In November 2013, managers at H.J. Heinz Co. gathered their workers in the cafeteria from the company’s century-old plant in Leamington and broke some bad news.
The plant’s new owners – Berkshire Hathaway and Brazilian private equity finance firm 3G capital – had decided to shut the guarana plant down. It was unclear whether the small Southwestern Ontario town would get over such a crippling blow.
The plant had 740 full-time employees and 350 seasonal workers. The tomatoes it processed for Heinz taken into account 1 / 2 of Ontario’s $52 million crop. Devastated workers left the meeting in a hail of curses and tears, making panicked calls to realtors concerning the worth of their houses.
A few months later, a brand new company called Highbury Canco Corp. offered a reprieve. The company took over the plant and signed a letter of intent to continue processing tomatoes for Heinz – but not for ketchup, its former signature product, and not enough to keep a lot more than about one-third of the plant’s workers employed.
Little did Heinz know that 2 yrs later, lingering anger over its treatment of Leamington would play directly into both your hands of 1 of their biggest competitors.
In late 2014 to little fanfare, The French’s Food Co. LLC – best known for its mustard – started selling ketchup in supermarkets. Heinz hit back a few months later, ramping up distribution and marketing of their retail mustard: “For a long time, Heinz ketchup has been with the wrong mustard. Well, not anymore,” said the voiceover of the commercial released in April 2015.
Struggling to challenge Heinz’s market leadership, French’s rolled out a brand new marketing campaign positioning itself because the natural, local condiment alternative, free from additives, high fructose corn syrup and gluten. That included buying paste produced by Highbury Canco from tomatoes grown in Southwestern Ontario for its Canadian ketchup.
Today’s consumers, especially millennials, “want things local,” said French’s president Elliott Penner. “They don’t need to see stuff that they don’t know where they originated from.”
And boy, was he right. A minimum of if you’re counting likes and shares – and prepared to stretch the phrase “local.”
In January, a month after French’s starting sending out press releases touting that “working with local farmers in Ontario, French’s Ketchup has become made with 100% Canadian tomatoes,” the CBC bit and ran a tale about how Leamington tomatoes were being used for ketchup again. About 6 weeks later, a construction worker in Orillia discovered that story and wrote a viral Facebook post with 133,000 shares and counting, saying his family had chose to change to French’s: “Absolutely love it!! Bye. Bye. Heinz.”
When word got out last week that Loblaw Cos. Ltd. was pulling regular-flavoured French’s ketchup from stores, citing low sales, the atmosphere on social networking turned from love-in to lynch mob.
Yet another post went viral, a relevant video featuring an irate and heavily tattooed man waiting in front of the Loblaws store holding a bottle of French’s ketchup and vowing to never shop there again unless the company reverses its decision. “FRENCH’S are creating jobs for Canadians while Loblaws/Heinz take away jobs from Canadians.CALL AND COMPLAIN NOW !!” he wrote in a Facebook post accompanying the recording.
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And complain people did: #Frenchsketchup was a trending hashtag on Twitter and Loblaw announced it might restock French’s regular ketchup (lost within the din was the fact Loblaw hadn’t pulled the product completely: French’s Buffalo and garlic ketchups had not left shelves of the company’s various grocery brands). It was a clear PR victory for French’s – but not so much for Canadian jobs.
Just like Heinz, French’s is a member of an overseas multinational. U.K.-based Reckitt Benckiser Group PLC has a market capitalization of US$46.72 billion and its portfolio includes brands such as Clearasil, Durex and Lysol, in addition to French’s.
Loblaw, meanwhile, is among Canada’s biggest and most successful companies, employing 200,000 people across the nation. Its PC make of ketchup is produced in a plant in Winona, Ont., that employs 430 people; French’s retail ketchup is produced in Ohio.
Sylvain Charlebois, a professor at the University of Guelph’s Food Institute, said the social networking response was more emotional than rational.
“Other brands may be as Canadian as French’s,” he explained. “Ultimately, it doesn’t matter. It’s about perceptions.”
So how, exactly, did that perception spread so quickly?
According for an analysis performed for the Financial Post by McGill University information technology professor Xue Liu and the students Mingyuan Xia and Xinye Lin, the initial viral Facebook post by the Orillia construction worker doesn’t show any indications of meddling by French’s or other people. “We think this post going viral is a true social event,” Liu said in an email.
The other mystery is whether all the attention has translated into actual sales for French’s ketchup. Penner, obama of French’s, claims it has, saying sales to retailers have quadrupled over the last four weeks: “It’s humbling what happened. It shows you the power of consumers…. For anyone to consider that’s not translating to sales, I don’t know what to say.”
But those numbers are impossible to verify. French’s share from the ketchup market is not big enough for research firms to track – specifically in Canada, where Heinz ketchup taken into account 84 per cent of sales in 2015, based on data from Euromonitor International. In Loblaw’s statement announcing it would restock French’s ketchup, the company alluded to previous poor performance in the check out: “We’ll re-stock French’s ketchup and hope the enthusiasm there has been in the media and on social media means sales from the product.”
What’s clear is the power of Leamington’s story, a David and Goliath tale that pits hard-working, blue-collar Canadians against a huge, foreign corporation. Even though Penner denies it has almost anything to use Heinz whatsoever, the fact Canadians are letting French’s play the hero to Heinz’s villain is excellent news for the would-be condiment king.
cbrownell@nationalpost.com
Twitter.com/clabrow
