(Bloomberg) -- For Heinz ketchup, nothing is more important than tomatoes. Sure, by calories, a tablespoon of the flagship condiment is 80 per cent added sugar. But by weight — and frankly, by reputation — it’s Heinz Tomato Ketchup for a reason. Now some of those tomatoes are in peril from climate change.
The US$5 billion-plus Heinz brand is critical to Kraft Heinz, the $42 billion packaged food giant that owns it. It produces 660 million bottles of ketchup each year, 300 million of them in the U.S. In a recent interview, Pedro Navio, the company’s North America president, referred to Heinz as its “powerhouse.” Kraft Heinz has also invested in organic and no-added-sugar versions — and charges more for them — which then Chief Executive Officer Miguel Patricio said on a 2019 earnings call was paying off.
“That is a very good example of what to do,” Patricio said, noting that putting money into the brand led to a 70 per cent U.S. market share.
The tomatoes used in Heinz ketchup are a particular point of pride. At its HeinzSeed research center in California, the company has spent more than 150 years evolving the fruit to ensure that tomatoes growing in the field can be processed into perfect tomato paste. The proprietary seeds are sold to seed dealers, who then sell them to farmers. Kraft Heinz buys the tomatoes back from the farmers, making it the “largest purchaser of processing tomatoes in the world,” according to a spokesperson.
California, where all of the tomatoes for Heinz ketchup sold in the U.S. are grown, just experienced its hottest July ever. Daniel Swain, a climate scientist at the University of California at Los Angeles, described the heat on his blog as “remarkable not only for its sheer intensity… but also for its duration.” Some areas saw record daytime and nighttime temperatures, which frequently crossed 100F (38C).
What exactly that means for this year’s batch of Heinz ketchup tomatoes is still an open question.
Whatever the temperature and wherever the region, ketchup tomatoes are not the same as grocery-store tomatoes: They have little juice and a more saturated red color. The paste they’re mashed into gets turned into ketchup, so consistency and color are crucial. While Heinz does add high-fructose corn syrup as sweetener, it doesn’t add any coloring. The red is pure tomato.
Back in 2007, rising prices for high-fructose corn syrup had Heinz talking about making a naturally sweeter tomato. Today, the company’s research is singularly focused on climate change. Resilience, heat, water stress and soil salinity are among the challenges that Patrick Sheridan, Kraft Heinz’s vice president of global agriculture and sustainability, calls “longer-term problems.”
The company won’t divulge specifics on its research and development spending, but says it has poured millions of dollars into HeinzSeed research over just the past five years, developing varieties that can survive hotter, dryer growing seasons in California’s Merced County. Derek Azevedo, executive vice president of Bowles Farming Company Inc. — a major Heinz grower — says the area is to tomato paste what “Napa is for wine.”
HeinzSeed runs about 800 tomato breed trials at once to gradually identify the most promising plants. (A typical bottle of ketchup contains about 10 varieties.) Over the past five years, Sheridan says the company has quadrupled its investment in those trials, which take roughly five years from initial test to mass cultivation.
This year’s harvest season is well underway, but won’t be completed until mid-October, when Kraft Heinz researchers will find out how their fruit fared in the summer’s extreme heat. Yield will almost certainly be hit, according to experts, but by how much is hard to say. “Some people say 20 per cent,” Sheridan says of the minority of crops exposed to the heat during fruit set, the time when the flower becomes a fruit. “Others say no one knows.”
Zach Bagley, managing director of the California Tomato Research Institute, says it’s too early to predict specific outcomes. Still, “it is a certainty that there will be some yield loss,” he said.
Looking for fruit that can handle high temperatures is part of the tomato-breeding process, but this year’s heat was especially intense. “What is new this year is such a prolonged heat spell during the flowering period,” Sheridan says, referring to a little yellow flower that heralds the incoming fruit. “You couldn’t breed for three to four weeks at 100-plus degrees.”
Farmers have already been making adjustments. Most bury their irrigation systems deep in the soil to encourage the roots to find the water, and Azevedo tracks natural precipitation against the tomato’s lifecycle so he’s only giving the plants as much hydration as they need. Bowles Farming also sometimes sprays the leaves with a clay polymer to protect them from the sun, a tactic Azevedo likens to elephants throwing mud on their backs.
Bagley believes additional research will identify more approaches, noting that wild tomatoes are genetically evolved for heat- and drought-tolerance. “The expectation is we’re going to see heat spells like this from time to time,” he says. “Not that they’re normal, but they have happened in the past, we expect them to happen in the future, [and] we expect them to happen at higher frequencies.”
Crafting the best tomato for the current environment has always been iterative. “Every year we constantly get new genetics,” says Mike Montna, president and CEO of the California Tomato Growers Association. “We haven’t yet found a drought-resistant tomato, but we have changed growing practices to use less water.”
Still, Aidan Farrell, a senior lecturer in plant physiology at the University of the West Indies, sounds a note of caution. “A ‘heat-tolerant’ plant will still lose productivity at high temperatures,” Farrell says. “Breeding a plant that is well suited to a climate that is on average 1C warmer may not offer much protection from an infrequent heat wave event.”
Kraft Heinz, for its part, views this year’s heat as just another test for the tomato varieties it already has in the field, whether in early-stage trials or production-ready. “Varieties that can’t deal with this will be removed from the program,” Sheridan says.
In a follow-up, Sheridan described Heinz’s early reads on yield as “good,” but said the company will “only have accurate numbers after the season.” Bagley notes that the true impacts will be clearer in a few weeks, “as we get into the crop [that] was in more vulnerable stages of development when the high heat came on.”
If the yield is low, Heinz will manage. The company can dip into back stock of tomato paste, or source tomatoes from other regions.
“At the end of the day, we might be short,” said Lynn Veenstra, North American sales manager for HeinzSeed, on July 25 while the heat wave was still going. “Just kind of gotta hope for the best.”
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