Steve's Soapbox

Sunday, November 27, 2005

Brownwood Tortillas - We recommend Ricardos

Tortillas, the new white bread ?
As the Mexican staple goes mainstream, makers grind out millions more
12:00 AM CST on Sunday, November 27, 2005
By KAREN ROBINSON-JACOBS / The Dallas Morning News

Two Jewish guys from Hollywood are shipping flavored tortillas to Mexico.
Experts attribute some of the growth to the nation's rapidly expanding Hispanic population.
Still others point to the popularity of flavored sandwich "wraps" and rapidly growing markets such as New Berlin, Wis., and Boise, Idaho, as evidence that the tortilla has crossed a cultural bridge and shows no signs of turning back.
"The fastest growth part is the non-Hispanic market," said Rudy Guerra Jr., president of Dallas-based Rudy's Tortillas and a third-generation tortilla maker.
"It's not just a Hispanic food now."
The development has economic implications for Texas, home to more than 150 tortilla makers, including two of the nation's largest.
Mission Foods, owned by Grupo Maseca's Gruma Corp. of Mexico, is in Irving. Bimbo Bakeries USA, maker of the Tia Rosa tortilla line, is in Fort Worth.
Rising sales are attracting new companies with multimillion-dollar plants into an arena long populated by mom-and-pop shops.
"The industry is not used to a corporate form and structure like we've set up here, with a CEO, COO, CFO," said John Sommerhalder, chief executive of Dallas-based Lobo Tortilla Factory, which counts one Hispanic among its C-suite officers.
"We're trying to bring a corporate management style that you don't find pervasive across the industry."
Lobo Tortilla Factory was launched in January.
It was fueled largely by a $2.5 million equity investment from Brett Landes, who owns more than 70 percent of the company. Mr. Landes is a principal in Staubach Capital Partners, part of the Staubach Co.
At first, Lobo was running two production lines. Now it's up to seven, with a bead on new customers that would ramp up production even more.
Rudy's, too, is expanding.
The need to boost production, and perhaps go after markets in Europe, inspired Mr. Guerra to invest $3.5 million in equipment and $3 million to buy a 104,000-square-foot plant one block from his current location on Regal Row in Dallas.
When the new facility is ready early next year, Rudy's will have 10 tortilla lines – machines that handle production from dough to bagged product. The lines will run around the clock, turning out 15 million tortillas a day, Mr. Guerra said while walking the floor at the recent Tortilla Industry Association conference in Grapevine.
"There's a point where you can't get any more business without the equipment," he said, as a tortilla bagger whirred softly in the background. "This is our opportunity to go to a larger type of customer – a national, even a global customer."
Biting into bread
About half of Mr. Guerra's sales are in flour tortillas. But that side of the business is growing faster than corn, he said, guessing that's partly due to the ability to add flavors.
He said it also may be due to the flour tortilla's similarity to white bread – an affinity with implications for the makers of white bread.
For seven decades, white bread reigned supreme as the undisputed starch of choice on U.S. tables. But as the nation grew more brown – and health-conscious – white bread began to look, well, a little too white-bread.
Now the Hispanic-fueled growth of traditional tortillas and the broader market's taste for flavored and low-fat varieties are taking a bite out of white bread sales.
For the 52 weeks ended Oct. 8, mass merchandisers sold $1.95 billion in prepackaged white bread, not counting sales at Wal-Mart, smaller grocers or bakeries, according to A.C. Nielsen.
That's nearly double the $1 billion in tortilla sales at those stores in the same period – but the trajectories are headed in opposite directions.
White bread sales are off 16 percent from $2.3 billion in 2001, and tortilla sales are up 23 percent from $811 million in 2001, Nielsen figures show.
The tortilla association, based in Addison, argues that those figures underestimate the true retail market because so many tortillas are sold at small ethnic shops not tracked by services such as Nielsen.
Kirk O'Donnell, vice president for education at the American Institute of Baking in Manhattan, Kan., said that white bread has gotten a bum rap from consumers who see it as overly processed and fattening.
Tortillas are perceived to be healthier than white bread, but they can be higher in fat, he said.
Good to go
But Mr. O'Donnell conceded that tortillas can be a better fit than white bread with consumers' grab-and-go eating patterns – an attribute that has opened up a world of possibilities.
Though flavored tortillas are a niche, chefs and sandwich makers across the globe are embracing sun-dried tomato, spinach and habanero-flavored tortillas to repackage traditional sandwiches and salads as wraps.
"Chefs get to be creative with the product," said Mr. Guerra, who estimates that flavored tortillas account for up to 10 percent of Rudy's flour tortilla sales. He predicts that will be 15 percent within a year.
Wraps often command a higher price in restaurants than traditional burritos, he said. "Maybe we think we're eating better if it's called a wrap and not a burrito."
Health-conscious consumers have been a major marketing focus for Tumaro's Gourmet Tortillas, the Hollywood-based company that began selling flavored flour tortillas nationally in 1997.
The company says that up to 93 percent of the ingredients in its tortillas, which come in 21 varieties, are organic. (Preservatives were added to lengthen shelf life.)
About 75 percent of sales are to retailers outside Hispanic areas, said vice president Brian Jacobs, son of Herman Jacobs, who purchased Tumaro's in 1995.
"We're selling to very few Hispanic-based retail outlets," Mr. Jacobs said. "We really haven't targeted that demographic."
When the company began to market its nontraditional tortillas in the late 1990s, Mr. Jacobs felt some resistance.
"I can't say that it's because I have white skin, but it's possible, especially when we would present to a Latin grocery store," he said. "The impression I got was, 'What have these crazy Californians come up with?' "
It's a wrap
It was in the mid-1990s that the tortilla made the leap from the Mexican diner to the deli.
The word wrap helped push the momentum for flavored tortillas, Mr. Jacobs said. Wraps were associated with a variety of ingredients, from Thai food to baby greens, making the introduction of flavored versions less of a stretch.
By 2002, low-carb dieters were shunning bread makers and seeking alternatives, which spurred the growth of low-carb tortillas.
Sales also began picking up outside the Americas.
"We had guys come from Sweden saying, 'Our business is going gangbusters,' " said Mr. O'Donnell of the baking institute. "I was just amazed to hear how their market was growing."
Likewise, Mr. Jacobs has seen his market grow, though Tumaro's is still small compared with the industry biggies.
"We sell 180 million tortillas a year – two Jewish guys who knew nothing about the tortilla business 12 years ago," he said.
"We have shipped tortillas to Mexico, which is kind of funny."