Beverage Industry

Simply Irresistible

November 1, 2005

Simply Irresistible
By  ELIZABETH FUHRMAN
A new chief executive officer, new flavor, new packaging and two new line extensions lead new consumers to Tampico Beverages
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 flavors internationally.
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,” Miller explains.
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 business.”
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 availability?”
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, Weingart adds.
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 Plus’s vitamins.”
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 Hispanic.”
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 companies today.”
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.