Brand trimming may be one of the norms in this new normal for many companies and Herdez has taken a step in this direction.
The need to focus on those business lines that generate greater profitability is now vital in the face of a shrinking market.
Fewer brands, more products
Brands like Coca-Cola, Mondelez or Pepsi seem to be reducing their offer to focus on their key products, in order to optimize their production chains.
At least this is the point of a recent analysis signed by CNN, which argues that the measure responds to the need to make supply chains more efficient.
In order to bet on a variety of brands rather than on the volume of products, companies must stop their production plants to change their product line, something that is almost impossible at a time like today when demand for certain products has increased remarkably, while brands must maximize each resource.
Now Grupo Herdez seems to go a step further amid this trend. The firm has just moved away from a category while selling one of its most representative brands at least to the consumer.
In a document sent to the Mexican Stock Exchange, Grupo Herdez reported that its associate Herdez Del Fuerte concluded various agreements for the partial divestment of its tuna business.
In a timely manner, the firm pointed out that it is selling its tuna fishing vessels, as well as related equipment, its tuna products processing and packaging plant located in Chiapas State.
Likewise, the company is already in the middle of concluding agreements to sell the rights to the Nair tuna brand.
Thus, the aforementioned document indicates that « Grupo Herdez and its associate will remain in the distribution and marketing of tuna-based products under the ‘Herdez’ brand, which will be assembled by third parties. »
Between profit and loss
In this context, it is important to mention that Nair represented 1.4 percent of the company’s consolidated sales for Grupo Herdez during 2019.
Considering the previous. The annotation delivered by Herdez at the end of June 2020 becomes relevant, in which it recognized that 70 percent of the income was derived from these transactions.
During the second quarter of the year, Grupo Herdez generated sales of 6,091 million pesos, which is 7.6 percent more than that registered during the same period last year.
Canned food was the segment that grew the most with 11.6 percent, with the result that “the categories with the best performance in the quarter were tuna, tomato puree, jam, homemade sauces, mole and tea,” said its financial report. of the second quarter of the year.
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