Adventures in CandyLand

Already making headway in the US. Hispanic market, Mexican sweets makers say "Gimme more, gimme more.

THE APPLE MARKET, A SMALL GROCERY STORY IN EAST LOS Angeles, is a typical U.S. store. But on its shelves are some not-so-typical items: tamarind pulp, candies and spicy ice cream bars and even powdered chili, all manufactured by just one Mexican company and discretely marked as "Product of Mexico." Near the cash registers are even more products made by the same company, Grupo Lorena, including its most famous and powerful offering: El Pelon Pelo Rico (Tasty-Haired Baldy).

El pelon, a phenomenon in Mexico and Central America, is not quite at the point of threatening U.S. candy makers. But since its introduction north of the border in 1993, sales have doubled, according to the company And, like other Mexican candy makers, it has taken advantage of its brand name recognition among Mexicans living in the U.S. But now it's setting its sights on the rest of the U.S. market, one that is far more difficult to crack but offers much sweeter rewards.

"We are well positioned in the smallest slice of the marketing pie, the Hispanic slice, but we are interested in reaching the Anglo market:' says Ulises Padilla, the international sales manager for Grupo Lorena. The U.S. market is pegged at about $22 billion a year--10 times the size of Mexico's--according to the U.S. National Confectioners Association.

Grupo Montes, another Mexican candy manufacturer--which sells about $70 million a year and exports one-third of its production--also wants to reach a broader market. "We want to take advantage of the marketing knowledge of U.S. distributors:' says Armando Crespo, assistant manager of exports for Grupo Montes, whose products are sold in huge U.S. retail chains like Sam's Club, Wal-Mart and Costco.

Entering the U.S. market requires some creative strategies. Both Grupo Lorena and Grupo Montes started by offering their services as manufacturers. Grupo Lorena makes candies for The Candy Company, Albert's and Spain's Chupa-Chups. Montes does the same for the private labels of Sam's Club or Costco.

But their ultimate goal is to sell their brands. Lorena sells its Fruit Pops and Color Brush; Montes sells its Fruit Chews and Panda Pops.

"This market is more difficult because we don't have brand name recognition," says Grupo Montes' Crespo. It is also a market that demands more in the way of content, packaging, presentation and service.

"Here they call you on the phone to ask you if your lollipops have such and such percentage of sugar or glucose, or why they don't have proteins," says Miguel Angel Valadez, an international sales manager at Grupo Lorena.

Discrimination is still a problem. "To sell your candy in the Anglo market, the first thing you have to do is take off every label that says "Made in Mexico," or "Mexican," because they assume that it's meant for the Hispanic market--cheap and of low quality," says Jesus Arroyo, Grupo Lorena's business manager. The company lists its products' origin as discretely as possible, but must do so to comply with U.S. regulations.

But just because the companies downplay their Mexican origins doesn't mean that they don't take advantage of marketing tactics that worked well in Mexico. For example, Lorena, like the larger Mexican food company Bimbo, distributes its candies to retailers using its own trucks. Lorena's so-called Plan of 100 Stores, which began in 1998, seeks to create its own direct, controlled distribution ton at least 10 medium-sized, U.S. supermarkets. This gives the company critical information about its customers and which products are in demand.

Valadez, of Grupo Lorena, says that the company is halfway to its goal, and the company's principal clients now include small chains like Farmer's Market, the Apple Market, Best Value and King's Ranch. With this strategy, Lorena has not only gotten shelf space, it has found other products that are beginning to sell well. As a result, though El Pelon Pelo Rico remains the main attraction, it now makes up 30% instead of 80% of all sales because its line of candies has more than 35 different products. This year, Grupo Lorena estimates it will sell about 100 million pieces of candy in the U.S. market.

The Power of El Pelon

Like the Biblical character Samson, the power of El Pel6n Pelo Rico (Tasty-Haired Baldy) is in his hair. In this case, the trick is to squeeze the tube and eat the hair as it oozes out of the head of El Pelon.

The "hair" is actually tamarind candy mixed with hot peppers. Known as a dulce-juguete, or toy candy, El Pelon is popular in Mexico and Central America and is sold in large and small stores. The idea is to make eating the candy fun. EIPeI6n comes in a plastic tube with the face of a bald man, When the tube is squeezed, the man grows "hair."

It may not sound good, but the mighty Pelon is responsible for Grupo Lorena's success in the 1980s, when the son of the founder, Fernando Topete Davila, set up the spicy candy lines that became the company's leading product. Today, Grupo Lorena is made up of 10 candy companies, employs more than 900 people, exports about 25% of its production and sells some 700 million pieces of candy a year throughout the Americas.

COPYRIGHT 1999 Freedom Magazines, Inc.
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