In making her American dream a reality, a Mexican Businesswoman is determined to conquer the frozen pop market in her native country. By Laura Martínez
The beginning of the 80's was very promising to Maria de Lourdes Sobrino. Her business, a trade show firm located in Mexico City, was running so well that she decided to open offices in the United States. She had an enviable client roster and began to export Mexican tourism into the country. Everything seemed to run smooth until 1982. The peso took a dive and Sobrino lost everything.
This is just one of the many downfalls this Mexican businesswoman would face in developing her business. First in Mexico and then in the United States: she lived the nightmare of two peso devaluations, one recession, the loss of several businesses, debt and competition from former employers.
Up to this point, her story is similar to countless Mexican business people, but in this case, her efforts were not in vein. Sobrino has made her American dream a reality: today, from Southern California, she leads two successful companies - Lulu's Dessert, founded in 1982 as a tiny gelatin manufacturer, and Fancy Fruit Corporation, a frozen fruit bars company founded in 1990 - together the company's gross 10 million dollars in sales annually. She also gets ready -- for the third time, to do business in Mexico. But this time with more savvy and maturity and of course, more caution.
"It was a difficult time; I didn't know what was going to happen. My savings were drained," remembers Sobrino of those uncertain times. And then one day, she decided she wanted gelatin.
She discovered that in the United States, the sophisticated country in candies and desserts, ready to eat gelatin (M6xican ready-to-eat gelatin) didn't exist. Big producers like Jell-O existed, but they limited themselves selling the powder needed to prepare the gelatin: and no one had thought of selling them ready-to-eat.
Even though Jell-O, the division of Kraft Food desserts, has produced gelatin in the United States for the past 103 years, it was not until 1993 (more than a decade after the founding of Lulu's Dessert) when they decided to produce ready-to-eat gelatin, and only after two years of market tests.
"We determined consumers had less time to cook but they wanted to continue purchasing our product", said Mary Jane Kinkado, Public Relations spokesperson for Kraft Foods in New York. And it is true that while Jell-O is, by far, the main producer of gelatin in the United States, it will never take away Sobrino's title that she was the pioneer in the area of "ready-to-eat" gelatin. But regardless of how good the kitchen work was, creating a new grocery category was another world. How was I going to sell a product that no one had ever heard or "I began innocently, thinking that Latinos were going to buy my product immediately," but that was not the case. Soon enough she realized that Mexicans from East Los Angeles were third and fourth generation "Mexicans": consumers who just like any other American consumer were not familiar with the product.
When the product began to attract the consumers and the supermarkets and the markets would call to increase their orders, Sobrino learned the importance of having food brokers, an important piece to successfully penetrate the grocers in the United States.
"The role of food brokers is fundamental; they know the grocery business well, and because you pay them on commission, they are in essence a sales force" explains Bill Schwartz from Concept Food Brokers, who promotes dozens of food producers in the United States, among them Lulu's Dessert.
With the gelatin business in expansion, Sobrino found diversification and established Fancy Fruit Corporation in 1990, the division of frozen fruit bars. However, problems did arise. The frozen food market is a whole different story: huge industry leaders dominate it and the expense of maintaining a product in the supermarket is extremely high. "I thought it would be the same thing but the frozen food business is much more competitive."
She also had to deal with the recession in the United States and Sobrino opted to open the market abroad; Fancy Fruit in Mexico, which was hit by another severe crisis: the devaluation of the peso in December of 1994. "I left my product in Mexico, in cold storage. Its unbelievable, but it was more expensive for me to pick it up than to leave it there to die," she remembers. Afterwards, she took her trucks to Tijuana to sell them and to close her business.
The lesson was harsh: "Mexico is a market with tremendous potential, but the limitations of the system make your life impossible". The businesswoman mentioned that the transportation system in the United States, for example, offers services to the client wherever it is needed, while you find limitations in Mexico because the transporters operating each route are limited.
She also mentioned that the Mexican government has more red tape than the United States. "Here, while you obey the laws, pay your taxes and do what the government asks you to do, nobody will bother you".
Even after the setbacks, Sobrino did not give up on her ideas of doing business in Mexico. But this time, her entry into the market was better planned and overall much more cautious. Just a while back, she sent her first two shipments to Mexico containing frozen fruit bars to allocate them in 170 Wal-Marts in Mexico. "If they open the doors to me, like Wal-Mart is doing now, then it is ok, but I get paid in dollars in the United States. I sell to Wal-Mart in Laredo, get paid in dollars and the payment is guaranteed by Exim Bank," says a more seasoned Sobrino.
For now, with the recent opening of a new production mega-plant in California, the business promises to grow three to four folds. And this time the expansion will be in the form of licensed and private label, where her production know-how and facilities will be the product.
Some of the growth Sobrino has experienced since she began has been to be less possessive of her business. Today she does not dismiss the possibility of investors or to listen to offers from other companies interested in buying the company. "Like a good Latin I would say 'this is mine and only mine;' but I've matured beyond those thoughts," she says even though she is truly in love with her business. "I don't regret anything I had to go through: the satisfaction was much more than any problem I had to face".