Everyone knows that it takes a bit of good fortune to be successful. For Jose Gomez and Prime Choice Foods, becoming an established player in the salted snack industry also involves a lot of hard work and being in the right place at the right time.
By Marina Mayer
Locating Bristol, Va., on a map is like searching for a needle in a haystack. The city - if it could be called that - is surrounded by interstate highways and a skyline of hills and oversized trees. It is so close to the Virginia and Tennessee state line that one wrong turn could result in a road trip to Kentucky.
But to the folks at Prime Choice Foods, Bristol is home to where dreams come true.
For Jose Gomez, the company’s president and CEO, the dream all began in 2000 when he received a phone call about the auction of an old building owned by Terry’s, a regionally owned snack-food company.
Not knowing what the building cost, Jose took a chance and tossed in his best bet.
“There were four bidders in the room, and we were the last bidder to propose a price,” he recalls. “And guess what? We ended up [getting] the building.”
With only four people on staff and no sales, the company’s success was against all odds. It took a year for Jose to gut out the building, install the first tortilla chip line, begin churning out chips and turn it into what eventually has become the 125,000-sq.-ft. operational food facility that it is today.
“The first year we were just coasting by. We didn’t make any money,” he says. “The second year, we got a break, and we were approved to start making organic products.”
In 2001, Prime Choice Foods then landed a deal with one of its largest customers, which paved the way for more successes to come.
Then in 2002, Jose brought in two of his six children to become part of the family business. One of them, Mauro Gomez, currently vice president of sales and marketing, took over the warehouse and distribution departments while the other, Adrian Gomez, ran the operations in the early stages of the business. Adrian is now a consultant on the manufacturing side and a key component to bringing the business up to speed.
“It all of a sudden became a 24-hour operation, seven days a week,” Jose says. “It ran like that for almost a year.”
In 2004, Jose, Mauro and Adrian installed a second tortilla chip line as a backup to the original line and began soliciting to four customers.
With Prime Choice Foods suddenly embarking on a rapid growth pattern, the snack producer then entered phase two of a $1.5 million expansion, which included the installation of more automated equipment, corn and oil silos, boilers, corn-cooking systems and packaging equipment.
During that growth period, Jose recalls, the company’s two warehouse locations began busting at the seams. So in 2006, he consolidated the two operations after acquiring an eight-acre lot of property with 72,000 sq. ft. of warehousing and 6,000 sq. ft. of office space.
Amid the intense time of development, Jose decided to put down his own set of chips, and place another bet to see if he could continue to luck out.
And guess what? In January 2008, Prime Choice Foods purchased a tortilla chip company in Nashville, Tenn., that diversified its products further into the fried and baked snack business.
Instead of exclusively promoting its own brands, the company also found itself playing in the private label market.
“Our whole growth strategy is moving under private label and co-pack,” Jose notes. “Fifty percent of our business is really private label, meaning retailers, and out of the top 10 [private label companies], we manufacture for seven of them.”
With luck going its way, Prime Choice Foods tried yet another gamble. About one month after acquiring the Nashville business last year, it purchased Denver-based Great Western Tortilla Co., creating a national presence to its customers from a logistical standpoint.
With the Great Western operation under its helm, the company saw sales jump 54% in 2008 compared to the previous year.
“So our acquisitions and growing Prime Choice Foods’ sales as a whole, if you were looking at a growth year-end, the company’s sales went from $16 million to $24 million instantly,” Jose explains.
Now, with up to 75 employees just in Bristol and another 61 in Denver, Prime Choice Foods’ next move involves getting into the game with other big-time players.
Hitting its Prime
The company is hitting it big, so to speak, with a diversified line for its private label and co-packing customers. Overall, Prime Choice Foods produces nearly 200 SKUs [stock-keeping units], owns the rights to about 45 of those SKUs and its products serve several niche markets with organic and Kosher-certified products.
In addition to private label, the company also sells snacks under a variety of brands. For instance, its Go-Mex brand is a line of better-for-you organic snacks, mainly comprised of traditional stone-ground tortilla chips and strips. Go-Mex chips are made from an original hand-cooked recipe that’s been passed throughout the Gomez family for generations and utilizes pure organic oils. The lineup of Go-Mex varieties are Yellow and Blue Corn, Nacho Cheese, Chili & Lime, Jalapeño, Molé and Spicy Blue.
Another brand is the Mi Ranchito line, a traditional snack line founded in Arizona by the Murrilo family. It consists of Traditional Golden and Restaurant Style chips, come packaged in 13-oz. to 32-oz. bags and is projected to expand in the future to provide such offerings as pork rinds, flavored tortilla chips, organic snacks and salsas.
Then, there’s its La Primera brand, which focuses strictly on the Hispanic market and offers an assortment of Thick and Crispy, Thin and Crispy and Southwest Flavor tortilla chips. In addition, all packaging is printed in both English and Spanish.
“[La Primera chips] are true, authentic items, and we’ve tried to market them on the products themselves where it says ‘A True Taste of Mexico,’” Mauro says. “We’re trying to really go in those areas with those items.”
As a result of the company’s acquisitions, it has expanded its product offering. Last January, for instance, it launched a line of pita chips and baked chips. Then in March, it introduced Taqueria Style chips, which are traditional fried thin chips made from soft corn tortillas.
One of the strategic advantages, Mauro says, is the company’s intense emphasis on developing niche products such as taking a homemade tortilla, cutting it, then frying it, instead of just sheeting corn.
“It’s about giving [the consumer] more traditional products, like ones you would get in Mexico,” he notes. “So it’s a lot more unique, it’s a different taste and bite. And we use our lines to do other products. Our bake line can do pita and bagel chips.”
Another advantage involves Prime Choice Foods’ ability to track trends and anticipate its customers’ needs to predict, in essence, how the next hand will play. In the salted snack industry, sometimes a company has to rely on more than just luck.
“We’re constantly looking at every corner to be able to present to our current customers,” Jose says. “Our customers are constantly challenging us with product development. Because we are a young group, we have flexibility in our manufacturing lines. They’re not made to do one product 24/7.”
In addition to predicting what its customers want, Mauro says, the company now has plants that are strategically located in key locations where it can supply customers all across the United States. That’s critical, Jose adds, especially in the Northeastern part of the nation where there is a larger demographic of consumers who are purchasing the company’s organic snacks.
Additionally, Prime Choice Foods has found customers outside of the U.S. borders who also are willing to venture into the organic snack market.
“We export to Mexico. That’s been going on for about two years,” Mauro says. “And Canada, we’ve been doing that for quite a while now. Korea, as well. And we’re getting more requests as we move on to those countries from different chains, different stores wanting to carry [our] products.”
Prime Choice Foods also is betting on shifting consumer trends toward buying more healthful snack options.
For example, Jose says, consumers are counting calories, are more aware of trans fat and searching for organic, Kosher, all-natural ingredients.
“People are looking in the premium industry or organic industry for more custom blends, more internal ingredients,” he adds. “So our challenge is to really look at what types of products we can make that would be of better value and healthier.”
Furthermore, shoppers are enjoying private-label items more so now than ever before, Mauro says, especially with the current economic turbulence. However, going private label doesn’t necessarily mean consumers are trading down to more affordable, me-too items. Private label has come a long way in recent years.
“Since we’ve come aboard, not only the basic core items have gone up for us in sales,” he says, “but also those unique items where you see more and more everyday shoppers and consumers buying a private label brand.”
Cashing Out
By playing in the private label market, Jose walked into a big-time opportunity. However, some of his good fortune is a result of the people who now work for him and play a role in creating opportunities going forward.
“If you don’t have the right people working for your teams or for the business,” he says, “you can’t keep up with the growth.”
For instance, after Prime Choice Foods acquired Great Western, the company retained Sarah Ralston, who was quality assurance manager and became vice president of technical services of both Prime Choice facilities.
To enhance the coordination of its overall operations and serve its customers better, the salted snack manufacturer appointed a vice president of finance and is currently in the market for a vice president of operations/general manager to run all plants.
“You can have all the money you want, but if you don’t have talent, you can’t grow as fast,” Jose says. “It’s pretty much our small team. There’s constant communication.”
Additionally, Jose and Mauro execute decisions in a fairly rapid fashion since they don’t have to pummel through a lot of bureaucrat tape. As a result, Prime Choice Foods is filling orders at a 98% order-fulfillment rate and staying abreast of fluctuating commodity costs.
“In this market, if you don’t execute quick, someone else is going to beat you,” Jose says. “So there has to be a quick turnaround time.”
Over the years, Jose has had his share of luck, but it took a lot of foresight to know what to do with the good hand he was dealt and to turn his dream into a reality. From the smallest of towns, he’s betting on serving the biggest players in the market to take his once-small company to the next level.
Go to www.snackandbakery.com to read more about tortilla chip and snack products.
