An expanding Hispanic population and rising health consciousness support the industry
Los Angeles, CA (PRWEB) September 14, 2013
The tortilla has wrapped itself around the American palate and become one of the fastest-growing baked product segments in the country. Tortillas have become a mainstream constituent of the American diet primarily because of the rapidly growing Hispanic population in the United States, although other consumer demographics are increasingly viewing industry products as a staple. According to IBISWorld Industry Analyst Sarah Turk, “The rising number of health-conscious consumers, coupled with the growing prevalence of gluten intolerance, has increased demand for tortillas because they are a good source of fiber and vitamin B3.” Due to its convenience and affordability, tortillas have also competed favorably against bread and substitute products. As a result, IBISWorld expects revenue to grow at a forecast annualized rate of 0.7% to $3.3 billion over the five years to 2013, with revenue growth of 2.6% expected in 2013.
From 2010 to 2013, per capita disposable income increased, which allowed consumers to spend their discretionary income at restaurants. In particular, consumers are increasingly incorporating Mexican food into their diet, which is evidenced by the number of Mexican restaurant establishments growing at an annualized rate of 2.2% over the period.
However, the period experienced substantial volatility in input commodity prices. The price of corn and wheat, among other commodities, experienced spikes due to supply shortages, adverse weather conditions, growing demand from emerging economies and the use of grain in biofuels. As such, in 2008 and 2011, the price of corn jumped 38.2% and 58.0%, respectively, while the price of wheat skyrocketed 27.7% and 41.4%. Although industry operators can pass high input commodity prices to consumers, “the extent to which industry operators can raise tortilla prices is limited due to the industry's highly competitive nature and the availability of substitute products,” says Turk.
Key market players are increasingly undergoing vertical integration to lower production costs and hedge input commodity prices to lessen the burden of commodity price volatility on revenue. Consequently, the Tortilla Production industry is estimated to have a high level of industry concentration, and the major players include Gruma SAB de CV and Grupo Bimbo SAB de CV. A growing Hispanic population and the continued emphasis on healthy eating will continue to drive industry success.
For more information, visit IBISWorld’s Tortilla Production in the US industry report page.
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IBISWorld Industry Report Key Topics
Companies in the Tortilla Production industry purchase various ingredients (such as flour, corn, corn starch, salt and seasoning) from other food manufacturers and then sell the tortillas to downstream buyers in both flexible and paperboard container packaging. The final product is sold to grocery wholesalers and retailers, caterers and other food service contractors, which then distribute them to consumers. Tortilla chips are not included in this industry.
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