has been associated with the family of former Mexican President Carlos Salinas de Gortari. Archer Daniels Midland also has a big chunk of the company.

Gonzalez Barrera is the leading figure behind Grupo Financiero Banorte, which stands as the only large Mexican-owned banking chain. In recent years, Banorte has established a foothold in the US with its ownership of Texas’ Inter National Bank and two remittance transfer companies.

GRUMA’s expansion in the US has been a contentious one, with rivals sometimes claiming unfair competition. Nonetheless, anti-trust lawsuits by 18 small California tortilla makers did not prosper in the federal courts during the first half of the last decade.

In a statement, GRUMA said its purchase of Albuquerque Tortilla Company was “part of a strategy to take advantage of opportunities and synergies in the United States, the most important market in the world for GRUMA today.”

Additional sources.  

• KOB.com, April 25, 2011. Article by Stuart Dyson.
• Economia.terra.com, April 25, 2011.
• Misionpolitica.com, April 25, 2011.
• Milenio.com, April 24, 2011.
• La Jornada/Notimex, April 24, 2011.
• Albuquerque Journal/Las Cruces Sun-News, April 12, 2011, article by Diana M. Alba.

Frontera NorteSur: on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico