In episode three of the Marketing on Tap podcast, we take a look at how a giant of consumer packaged goods fell from grace when it left the Canadian market and became entangled in what would be known as “ketchup wars”.
When Heinz moved its production of its famous ketchup from Canada to the U.S. in 2014, it became a PR and financial nightmare as Canadian consumers pushed back, and switched their allegiance to French’s Ketchup instead.
Now, with the U.S. – Canadian trade wars seeing Heinz take an even bigger hit to its pocket, the company has started a campaign to win back Canadian consumers. But can marketing and PR win in a political and cultural war?
Settle back and enjoy this week’s topic, brought to you in the usual unscripted manner that you’ve come to expect when Sam and Danny take the mic.
If you prefer to listen on the go, the audio version of this week’s episode can be listened to below.
Sam Fiorella: Welcome to our next episode of Marketing on Tap. I am Sam Fiorella and this is my mate Danny Brown.
Sam Fiorella: Today we want to talk about an interesting one. It’s really ripe for the times, in fact, and it’s ketchup wars. I was really fascinated with a story that I read, actually that I had been reading about. But there’s one article in particular on CBC News, talked about ketchup wars. To preface the conversation I want to have today, Danny, it’s about French’s ketchup and Heinz ketchup, of all the things we’re going to talk about. Basically the story here is in retaliation to Donald Trump’s, or I guess America’s taxes, or tariffs, on Canadian aluminum and steel, the Canadian government has said, “Well, if you’re going to tax us we’re going to tax you where it hurts.” And where does it hurt more than ketchup, apparently? Heinz is getting not just ketchup, they’re getting an extra 10% tariff-
Danny Brown: Well rye as well, right [crosstalk 00:02:00] … denim jeans.
Sam Fiorella: Yeah, exactly. So there’s all kinds of things that they produce, but the ketchup one is one I want to focus on today because before all of this happened Heinz, the iconic brand, there is really no other brand. Growing up it was Heinz, like Kleenex you would say, “I want a tissue, I want a Kleenex.” “Here give me the Heinz.”
Sam Fiorella: It’s so iconic, but what’s fascinating right now is that they pulled out of the Canadian market. They’re still selling here but they don’t manufacture their ketchup here anymore.
Sam Fiorella: There is a plant in Leamington, Ontario where they would source the local tomatoes and actually manufacture right here, or at a minimum, process the tomatoes here. They left and French’s, a similar brand, also American, also makes mustard, and ketchup, and all the rest of the condiments, amongst other things. They said, “Well we’re going to take over because the plant is already there. We know the tomatoes are there.” They’ve been quietly going about their business, but they haven’t really had a lot of success against the Heinz brand.
Sam Fiorella: What happened of course now with this whole tariff thing, Canadians are starting to say, “Well hold on. Heinz left, they’re now fully an American. Yeah French is a Canadian company, but at least they’re here, they’re sourcing our tomatoes, so we got to buy Canadian.”
Danny Brown: Right, exactly.
Sam Fiorella: I’m not sure if everybody realizes that French is actually [crosstalk 00:03:19] an American brand, but at least they’re getting Canadians jobs. In retaliation to this whole political mess this is what’s happening. Interesting, Lablaw is one of the biggest grocery chains here, had before all of this happened pulled-
Danny Brown: Heinz from the shelf.
Sam Fiorella: … Heinz from the shelf because the sales weren’t there I guess and they were going to focus on Heinz, so they pulled French’s. Then everybody started complaining online and making a big deal, “Well I want something that’s more Canadian.” So they had to bring it back.
Sam Fiorella: Anyway, long story short, today where we are, and we’re only a month into [crosstalk 00:03:54] this whole boycott thing and the tariffs that are being employed, Heinz is down 5% in terms of sales here in Canada. French’s has actually increased by $11 million in sales period over period. I think that’s just absolutely fascinating [crosstalk 00:04:11].
Danny Brown: … yeah, exactly.
Sam Fiorella: I want to talk about this ketchup war and how politics and marketing mix, and if they should mix, and can one avoid the other.
Sam Fiorella: Before I have that conversation though, you just poured something-
Danny Brown: I did.
Sam Fiorella: … really interesting. What are we drinking today?
Danny Brown: Today we’ve got Side Launch, it’s their wheat beer, Side Launch Brewing Company.
Sam Fiorella: Nice.
Danny Brown: They’re over in Collingwood, Ontario. This is a great beer for summer, it’s really refreshing, lots of lemon zest, citrus coming through. Really clear beer as you can see, wheat beer taste-wise it’s a really clear beer. It’s only sitting at 5.3% ABV, so it’s not a heavy beer to drink. On a summer day like this, looking outside at the sunshine, and it’s bang on.
Sam Fiorella: You said they’re in Collingwood?
Danny Brown: They’re in Collingwood. You can check them out. They were actually a 2016 Canadian Brewery of the Year-
Sam Fiorella: Oh wow.
Danny Brown: … in Collingwood, Ontario, so just up the road from us.
Sam Fiorella: I like it.
Danny Brown: Side Launch Brewing Company, sidelaunchbrewing.com.
Sam Fiorella: Cheers.
Danny Brown: Cheers.
Sam Fiorella: Oh that orangy, lemony zest that comes through.
Danny Brown: It hits you right away, it’s like a [crosstalk 00:05:20].
Sam Fiorella: That’s fantastic.
Danny Brown: And 5.3% you can drink a good few of them and not be too overly concerned.
Sam Fiorella: Somewhere in the world it’s four o’clock in the afternoon. It may only be before noon here but-
Danny Brown: A little bit yeah.
Sam Fiorella: We’re working on that time. Anyway, thank you very much. We are not sponsored by any of these beers, by the way, just in case, or any of these breweries if anybody’s wondering. These are just-
Danny Brown: Breweries we like and we appreciate.
Sam Fiorella: Breweries we like and appreciate. I really like this one here. That’s fantastic. Thank you for pouring.
Sam Fiorella: Let’s talk then a little bit about this whole ketchup war thing. Politics aside, what impact can marketing really have in a struggle like this? It started with politics. This whole thing was happening with Heinz pulling out of Canada. Nobody paid attention when they pulled out of Canada, we were still buying it. It was still the number one brand, no issues. Can marketing actually be removed from it? Can we ignore politics or do we have to hit it head on now?
Danny Brown: I think, as the results show, any financials, marketing impacts the political side of it and vice versa. I know in the last week or two alone, Heinz has started a big PR campaign to reclaim how, “We never really left Canada. We’re still sourcing tomatoes etc. and we’re still there selling products. We never really left Canada but a lot of analysts said, ‘Well, you kind of did because you’re not here.'” And now the Canadian consumers are saying that and it’s impacting.
Danny Brown: The decision was made and I know it wasn’t made based on TRump’s [inaudible 00:06:53] tariffs, what have you. But with that background and the fact that Heinz had already pulled out and they’re now seen as trying to come after this Canadian company that stayed here, then it’s going to take a huge marketing message to get back into consumer trust, if they can.
Sam Fiorella: I think it really highlights the importance of marketing and PR to any brand, in particular. The fact that French’s is an American company but because they source here and they actually employ Canadians in a factory here. Canadians are wrapping the Canadian flag around it and they’re getting behind the brand to the tune of $11 million extra and forcing Loblaws, as one, to bring it back on to the shelves. So clearly, marketing, has to be in place here. The thing though, for me, is when is it too late? Heinz, as you said, has put a big PR blitz on but nobody’s buying it. Canadians are still rejecting it which is, something i thought I would never see. An iconic brand like Heinz, as I said growing up, it was Heinz or nothing. Even other brands were considered store brands, even if they weren’t no name brands. But obviously, that’s changing.
Sam Fiorella: I’m thinking, what does a brand have to do today to stay ahead of something like this? So that they’re not caught on their heels the way that Heinz was? Do we need to adopt local? Is being made locally, paying people locally, employing people locally? Is that something that we just have to make part of our daily mix now in anticipation of what’s happening in the globe with this whole, “Make America great, buy local,” all that kind of stuff?
Danny Brown: Just look at the craft beer industry against the corporate brewers. A lot of people prefer to try either buy it at the brewery direct or try and get it from their [inaudible 00:08:50] as opposed to supporting big brewers. And supporting Canadian and local businesses, could be American craft. To ketchup, to the sauce wars, if you like, I think at some stage it does get too late. You can’t actually change perception and Canadians, we’re very polite. We know that and we always apologize and we always accept apologies but sometimes, I don’t think we do accept if we’re seeing Canadian values being challenged by an outsider. Especially in the climate that it is at the moment where Trump’s made it very much about America first over everybody else. Which is his mandate but then he has to expect that countries are going to retaliate. Whether it’s the government or the consumers that buy products from the shelves.
Sam Fiorella: This is what’s interesting is when this whole political movement started and Trump started campaigning and it was all about, “Make America Great Again.” The vibe, at least from a PR perspective, in Canada and I would assume it’s the same around the rest of the world was, “Okay, good for them. That’s their prerogative, not an issue. But today it’s less about us first, it’s us against you.” It’s coming across that way and I think that’s part of the reason why there’s been such a backlash against brands that aren’t Canadian because we’re now saying, “Okay well if you’re going to be against us, we’re then going to be against you because we need to protect ourselves. It’s almost predatory what you’re doing as opposed to protectionism for your own country, which every body would understand.”
Sam Fiorella: I think this is an interesting thing to analyze, how would we do it differently? What should they do? We’ve got two sides of the coin here. We have French’s that kind of stumbled into this, to their luck.
Danny Brown: Happy accident.
Sam Fiorella: They didn’t know that this was coming, they just saw an opportunity to take over a plant that already had trained people and a great growing community. So they decided to take it over. So now they’re in a good position. How do they maximize this? Should they be riding on it or do they run the risk of saying, “You’re wading into politics.”
Danny Brown: I don’t think they need to wade into politics. They certainly should maximize the fact they’re still here, they’re employing Canadian people, making a Canadian product. If it comes down to maximizing it, just play that story and start sharing human stories of the people that they’re keeping in a job. So you get the employees sharing a little micro video saying, “This is why I love working at French’s versus …” If they wanted to go the whole adversarial way, “This is why I prefer French’s over ketchup.” They could do that in a fun way and maximize that on to the consumer side and have these little ads propagating out. Even doing a mini influence campaign about this is why local products works over the larger big boys.
Sam Fiorella: I think that’s a really interesting thing. I don’t have a pen here to make some notes. This is completely unscripted by the way other than reading the article and taking some notes on the article that spurred this conversation. [inaudible 00:11:53] that’s a great idea for our last call. But I agree, you either have the option of playing up the local by local which may be a little, “Oh sure now you’re just jumping on the bandwagon.” But I love the idea of having it from the perspective of the employees. I definitely would showcase the fact that, here’s our employees, here’s what we’re doing to the economy here. That’s a subtle way of playing into this whole political theme that we’re playing out right now in our daily conversations without actually hitting you over the head with it.
Sam Fiorella: Of course, they do run the risk of somebody finally saying, “You’re not really Canadian. You’re american. But I think people can forgive that as long as you’re employing people here.” It’s one of the reasons why I know some people buy Ford cars. It’s an american made car or German car but they look, is it actually made locally? Is employing Canadians?
Sam Fiorella: Let’s flip this. Let’s take a look at Heinz now.
Danny Brown: Okay.
Sam Fiorella: Heinz is on the bad side of this, or the wrong side of this happenstance. They pulled out for whatever reason, I’m not even sure actually, the reason that they pulled out. I’m assuming it was for some economic reason.
Danny Brown: Subsidy or something [crosstalk 00:13:03].
Sam Fiorella: Was it a subsidy?
Danny Brown: I think [inaudible 00:13:04] lack of subsidy from the Ontario government at the time.
Sam Fiorella: So there was a financial reason that they chose. I should’ve looked that up. For whatever reason, they’re now on the back foot. They’re on their heels. What could they possibly do? Their PR campaign is not working. What else could they possibly do?
Danny Brown: Apologize.
Danny Brown: It’s tough one because like you say, it’s already backfired.
Sam Fiorella: I think it’s typical … How long have you been in Canada?
Danny Brown: 16 years, 17 years now almost.
Sam Fiorella: Hold on, what?
Danny Brown: No, no 2006 so, 13 years.
Sam Fiorella: You’ve been here for 13 years and you still talk like that?
Danny Brown: I know, right? Exactly. I talk to my mum every now again just to keep the accent.
Sam Fiorella: Okay, I didn’t actually call that out because I wanted to slam the way you speak. Although we should, maybe, focus on that a little bit but that’ll be the subject of another podcast. I guess, the idea here is that after so many years, they could have had that impact. They could’ve made that happen, and they didn’t. How do we then say you’ve got this history here, the fact that you’re Canadian, which is the point I was trying to make. The fact that you say your first option, they can apologize. How Canadian are you? 13 years, osmosis has worked, and it’s pulled in, so I think that’s kind of funny.
Sam Fiorella: Other than apologizing, sorry, I had to throw that dig in there.
Danny Brown: No, no. For sure.
Sam Fiorella: Other than apologizing, what could they do?
Danny Brown: I think, all they can do if they really wanted to get back into Canada in any meaningful way is some form of grassroots. Take one step at a time and do instead of say or do instead of promote.
Sam Fiorella: Okay.
Danny Brown: And actually come out a year later and say, “You know what we screwed up, we’re doing this, we’re doing this. Even if it’s not a major step, just show we’re back in Canada.” If they want to come back, and they clearly do because they’re having an impact on their sales and profits so they need to, obviously, get these customers back. It depends on what they’re allowed to do and whether the current government over in the US will allow them to come back as opposed to staying in the US where US workers are.
Sam Fiorella: I agree. I’m getting the signal, last call. We’ve got to get a bell. Robert, get us a bell so that you can just ding, ding, ding, ding when we’re done here. So, last call. We always want to leave these with an actionable tidbit that they can walk away with. What would we pull out of this conversation? What can they pull out? What’s your last final thought on this?
Danny Brown: Obviously politics and marketing is never a great mix and if a business or a brand has any inclination that something is about to happen because of politics, they have to have a plan in place that says, “We can’t get sucked into this. It’s going to look like we’re pulling out because Canada did this or the US asked this but we have to have a strong communication plan that shows, ‘We’re stuck in the middle guys but we’re here to support you if you’re going to support us. We’ll sit here, we’ll work together.'” That kind of thing.
Sam Fiorella: So have a plan in place for this? If you’re not going to dive into it right away, knowing that politics is actually mingling with your marketing right now, have a plan ready to execute or try and get ahead of it.
Danny Brown: Yeah.
Sam Fiorella: For me, in terms of an actionable result, one of the things you mentioned that I was going to write a note on is, the campaign of apologizing is actually not such a bad idea. This is a takeaway that maybe people want to think about. Think about what McDonalds did. Here in Canada, in particular, all of the negative news in the United States about how bad the food was for you and there was very little redeeming value other than it just tastes fantastic. But here in Canada we were worried about what was in the hamburgers? It wasn’t 100% beef. They created that big campaign. It wasn’t necessarily an apology but ask any question, “Ask us what’s in a McNugget.”
Danny Brown: They built that website right?
Sam Fiorella: They had that whole site which was nothing but live questions and honest answers and they were very transparent. This is an interesting lesson learned, maybe, that could be taken away here that I really like. Heinz could take a similar approach, “We say we never left Canada so ask us.” You know, I mean, open up a dialogue with Canadians and that transparency if they’re truly willing to be transparent. And if they haven’t really left [crosstalk 00:17:21]
Danny Brown: What were you doing in the mean time?
Sam Fiorella: Exactly. So that would be an approach that I would take as an actionable marketing item. Anyway, that’s it for today. Our time is up, we’re a few minutes over. Thanks everybody for joining us again for this Marketing On Tap episode. Join us again next week, we’re going to be sampling another craft brew and tackling another marketing project. Thanks Danny, see you guys next week.
Danny Brown: Cheers.
Sam Fiorella: Cheers everyone.
Introduction: You’ve been listening to Marketing On Tap with Sam Fiorella and Danny Brown. If you enjoyed this episode, make sure to subscribe so you don’t miss the next one. And please, feel free to leave a show review. That’s always worth a cheers.