The Taste of Success [U.S.-Latin Trade magazine]
by Hope Katz Gibbs
U.S.-Latin Trade magazine
THE MANAGEMENT AT FRUITSTIX could see it so clearly: frozen strawberry fruit bars dripping down the chins of Mexican children. Lots of Mexican children.
That was the dream, at least, when in 1992 sales and marketing director Ray Amicone got a call from a Mexican distributor who wanted to sell the frozen fruit treats to supermarkets and retail outlets in Mexico City. Two years later, FruitStix are stocked in about 100 retail outlets south of the border. But there have been a few kinks to smooth out along the way.
It was early in 1993 when Amicone faced one of the biggest obstacles. He was touring Mexican retail outlets during one of his bi-annual visits and, as usual, he purchased a box of FruitStix. He opened one of the ruby-red frozen fruit treats only to find it had melted and then refrozen.
“In Mexico the power goes off for a while and the product will start to melt,” he says. “When the electricity comes back on the fruit bars refreeze, but they are deformed. When customers buy them and find they are all dilapidated, they probably won’t purchase them again.”
Although Amicone could do nothing about perfecting the electrical system in Mexico, he could do something about educating the wholesalers and retailers on how to stock his product.
A MATTER OF MARKETS
With so many potential problems, why would an American company even try to sell fruit bars in Mexico? Because the American market is saturated, says Amicone.
“The ice cream novelty business in the U.S. is now dominated by two huge conglomerates, Unilever and Nestle,” says Amicone. “It has become more difficult for small companies like us with quality products to do business in the United States.”
In the last two years, Unilever (which owns Good Humor, Breyers and Klondike) and Nestle (which acquired marketing rights to Disney brand frozen treats) have also bought up smaller companies and now control 31 % of the US$1.5 billion U.S. market.
So, five years ago, FruitStix decided to look overseas for export opportunities. In 1989 it began shipping to Japan, where frozen treats on a stick was not common. Now FruitStix ships $400,000 of fruit bars to Tokyo yearly.
The decision to export to Mexico was the result of a call from the Mexican distribution company Servicios Integrales de Refrigeracion, which wanted to get into the frozen treat business. The company chairman discovered FruitStix from a U.S. Department of Commerce listing of U.S. exporters.
Aurrerd, a large supermarket chain in Mexico City, started carrying FruitStix in 1993. Until now, however, sales haven’t been great, says Amicone. The problem: Individual, 4-ounce FruitStix bars are too big for the Mexican children to consume. “We need to accommodate the consumer who is buying for a large family.”
Amicone and the company’s majority shareholder, William J. McKinley, went to work on developing a smaller bar. This summer, FruitStix launched its 1.75-ounce fruit bar in Mexico City, and Amicone hopes to gross $250,000 from that country alone. (Last year, exports to Mexico brought in $130,000 of the company’s gross sales of $5 million.)
This month, Amicone is taking his FruitStix on the road to Mexico again—this time to the U.S. Dept. of Agriculture-sponsored AGXPORT Trade Show. “We are hoping to establish more leads for retailers and distributors in Mexico.”
The San Diego-based Padilla family established FruitStix in 1977. The fruit bars had the same name. McKinley, a Santa Barbara businessman, approached them in 1985. He wanted to buy the firm. The Padilla’s agreed.
It was a good buy, says Amicone, who joined the company after a long stint with competitor Frozfruit. “We offer consumers a quality product and quality service. Whether we’re in Mexico or Kuwait, it’s the same. I always say: One bite says it all. If people taste FruitStix, they’ll keep on buying it.”
The product currently comes in a variety of flavors including strawberry, lemon, tutti-frutti, and lime. Other choices include fudgestix, and fudgestix light. Production, which is 65,000 bars per day, is scheduled to double by 1995.
Now, FruitStix is negotiating with a Canadian company for distribution throughout Latin America. “This company has retail franchise outlets in Costa Rica, Mexico, Ecuador, Venezuela, Chile, Colombia, Guatemala, Nicaragua, El Salvador, Honduras, Panama and Belize,” says Amicone. “I don’t think we’ll sell a whole lot of bars in Nicaragua, but I am investigating all options for future growth.”