Week after week, the trade dispute opposing the United States and Canada since early June has escalated.
After the announcement by Donald Trump that customs tariffs were to be slapped on Canadian aluminum and steel after 1 June, Prime Minister Justin Trudeau responded to Washington's tariffs assault by slapping 16.6 billion Canadian dollars' worth of taxes (USD 12.55 billion) on American goods (see our article posted 5 June).
One of the US products now being taxed is ketchup made by the emblematic food giant Kraft Heinz. The application of a 10% customs tariffs on US ketchup is a further setback for the multinational group whose image with Canadian consumers was severely damaged over the closure of the Leamington Heinz ketchup production factory in 2014, causing 740 people to lose their jobs and leading to a major crisis in the Canadian tomato growing and processing industry.
The plant was then taken over by local company Highbury Canco, which signed an agreement in 2016 for a partnership with French's, a leading operator on the mustard market and a ketchup distributor – and therefore a major competitor and rival for Heinz. As a consequence of French's commitment to only use Canadian tomatoes for making its ketchup, and of an unexpected surge in Canadian public opinion, the share of the ketchup market held by Kraft Heinz noticeably dropped while the market share held by French's doubled, reaching approximately 8% over the past two years. According to Euromonitor International, sales of French's ketchup in Canada rose to 11.1 million dollars in 2017, while those of Heinz fell -5% to 126.4 million dollars. Of course, Heinz still holds a large majority share of the Canadian ketchup market – approximately 76%. But the customs measures that have recently been decided by Canadian authorities and commented on by Prime Minister Justin Trudeau during his visit of the Leamington factory for Canada Day celebrations are likely to accentuate these shifts.
Justin Trudeau in front of the premises of Highbury Canco Corporation in Leamington
Yet the protagonists of this dispute are not Canadian on the one side and American on the other, but are both United States companies, as French's is owned by McCormick & Co, a Maryland company. But the brand has known how to tug on the patriotic heartstrings of Canadians and has adapted to its client base, which is both English-speaking and French-speaking, by opening a French language website, putting a maple leaf on its ketchup labels and using a very convincing slogan: "Tomates canadiennes" ("Canadian Tomatoes").
In the present climate, which is fraught with tension if not downright hostile, Kraft Heinz has attempted to preserve its image. The Vice-President of corporate and legal affairs for Kraft Heinz Canada, Av Maharaj, has pointed out that the company employs 2 000 people in Canada and provides indirect jobs for thousands of others. “I just want Canadians to know that Kraft Heinz is part of the Canadian fabric — we make more food in Canada than anybody else.” Commenting on Highbury Canco, Mr. Maharaj underlined the industrial and economic links between Kraft Heinz and the Ontarian processor: “We’re their biggest customer,” with annual food contracts worth “tens of millions of dollars.” Highbury Canco processes 70 000 metric tonnes of foods annually for Kraft Heinz Canada, he said.
His insistence on these links sounded like a warning to a number of industry experts.
EU: Europe prepares new tariffs on the US, with ketchup as the next target
The European Union is preparing a new list of duties against the U.S. in case President Donald Trump moves ahead with tariffs on European cars, the Financial Times reported on 6 July, citing anonymous officials in the region.
The list, which is reportedly set to include duties worth 18 billion Euros (USD 21.07 billion), will target staples like ketchup, it said.
However, there are doubts whether this would be the right product to target, with a spokesperson for Kraft Heinz telling the newspaper that the company has substantial manufacturing operations in Europe, and that all the ketchup sold in Europe is made there.
The list for new tariffs is also likely to include frozen fish, raisins and adhesive bandages, according to the report.
Source: letemps.ch, radio-canada.ca, Windsor Star, cnbc.com
