Mexican processor expanding as market matures

In 2000, Fresh Cut magazine featured a two-year-old Mexican fresh-cut processor that was doing about $500,000 in sales. Eight years later – and 10 years after its founding – that company is doing $10 million in sales and building the Mexican fresh-cut market.

“That’s pretty nice growth,” said Ray Cid, general manager for Food Solutions S.A., which markets products under the Nutribits brand.

That growth was the result of Food Solutions focusing on two key goals: expanding the Nutribits brand and working with U.S.-based companies to grow the fresh-cut segment. The two go hand in hand, Cid said, with U.S. suppliers and retailers creating new stores and introducing products to Mexican consumers and the Nutribits brand creating fresh-cut products designed to consumers’ tastes.

The fresh-cut Nutribits line is distributed throughout Mexico through Mexican and U.S. retail chains, including Costco, Wal-Mart and HEB. Processing is done at the company’s headquarters in Apodaca, in the northeastern state of Monterrey. The plant has 7,500 square feet of processing space, nearly double what it had in 2000. The facility has a Good Manufacturing Practices program and an HACCP plan – both of which the company has had from the beginning. Staff has more than doubled in the company’s decade in business as well. About 140 employees – up from 60 ten years ago – work three shifts, so the plant is running almost 24 hours a day, seven days a week, Cid said. Most of the cutting is done by hand because labor is less expensive than in the United States, but Cid said he was looking at adding a cutting machine. Everything else in the processing room, from washing to bagging, is automated. As the company looks for areas to expand into, more machinery will have to be added to take on the added volume.

In 2004, the Nutribits brand introduced romaine hearts, and it was also Food Solutions’ introduction to an agricultural program. The company has been building up that program, which works with Mexican growers of leafy greens. Those growers follow Good Agricultural Practices and are audited twice yearly, along with the company’s processing facility. The development of the agricultural program was more for a quality product and less about locally grown, which hasn’t caught on with shoppers there yet.

“Mexican consumers want the best product, whether it comes from Mexico or from the States,” Cid said.

Iceberg lettuce – the product that jump-started the fresh-cut industry in the United States – was Mexican consumers’ first taste of the industry there. But Food Solutions found that there weren’t any processors doing romaine lettuces.

“We found a niche that no one was doing,” Cid said.

That niche has grown into one of the main sellers for the processors. Romaine hearts in a three-pack clamshell, like those found in U.S. supermarkets, is the No. 1 item in all major Mexican chains, Cid said. The company also is looking to use romaine and other leaf lettuces to expand its salad program, and clamshells may be the way to go for those products, he said. Organics haven’t caught on, but growth in that market may be on the horizon, so Food Solutions is preparing its agricultural program for the potential launch of organic fresh-cuts.

“The boom for organics is coming up in Mexico,” Cid said.

A partnership with Bolthouse Farms brought the first fresh-cut baby carrots to stores in Mexico, but Food Solutions found that consumers there wanted something a little extra. Many were adding chili peppers to the carrots, so the company created its own line of baby carrots with chili peppers and sold it under the Nutribits brand. Other fresh-cut products that were popular with American consumers have been adapted to fit the Mexican consumer’s tastes, Cid said, including bagged salads and slaws that had their mixtures changed.

When Food Solutions began processing fresh-cuts for the Mexican market, consumers there didn’t see the advantage to buying pre-cut, prepared items. But a similar trend to what has happened in the U.S. market was occurring. Middle-class consumers, with disposable income and little time to prepare meals, were looking for healthful meals that were quick and convenient. They also were recognizing that they could buy a whole fruit or vegetable and could cut it themselves, but then they would have more waste and would have to store it, and couldn’t get the same product mix at a cheaper price. The influx of retail stores has helped the company’s fresh-cut products gain visibility and created better-informed consumers.

Retail Markets

The Mexican retail market has changed considerably in a short time. When Food Solutions opened its doors a decade ago, there were few large retail chains in Mexico. Supermarkets would have the produce department tucked away in the back of the store and there was little refrigeration and no fresh-cut items, Cid said.

In 2000, HEB entered the Mexican market, and through that chain and others, produce has taken a more prominent place in stores, and the distribution chain has been greatly improved. The produce section can now be found to the immediate left or right of the entrance, Cid said, with lots of space for refrigerated goods – and in most cases the produce section is just as nice or nicer than supermarkets in the United States.

“We have had visitors from the states who can’t believe the stores down here,” Cid said.

That’s given the company the opportunity to co-market its fresh-cut offerings with other items, such as T. Marzetti salad dressings. Food Solutions, the Mexican distributor for the brand, is placing the dressings in the produce department near its bagged salads to give consumers a quick and easy meal selection. The produce section is also one area where Food Solutions reaches consumers with point-of-sale materials and brochures handed out during in-store cooking demonstrations for new products like the Nutribits romaine hearts. A national advertising campaign of half-page ads in a nationally distributed newspaper was launched this year to raise awareness of the brand.

With new retail players entering the market, Cid said the distribution chain has improved. His company delivers products to stores’ distribution centers (DC) on its own trucks, then the HEB and Wal-Mart trucks move it from the DC to the individual stores. The company has 15 trucks that are always working, he said, delivering produce to retail customers in Mexico City, Guadalajara and Monterrey, the three largest cities in the country.

It’s out of his hands once it’s delivered to the DC, so Cid has to ensure that the product isn’t being abused between there and when the consumer buys it. To do that, Cid has sales personnel in each are visit stores to check on the product on the shelves and sales at the store level, and to speak with the produce manager to find out his response from consumers. Food Solutions also staffs a call center that calls stores where there aren’t sales personnel to check on product. All of that information is put into a database that is shared with retail buyers, who are always looking for more consumer-based information, Cid said. The combination of follow-up visits and a round-the-clock production schedule has built a relationship with retail buyers, which in turn has opened up doors for the processor.

“They can rely on us to give them the products on time and complete,” Cid said.

Foodservice

Ten years ago, there was very little demand for fresh-cut products from restaurants, Cid said. Food Solutions tried marketing products to the foodservice area when it first opened, but stopped after finding little success. It doesn’t cost much for a restaurant employee to cut fresh produce, but Cid said there’s now more interest in fresh-cuts than ever before and the company will kick off the next decade by getting back into foodservice sales.

“Next year we’re going to attack really strong the foodservice area,” he said. “Basically it’s a question of cost and labor.”

Customers in Mexico are looking for more healthful options when they eat out, and the increase in franchise restaurants has increased the need for quick ingredients that are free from contaminants. With restaurants like Applebee’s, Chili’s, McDonalds and Burger King popping up all over the country, Cid said the differences between the markets in Mexico and the United States are starting to disappear.

“We’re getting more and more similar to the States than back 10 years ago,” he said.


Latest News