Six years after controversial exit, Kraft Heinz to bring ketchup production back to Canada

Employees eat lunch beside a large novelty ketchup bottle in the cafeteria at the Kraft Heinz factory in Montreal on Nov. 17, 2020.

Andrej Ivanov/The Globe and Mail

Six years after pulling its ketchup production out of Leamington, Ont. – a decision that would help to ignite the “ketchup wars” – Heinz is coming back to Canada.

On Tuesday, the Kraft Heinz Co. Kraft Heinz Company announced that most of its ketchup sold in Canada will be manufactured at its facility in Montreal, starting next summer. The company will be investing US$17.6-million to build two new production lines, including a $2-million forgivable loan under the Quebec government’s ESSOR program.

For the first couple of years, however, Heinz ketchup will continue to be made with U.S.-grown tomatoes. That will matter to some Canadian shoppers, who in recent years have begun to view the red stuff you slather on burgers and fries as an unlikely symbol of national pride.

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“Because of growing agreements we already have in place – because of how farmers sell their crops – we won’t be able to do that in the short term. But our goal is to have Canadian tomatoes used in the production in the future,” said Av Maharaj, chief administrative officer for Kraft Heinz Canada. The tomato paste will be made in the U.S. for now, with the ketchup manufactured and bottled in Quebec. “It would probably take a couple of years before we could solidify that.”

The public-relations headache began for Heinz in 2014, when it moved its Canadian ketchup production to the U.S., withdrawing from its Leamington plant that employed 740 people and supported many tomato farmers in the region. Some of those jobs were saved when Highbury Canco Corp. took over that plant and signed a deal with Heinz to keep processing tomatoes for other products.

In late 2015, seeking to promote its own ketchup against a dominant competitor, French’s began promoting its use of Canadian-grown tomatoes. It purchased tomato paste from the Highbury Canco plant in Leamington. Even though French’s ketchup was still manufactured in the U.S. at the time (it opened a Toronto plant in 2017), and neither Heinz nor French’s were owned by Canadian companies, some consumers began to see their ketchup choice as a political decision. The story made the social-media rounds in 2016 as people boasted about switching allegiances.

“To this day, we are its largest customer,” Mr. Maharaj said of the Leamington plant, where Kraft Heinz makes products such as tomato sauce and tomato juice. The company re-signed a five-year contract with the plant in 2019. “I’d like to say we’re still part of Leamington. … We use more tomatoes in our products than the entire tomato ketchup retail market.”

Despite the furor, Kraft Heinz says its ketchup market share hasn’t changed much; while sales go up and down, its share has held relatively steady at about 75 per cent, Mr. Maharaj said. (Heinz merged with Kraft in 2015.)

“If others do their small part to help Canadian farmers, that’s fantastic,” Mr. Maharaj said when asked about the effort by French’s to promote its Canadian connections. “I know we’re doing our part as well.”

The category is growing; so far this year, ketchup sales in Canada have risen roughly 14 per cent, according to Nielsen data for the period ended Oct. 24. That’s part of a trend that the company began to observe even before the COVID-19 pandemic affected grocery-sales patterns.

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The heightened demand caused the company to look for supply-chain efficiencies, Mr. Maharaj said, adding that the provincial government’s aid made this the right time to bring production back. Kraft Heinz is planning to invest a total of US$100-million to modernize its Montreal facility over the next few years; it already produces roughly $2-billion worth of food per year, or 70 per cent of the products that Kraft Heinz sells in Canada, he said.

The company estimates that the Montreal facility will produce more than 100-million pounds of ketchup in its first two years. Production is planned to begin in late summer of 2021 and will add 30 jobs at the plant.

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