Risk, returns & timeframes illustration
1 min read
September 6, 2022
by
Regan Pearson

The great condiment crisis of 2022 🍅

Things are about to get saucy… or are they? Californian farmers have warned of imminent climate change-related tomato shortages. Are salsas, pasta sauces, ketchup, and pizza toppings under threat? And what could that mean for the big companies that need big supplies, like Heinz and McDonalds?
Risk, returns & timeframes illustration
1 min read
September 6, 2022
by
Regan Pearson

The great condiment crisis of 2022 🍅

Things are about to get saucy… or are they? Californian farmers have warned of imminent climate change-related tomato shortages. Are salsas, pasta sauces, ketchup, and pizza toppings under threat? And what could that mean for the big companies that need big supplies, like Heinz and McDonalds?
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After watching Jeremy Wells savour our tasty tomato sauce with ice cream on live telly, it’s safe to say that pretty much everything's better with a bit o’ sauce... right? 🤢 But while people in Spain spent last week joyously flinging gazpacho at each other in the streets, our summer BBQs were being put on red alert over a potentially devastating sauce shortage in what is fast becoming ‘the great condiment crisis of 2022’. 🚨

First, a quick recap. Earlier this year Huy Fong Foods, which makes the iconic (and delicious) sriracha hot sauce, announced that a severe shortage of chilis was putting a halt to their production. 🌶️ The cause? Ongoing drought in Northern Mexico. Months later in France, word started to spread of an imminent mustard shortage. Panic ensued. Except this time it was in drought in Canada, which produces half the world’s mustard seed exports. 

Fast forward to today, where thirsty tomato crops in California are threatening the US ketchup supply. 🍅 California grows nearly all the tomatoes America processes into salsas, pasta sauces, ketchup, and pizza toppings. But farmers have warned of supply shortages as climate change makes food supply, like our beloved condiments, increasingly unreliable.

That creates a new challenge for food processing companies like Kraft Heinz (KHC) and Tyson Foods (TSN), as well as companies that rely on those sweet and spicy additions to support their menus, like McDonalds (MCD) and Restaurant Brands (QSR). 🍕 Could Aotearoa’s sacred sauce supply be at risk? Hopefully not. Watties New Zealand grows 90% of their canned tomatoes right here Down Under, where winter has ensured plenty of water. Still, with the summer BBQ season beckoning, it can’t hurt to add ‘sauce’ to the shopping list… right next to ice cream. 🍦

Regan Pearson
Finance writer
Linkedin

We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.

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