For Mexican Tortilla Giant GRUMA, the Big Business is Abroad

Gruma is a Mexican tortilla company with a phenomenal stock performance between 2013 and 2016 — a +746% return on investment. However, despite its solid financial standing and profitable business model, its stock has stayed stagnant in the past five years. Is it that food companies are unappealing to investors? Or is the Mexican stock exchange (Bolsa Mexicana de Valores) that scares them off?

In any case, Gruma was founded in 1949 in Monterrey, Mexico, and it has been described as “El Rey de las Tortillas” or the Tortilla King. That title is hard to dispute since estimates show that it holds almost 50% of the combined market share of the US and Mexico. Over the years, its Mission and Maseca brands have grown steadily in international markets, which are increasingly interested in tacos.

Gruma’s businesses outside of Latin America now represent about 68% of its revenues. Mexico is a bigger market than the US in terms of tons of product sold — 2M vs. 1.5M — but a ton of product sold in the US brings 3x more revenue than in Mexico. The US segment is also more profitable, with a 14% margin compared to Mexico’s 10%. The company has also had some struggles in Latin America in the last decade. In 2013, it began pulling out of Venezuela, one of its most vital business segments, due to the country’s unfavorable conditions and Hugo Chavez’s expropriation of some of Gruma’s assets.

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