A new chief executive officer, new flavor, new
packaging and two new line extensions lead new consumers to Tampico
The challenge of being any type of consumer packaged goods company is that the landscape is broad and fast
moving, and in that landscape, live many big competitors.
“In that challenge, our strength is to be quick
and nimble, and the ability to really innovate,” says Scott Miller,
chief executive officer of Tampico Beverages. “Most people, whether
retailer, licensee or consumer, think of Tampico as very regionally driven.
The challenge is to create a nationally branded equity, and that is what we
are doing here today with the new Tampico and the new look.”
Miller has undertaken many changes since he joined
Chicago-based Tampico Beverages in January — from a new flavor to new
products to new packaging to a new company culture. Miller, who came with
14 years of experience from the Snapple Beverage Group, started the changes
at Tampico with a 100-day agenda.
Tampico was an organization that had always worked
hard, Miller says, but it needed to create “smart action,”
making sure what it was doing was applicable in the market. Tampico began
in 1989 with the launch of Citrus Punch by family-run Marbo Inc. Ten years
later it was sold to New York private-equity firm AEA Investors LLC. In
less than 20 years, the company developed into a gallon- business
distributing to more than 50 countries across the globe with primary
distribution through U.S. dairies. Priced at half of its big-named
competitors, Tampico is the No.1-selling refrigerated juice drink in
grocery store volume, with 22 percent of the 364 million-gallon U.S.
grocery store market, according to ACNielsen data for the year ending June
11. Nationally, Tampico has a 79 percent all-commodity volume (ACV) in
primary supermarkets and Wal-Mart SuperCenters, according to the company.
All product concentrates are made in the Chicago
facility or at a facility in Brazil, and shipped in 50-gallon drums or
5-gallon bag-in-box packages to licensees where they are bottled and
distributed. The U.S. route to market includes distribution through 136
licensees, including “captive” (Safeway, Kroger, HEB and Winn Dixie) and “independents” (Dean’s,
NDH and Prairie Farms). The Citrus Punch flavor is the staple of the
Tampico franchise, but the company distributes 10 flavors nationally
— including Apple, Grape, Island,
Tropical and Mango — and three more
But when Miller, who was senior vice president of
sales for Snapple and then managed all of London-based Cadbury
Schweppes’ convenience store brands after Cadbury bought Snapple,
joined what he called the “sleepy” company, it hadn’t
launched a new flavor with impact in three years. The other situation he
faced was that many of Tampico’s customers thought of the brand as
regional, and the business acted like it was regional. “We wanted to
create a national image for the brand,” he says.
During the past 11 months, Tampico has undergone a
transformation, and has a product to show for its hard work — a
30-day-to-market turnaround of its new flavor Kiwi Strawberry Guava.
But first, the company got its executive team in
place. After Miller joined Tampico in January, Charles Walkley, executive
vice president of business strategy, came aboard in February from PepsiCo,
as did Mark Kent, who is executive vice president of sales. Richard Ross;
brand director, Dan Weingart, executive vice president of international;
Dawn Stainislaw, executive vice preseident of finance; and Arthur Acevedo,
executive vice president of legal, already were with the business. The team
wanted to prove Tampico could act quickly. “We got together as a
group and said we want to introduce a new flavor for several reasons, but
the key reason is strategy in the marketplace, and we need speed,”
Kiwi Strawberry Guava was created in April and started
rolling out in May. In the short window since the product launched, the new
flavor has sold more than 1.5 million gallons, and sales are higher than
the company forecasted.
After the introduction of Kiwi Strawberry Guava, the
company started working on research in the marketplace to launch Tampico
Plus — a vitamin-enhanced, calcium-fortified, reduced-sugar
beverage. Tampico began the new product development process by doing
consumer insight work and talking to its grocery customers. “Tampico
is a value proposition, but what other attributes do they see?”
Miller wanted to know. “Ultimately, we wanted to enhance our brand
equity, and still deliver value to the customer.”
In addition to Tampico Plus, which is available in
Citrus, Mango, Kiwi Strawberry and Tropical, the company will rollout
Tampico Light — a zero-calorie fruit juice beverage — during
the first quarter of 2006. Tampico plans to take Light beyond the gallon
business by possibly introducing a 24-pack as well.
And Tampico will introduce a new 12-bottle variety
pack featuring a combination of four of its top-selling flavors —
Citrus Punch/Tropical Punch and Kiwi Strawberry Punch/Island Punch. The
variety packs aim to appeal to busy families on the go.
With Tampico Plus and the launch of Tampico Light next year, the company hopes to capture another new
consumer base. “One of the things that we
wanted to do with Tampico is drive new consumers to the franchise,”
Miller says. “We might not get them under our gallon-business, but we
might under Light or Plus. Really, the thought was ‘How do you drive
new consumers to Tampico?’ We know we have a great tasting beverage,
and now we have a point of difference to be a better beverage
The other factor Tampico has to consider when launching
new products is how it enters the marketplace. The company has a twofold
distribution approach — Tampico utilizes a dairy system that goes to
the refrigerated set, and takes it multipacks direct. “Speed to
market is important,” Miller says. “... As far as building a
better beverage business, how do we do that in our distribution
In the future, Tampico will look to distribute
multipacks and more of its products on a direct basis, which offers a
different point of distribution in the store outside of its refrigerated set.
“Ultimately we’d like a refrigerated wall
of Light, Plus, our core and our single-serve,” Miller says.
“For the first time now, Tampico has a platform to present to
retailers with a core point of difference.”
A global company
Tampico’s 100-day agenda was essentially to set
a strategic path forward. One of those pathways was through innovation.
Another was to restage Tampico’s gallon business, which led to a
package redesign. Tampico now features its first double-sided label, with
the nutrition statement on the package’s back. Each Tampico label
looks similar with the same label shape. The Tampico brand name also now is
written on the cap, so even if a container is on a lower shelf, the Tampico
name can be seen clearly. Along with upgraded fruit images, each label also has the brand’s tagline,
“Irresistible,” featured on the label to help create brand image. Domestically, the tagline
never has appeared on the package, Ross says.
“Irresistible” as a tagline is important
for Tampico because letter for letter the word is identical in English and
Spanish. As a leading juice drink brand among
Hispanic consumers, irresistible is the “perfect crossover,”
Ross says. “As we made our decision to come up with a new tagline, we
decided to make sure it appeals to our core consumer.”
Tampico, itself, is a great name because it is a
Latin-derived word. Competing products often have names that would not
sound the same in Spanish. “[Hispanic consumers] might hear a
commercial, and they might not even recognize the name, because they
wouldn’t pronounce it the same way, or it is a very difficult word
for them to pronounce,” Ross says. “As I talk to both consumers and people in the trade, Tampico is an incredible
name. It’s a city in Mexico, but when we talk to people
internationally, they will all tell you that they feel like it’s
their own.” Many international consumers don’t even know that
it is a city in Mexico, so the brand name is still ambiguous enough,
Tampico’s sales internationally vs. globally are approximately a 50/50 split. Domestically,
Tampico’s strongest presence is in key Hispanic markets such as the
South, Southwest and Southeast. Until now,
Miller believes that Tampico has been an underutilized asset by retailers
domestically. “We had market share strength in core markets like San
Diego, Las Vegas and Los Angeles, where we have 42 percent share of the
juice drink category and our nearest competitor has 14,” Miller
explains. “...We have what we believe is a great equity that has
acted in the past much more regional and not national.
“We also have the highest index among Hispanics
in juices and juice drinks, according to Spectra,” he continues.
“We’re a value proposition and family-driven. Our core users in
our consumer insight group are Hispanic. We believe that’s a clear
strength in that everyone talks about Hispanics, but to really focus on
Hispanics, we have that consumer. We’re not going to try and create
it, we have that. With about 15 percent of the U.S. population being
Hispanic, and that expected to nearly double in the next three decades, we
believe we’re in the right position for growth.”
That is not to say that Tampico isn’t aiming to
grow its domestic business with the mass population as well. By bringing in
more product offerings such as Tampico Plus and Light, the company hopes to
meet that goal.
Internationally, Tampico has a strong single-serve
business. Domestically, it would like to have the same strength, but is
still working out its route to market. In more than 50 countries outside
the United States in which Tampico is sold, the brand has leadership in
Latin America, South America and the Caribbean. The brand is No. 1 in
Colombia, Guatemala and Ecuador, and No. 2 in Mexico, Weingart says. The
added benefit of this consumer base is when these consumers come to the
United States, they already are familiar with Tampico products.
Tampico also is looking at launching Tampico Plus in
Latin America, Weingart says. “Tampico Plus has 50 percent less
sugar,” he says. “The light products in Latin America
aren’t zero-calorie products. They have 35 to 50 calories per
serving. I also don’t think there is a product that I have seen in
Latin America that has 50 percent less sugar, calcium and all Tampico
Another thing that Tampico learned through its
consumer focus groups is that Hispanics aren’t really interested in
diet products, Miller says. “They see them as almost diabetic in
nature,” he explains. “Fortification is something they said in
all focus groups — moms and others — that they’d love to
have in a juice drink with less sugar.”
One of the key points that many companies miss is that
all Hispanics are not the same, Ross points out. The Hispanic populations
in Miami, Los Angeles, Houston, New York and Chicago are not the same, for
example, as say, New York, which has a population from Puerto Rico, the
Dominican Republic and now Mexico. “We’re making sure that
we’re not only getting one type of Hispanic, but that we’re
getting a broad base group,” he says.
Additionally, Tampico has conducted research in Denver
for Anglos and in Dallas for Hispanics and African Americans. “One of
our biggest markets is Salt Lake City,” Ross says. “It always
has been for years, and it’s a perfect drink for the market, but I
can tell you right now that the prime consumer there isn’t
And even though Citrus Punch is the top-selling flavor
in most markets (the exception is the Caribbean where multiple flavors are
popular) as one goes around the globe certainly the flavor profiles and
preferences change as the demographics change. Tampico plans to add flavors
as the need arises to keep excitement around the brand.
Currently, Tampico is a gallon business domestically.
Going forward, the company will offer multipacks, 20-ounce bottles and
half-gallon to gallon-packages. Inter-nationally, the business offers
more variety, from a bottle as big as 4 liters to a 150-ml. pouch, which is
found in western Africa, Guatemala and select markets in Mexico. Packaging
includes HDPE, PET, TetraPak and full-body wrap.
“One of the advantages we have is that we have a
significant number of licensees that really allow us to put Tampico in a
locally favorable package,” says Charles Walkley, executive vice
president of business strategy.
Clearly, retail internationally is not like retail in
the United States. Approximately 97 percent of Tampico’s business is
in grocery domestically, but international retail outlets are more
balanced, Weingart says. “Eleven years ago, when I first started in
the beverage business, they said the local ‘mom and pop’ stores
in Mexico, where there are maybe 100,000 in Mexico City, were going to
disappear,” Weingart explains. “They said, ‘In 10 years
those will be gone.’ They have maybe dropped 5 percent. It’s a
very slow migration.”
Being an international business is advantageous when a
company’s core consumer is Hispanic and migrating into new favorable
markets. The challenge of having an international company is figuring out
where to focus. “In the past, international might have been finding
several different countries to open up and work on,” Miller says.
“Going forward, we want to open up countries that we know we can
develop, but we want to develop core countries like Mexico, Guatemala,
Brazil and Columbia. We want to stay there and drop the anchor and really
focus on that business.
“When we look to grow our international
business, we also want to take the smart approach,” Miller continues.
“Does it make sense that if we are in Brazil to look at Chile? Do we
look at other neighboring countries? So [we don’t want] a
shotgun-approach, but a strategic approach to where we are going. But we
want to focus on our core markets.”
In the next three to five years, Tampico hopes to be a
much broader beverage business from a
distribution-channel standpoint. “Our largest opportunity for growth
is through full-channel distribution,” Miller says. “...We
don’t have that as of now, which is very different from many beverage
An opportunity for market development
for Tampico is the Northeast, Miller says. The company now appears in AM/PM in New York, which he hopes will push the
business forward. The goal of this approximately $80-million company (Beverage Industry estimate)
is to double its overall sales globally within a four year period.
Tampico may be a value proposition, but plans to offer
higher-priced options with the Tampico Plus and Light lines. If you take
the volume Tampico sells, Ross says, the company can even return to the
retailer what some of its higher-priced competitors return.
“We are bringing in a shopper that they want in
the store — a shopper that is buying a lot more than their Anglo
counterpart,” Ross says. “This shopper is still cooking at home
a lot and not going out to as many restaurants and uses fruits and
vegetables in their cooking. So it’s a great shopper to have.”BI
A new mindset
With a new chief executive officer comes a new way of
thinking for a company. Along with Scott Miller’s 100-day agenda, he
wanted Tampico Beverages to look, act and think like a beverage company.
Employees voted on the company’s new business cards and helped create
its new mission statement. Tampico updated its lobby at the corporate
offices, which now includes world maps of where Tampico is distributed and
actual product. But the biggest change for the company’s culture was
the newly created Innovation Room.
The Innovation Room offers Tampico a place to
brainstorm and bring customers in to show them what the company is doing.
Everything in the Innovation Room from Tampico’s new products and
packaging to even the table shows off Tampico’s new look.
“We’re excited about just having the space
to work on and think about products,” Miller says.
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