News Column

A Feast Year for Manufacturing

June 2001

By Christopher D. Lancette,HISPANIC BUSINESS magazine

While CEOs in other industries worry about a slowdown in the U.S. economy, players in the food industry talk about good times. Sales for Ruiz Food Products Inc., number 27 on the HISPANIC BUSINESS 500, amounted to $135 million last year, an increase of 28.5 percent. The company expects sales to jump another 25 percent this year, for a 100 percent revenue increase since 1998.

"Consumers may be getting skittish about the economy and how to spend their dollars, but they have to eat," says Ric Alvarez, CEO of the company founded by the father-and-son team of Louis and Fred Ruiz in 1964. "And they're turning to products like ours -- frozen food that tastes good and provides value."

A crucial trend that Ruiz rides is that consumers want to spend less time in the kitchen. "There's lots of balancing going on in consumers' lives today," says Leslie G. Sarasin, president of the American Frozen Foods Institute. "They're working longer hours and are pressed for time. They want to spend more time at work or leisure activities, so they choose to spend less time cooking. Manufacturers are benefiting by responding to that lifestyle. Ruiz Foods is a perfect example."

Five of the 10 largest manufacturers on the HISPANIC BUSINESS 500 are in the food industry.

Despite the sales boom, Mr. Alvarez notes that the industry as a whole "has been living in a deflationary mode the last five years," meaning that companies haven't been able to pass on to consumers the increasing costs of business. For Ruiz Foods, the result has been concentrated efforts to become more cost effective. "We've been successful in doing that by creating a highly motivated work force," Mr. Alvarez says.

The company has been successful in maintaining its dominant position in the frozen Mexican food market. According to ACNielsen, sales in this category increased from $425 million in 1998 to $517 million in 2000. Ms. Sarasin thinks that kind of growth will continue for the near term. "Growth has been in the double digits for several years," she comments.

One key to Ruiz's surge is product innovation. The company offers 185 products (best known is its El Monterey brand) and constantly seeks to create more. In the year 2000, an impressive 28 percent of its sales came from products developed in the previous three years.

Such accomplishments have come in a remarkably competitive business environment: The company's processed foods vie for space with thousands of items in a typical grocery store, as well as direct competitors and private-label brands in its segment. "The typical consumer walks down the aisle making decisions in seconds," Mr. Alvarez says. "The packaging has to be attractive enough to make the consumer stop and say 'Wow!' and pick it up."

It's no surprise that innovation extends from product development to promotion. Ruiz developed a full-fledged campaign culminating on Cinco de Mayo to generate sales of its new flour taquitos in flashy packaging. The effort included an old-fashioned eating contest in which 50 young men and 50 young women at each of five universities competed to see who could gulp the most taquitos.

Meanwhile, the company continues its long tradition of experimenting with different tastes by providing trial products to Mexican restaurants, which collectively account for much of the industry's growth. "More than half of our consumer base comes from the non-Hispanic segment of the population," Mr. Alvarez says, "and this group has had a lot more exposure to Mexican foods thanks to the popularity of Mexican restaurants. The restaurants also serve as places where we can experiment, be a little creative." That innovation in cuisine paves the way for Ruiz's future sales growth a cycle the company hopes to follow again this year.

Top 10 Manufacturing Companies

Rank / Company / 2000 revenue ($M)

1 / Lopez Foods Inc. / $173.60

2 / Husco International Inc. / $160.00

3 / Ruiz Food Products Inc. / $135.00

4 / Corella Companies / $120.00

5 / UniBoring / $115.00

6 / Harvard Technologies / $105.00

7 / Community Asphalt Corp. / $78.00

8 / Rowland Coffee Roasters Inc. / $72.00

9 / C&F Foods Inc. / $71.85

10 / Injectronics Inc. / $70.00

2001 Hispanic Business Inc. Reprinting, copying, or transmitting all or part of this information requires written permission.

Source: HISPANIC BUSINESS magazine

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