Organic and Hispanic, These West Coast Chipsters Are Bagging Exports
By Jill Lee
Eighteen years agoshortly after Robert and Margaret Garcia bought the chip company that had previously worked fora change occurred in the snack food industry that made them hungry to establish their own competitive niche.
Today, the Garcias manufacture and sell Santa Cruz organic chipsand 15 percent of their market is overseas.
In the 1980s, smaller chip producers were being wiped out by the process of slotting fees. These fees, paid to major groceries, tie shelf space to sales and marketing. Just to survive, the Garcias moved to the specialty market of organic tortilla chips.
They didnt know how good a decision they had made. Soon, European consumers would develop a new passion for additive-free and organic foods. A Japanese market would open as well. Andunlike so many exporters who struggle to find buyerscustomers came to them.
A Trade Show Connection
The Garcias exporting adventure started when Margaret attended a natural product food show in the United States. Working the booth next to hers was a representative of an organic food distributor serving Central Europe.
He liked the Garcias chips, but he pointed out that they would need to do some extra work before his company could buy from them.
"In the United States, a snack product can be labeled organic if at least 95 percent of the ingredients meet the standard, but in our particular case, it needed to be much higher," said Margaret Garcia. "We had to contract for organic oil and organic spices."
It took some time to find the small-scale organic tomato farmer in Wisconsin. But a tomato base was absolutely vital to the Chili Lime and Nacho chips. So now the Garcias processor does special production runs for the export product; that way, the ingredients dont get mixed with non-organic ones.
"The extra effort is reflected in the suppliers price," said Garcia. "But you know, we find that if you stick with the little guy, the price comes out pretty close to what it would have otherwise been."
Tokyo Comes Calling
A Tokyo importer found out about the company from the Internet.
"Again, as with the German distributor, the buyer came to us," Garcia said. "The No. 1 seller there is salt flavor, and second is black bean and garlic."
When Santa Cruz ships to Tokyo, the chip bags are labeled with special stickers containing a list of ingredients and other product information printed in Japanese.
The product has been doing well in this affluent market for two years.
Making It Big in Britain
Customers in the United Kingdom take their organic food seriously. A large British import firm was able to win a major supermarket client for the Garcias, but before the deal was signed, the stores representative visited the Garcias Tampa, Fla. plant three times.
One trip was to check food safety standards. The snacks had to be made in compliance with both U.S. and British food safety guidelines..
Later trips were to ensure that the met European Union standards for snacks and organic products.
"It was an expense for us, but Im glad they did it because it shows they care about the products they sell," said Margaret Garcia.
The Santa Cruz nacho flavor is the No. 1 seller in Germany and England, followed closely by the chili-lime. The nacho flavor, however, was also the biggest export hassle initially.
"We had to get a U.S. veterinarian to certify that the cheese we used was EU approved," said Garcia. "Thats when less than 2 percent of the product is made with cheese. Just as the chips were sailing for Europe, we found out we had to have European Union approved certification for the processor, too."
The processor was European Union certified, but the paperwork was a must. In a mad scramble, it arrived just before the snacks reached the dock.
These days, all the chip shipments travel with their certification.
Not only has all this work paid off with several major U.K. markets for the Garcias, its also allowed them to help other organic businesses. Recently, the importer asked them to recommend a good organic salsa company for the U.K. market. Who better to know about salsa makers than chip makers?
Chips of Wisdom
There are a few pointers Margaret Garcia would leave with an aspiring exporter.
First, have a credible contact in your target country.
"The most important thing is to have your broker or distributor be someone who is a citizen of the country youre trying to export to," she said. "It gives you more credibility."
Second, be aware of labeling laws. Some, like those of Japan, are relatively simple. Others, like the United Kingdoms, have several layers of complexity.
"The U.K. labels are very specific. Its got to say maize, not corn, which to U.K. consumers is an animal feed," she said. "Then you have to list percentages for all of the main ingredients."
In labeling, language barriers can be a problem. Words can misfire, and meanings can get lost. While Garcia said most of her clients speak English, if their vocabulary is limited, business communications should be kept simple and direct. There can also be complications when labeling is translated.
The Internet has helped to combat this problem, enabling package designers and advertising copywriters to share drafts simultaneously with both the Garcias and their international clients.
Third, the Garcias recommend using FAS Market Access Program (MAP) to attend trade shows. They have also used MAP to promote their snacks overseas. They got the MAP funding through the Western United States Agricultural Trade Association in Vancouver, Wash.
Times Are Changing
Margaret Garcia says exporting is an untapped resourceone that many U.S. companies can no longer afford to ignore. She recommends that everyone stay aware of important trade negotiations like those taking place this year in Seattle and elsewhere.
"I think as we become more and more a global community we will have to make world trade more of a priority," said Garcia. "What happens in trade negotiations reflects on our country and we need to work to build positive relationships both as companies and as countries."
Jill Lee is a public affairs specialist with the FAS Information Division, USDA, Washington, D.C. Tel.: (202) 720-7939; Fax: (202) 720-1727; e-mail: firstname.lastname@example.org