Goya Foods Inc.

views updated

Goya Foods Inc.

100 Severn Drive
Secaucus, New Jersey 07094-1800
U.S.A.
(201) 348-4900
Fax: (201) 348-6609
Web site: http://www.wkbk.com/goya

Private Company
Founded: 1936
Employees: 2,000
Sales: $540 million (1995 est.)
SICs: 2099 Food Preparations, Not Elsewhere Classified; 5149 Groceries, General Line

With almost 1,000 items on sale, Goya Foods Inc. is the second largest Hispanic-owned company in the United States in the late 1990s. Its products include a full range of grocery, dairy, and frozen goods aimed at the general public as well as people of Latin American or Iberian birth or ancestry. The family-owned company maintains manufacturing and/or distribution facilities in the mainland United States, the Caribbean, and Spain.

Goya Foods to 1980

Goya Foods was founded in 1936 by Prudencio Unanue. He had left Spain as a youth in 1903 for Puerto Rico, where he established a small food business. He later moved to the metropolitan New York area and became a food broker for products imported from Spain. When the Spanish Civil War broke out in 1936, food supplies were cut off, and Unanue found himself out of work. He obtained a shipment of Moroccan sardines from a Spanish company and, with his wife, packaged them in a small Manhattan warehouse, selling to grocery stores. Unanue kept the Goya brand name of the sardines and also gave the Goya name to the olives and olive oil that he imported and sold.

Business picked up dramatically with the heavy influx of Puerto Ricans to New York City in the years immediately after World War II. Unanue established two canneries in Bayamon, Puerto Rico to produce the foods the newcomers could not buy in supermarkets, such as beef-tripe stew, tropical juices, pasteles (meat-filled pasties), gandules (pigeon peas), and some 25 varieties of beans. Goya salesmen went to the small Puerto Rican-owned grocery stores called bodegas to take orders for these goods. According to one of the founder’s grandsons, other companies were selling foods to New York’s Hispanics, but “the one thing that we did that was different was advertise, something unheard of in the ’50s.” Because management could not find an advertising agency that it felt was suitable to the company’s needs, Goya formed its own: Inter-Americas Advertising Agency.

By 1969 Goya Foods was selling to food stores in the Midwest as well as along the East Coast from Boston to Miami, servicing 7,000 accounts through 67 Spanish-speaking salesmen. The company’s packaging facilities were in Brooklyn. (Goya de Puerto Rico, the separate family-run corporation formed in 1949, was responsible for operations on the island.) The nation’s largest distributor of Latin foods, Goya estimated that 80 percent of its customers were ethnic Puerto Ricans or Cubans. Revenues, which had increased 35 percent annually for the last four years, came to more than $20 million in 1968 for the company’s 650 items. Prudencio’s son Joseph became president and chief executive officer of the company in the early 1970s.

By 1979 Goya Foods had almost 1,000 employees and estimated annual sales of $90 million. The cooking, seasoning, and quality control for all 700 items was being done in Puerto Rico, which accounted for about a quarter of the sales total. A plant in Seville, Spain processed all the olive oil, olives, and capers, and another in the Dominican Republic handled pigeon peas and the fruit pulp for Goya’s tropical juices. The company also owned a Chicago warehouse for distribution in the Midwest and other areas of expanding Hispanic population growth and a Florida fresh produce facility that made Goya one of the largest grocery wholesalers in the Miami area. The main facility had moved from Brooklyn to Secaucus, New Jersey, where the company had a 275,000-square-foot distribution and packaging plant.

Vertically integrated Goya had its own fleet of trucks, offering retailers direct, next day delivery from the warehouses. Its salesmen dealt directly with the retailers (rather than through wholesalers or brokers), making weekly visits to all its accounts and selling Goya’s goods to the smallest bodega at the same prices it did to supermarkets, which were now accounting for half of revenues. According to the company’s sales chief, this was a comparatively recent change, because “Fifteen years ago we had a hard time appealing to supermarkets. People told us they didn’t want to offend their white customers.”

Steady Growth in the 1980s

By the end of 1981, when Goya’s estimated revenues of $150 million made it the largest Hispanic-run firm in the country, it had 9,300 clients and 120 salesmen. Rice and beans each were accounting for about 15 to 20 percent of Goya’s sales in 1982. Seasonings, including sauces as well as herbs, spices, and condiments, made up another 15 to 20 percent, and olives and olive oils accounted for 10 to 15 percent. Goya’s 700-odd items (counting different product sizes) also included preserves, stews, canned vegetables and meats, soups, cheeses, and crackers, along with such exotic items as African red-palm oil, Cuban mango paste, Jamaican ginger beer, and malta—a nonalcoholic, noncarbonated licorice-tasting beverage composed of grain, malt, and hops. The company had enjoyed only limited success, however, reaching the highly competitive Cuban market in Florida. And Caribbean-oriented Goya had completely failed to crack the rapidly growing Mexican food market with the product line it introduced about 1977.

Around this time Goya also began an English-language television campaign intended to raise its market share by titillating the palates of mainstream Americans. In one ad Hispanics touted kidney beans and black-eyed peas to Anglo friends; in another the actress Hermione Gingold recommended Coco Goya, a cream-of-coconut mix for pina coladas. A new push in 1984, emphasizing foods that were both healthy and expensive, was aimed partly at the children and grandchildren of Hispanic immigrants. By praising the virtues of Caribbean foods, these ads were intended, said Goya’s president, to “remind them of their heritage, though you can’t push that too far.” One corporate insider joked that if all else failed “we can always start another revolution in a Latin American country,” thereby increasing immigration to the United States.

In fact, even discounting the civil wars in Nicaragua and El Salvador that were driving many refugees to the United States, Latin American migration northward was on the rise, swelling Goya’s potential customer base. In 1985 the company opened a distribution center in Tampa and raised its estimated annual revenue to $250 million, with Hispanics accounting for close to 90 percent and the East Coast for 80 percent of mainland U.S. sales. For the rapidly growing Colombian community, Goya had added soda crackers and a block chocolate used in making hot beverages. Frozen products included empanadillas (beef-filled turnovers), rellenos de papas (potato balls stuffed with spices and meat), tamales, squid, codfish croquettes, paella, and tropical vegetables such as pigeon peas, yautia, and yuca. Nectar drinks and a line of frozen cocktail mixes were considered crossover items aimed at Anglos as well as Hispanics.

Mexican food, based on corn and chili peppers, continued to be a loser for the company, unfamiliar with a cuisine so different from that of the Caribbean, which used milder seasonings and rice as the staple grain. In 1981 Goya made another bid for the market, offering its own jalapeno peppers, chili sauce, refried beans, and taco shells. After this line failed, too, the company, in 1986, imported some foods from Mexico to sell in the Houston area, where it opened a warehouse. Many of the goods turned out to be shoddy, and others were delivered only erratically. In 1991 Goya tried again, buying a Houston distributor of Mexican food that it hoped would teach it how to reach the market. Although only five percent of the company’s revenue was coming from Mexican foods, to become truly national Goya needed to establish a presence on the West Coast, where 70 percent of the Hispanic population was Mexican.

To retain its existing customer base, Goya’s 200 salesmen— always clad in suits and ties—carried pocket-sized computers to feed orders into the company’s data processing system. This sales force was expected to update information constantly on a community’s ethnic composition, so that the company could regularly update its product offerings to match immigrant tastes. Supermarkets generally displayed all of Goya’s products together. Spanish-language advertising was being handled by four in-house agencies based in New York, Chicago, Miami, and Puerto Rico, each one making its own media decisions. This posed special problems, since, as the company’s marketing director pointed out in 1993, “The language has to be neutral. You have to take a little bit of each country and put in the ad to get balanced for all nationalities.”

Aimed at non-Hispanic women, the English-language advertisements and commercials were being farmed to two outside agencies in the 1980s. One of them promoted Sazón, a spice package; the other promoted Adobo, a flavor enhancer for meat and poultry. A series of “Elegant Goyas” ads in the New York Times plugged the company’s beans, olives, seasonings, and tapas (Spanish appetizers). Goya also was maintaining its longstanding high profile in Hispanic communities, contributing to charities and sponsoring sports teams and dance and theater troupes. A Goya float could be found in almost every one of the Puerto Rican Day parades held each June. In 1995 the company was represented at 18 parades and festivals in the New York area alone. The company sponsored a Metropolitan Museum of Art exhibition of the works of Francisco Goya that year; in return the museum served Goya Foods in the museum restaurant for the run of the show.

Reaching Out Further in the 1990s

Goya’s revenues reached $410 million in 1991 and $453 million in 1992. It was continuing to introduce new products, including frozen bread pudding and corn bread, several Caribbean-style rice mixes, and salsas and guacamole for the Mexican market. The company also had added distribution facilities in Webster, Massachusetts and West Deptford, New Jersey, to better serve its northeast corridor market, and a new production facility for seasonings in Miami. The Secaucus warehouse was buying all of its more-than 80 frozen foods and half of the other products it sold from outside sources.

In 1994 Goya’s product mix was even more varied and exotic, including tostones (fried green plantains) from Honduras, nopalitos (sliced cactus) from Mexico, and harina pan, a Venezuelan corn flour used to make arepas, somewhat similar to English muffins. By 1995 sales had topped the $500 million mark and the company had 85 inventory control numbers for its bean products alone. Beans, indeed, well reflected the company’s multinational product mix. Cubans, Mexicans, and Nicaraguans called tiiemfrijoles, but in Puerto Rico and the Dominican Republic they were habichuelas, and in Argentina, Paraguay, and Uruguay they were called porotos. Cubans in Miami wanted black beans, dry in 14-ounce packages. Puerto Ricans in New York preferred pink beans in water-packed cans. Nicaraguans looked for red beans. Mexicans, who wanted their beans refried, bought dry beans in sacks of four or 10 pounds.

Goya’s line of soft drink flavors also was being chosen on the basis of their popularity in the homelands of the company’s immigrant base. Strawberry, for example, was the top flavor in Mexico, while pineapple was a Caribbean favorite. These flavors were introduced in 1997, along with mandarin orange, fruit punch, tamarind, and lemon-lime. Other sodas being marketed by Goya were coconut water (water with creamy pulp from young, green coconuts), champagne cola, pina, mango, guava, and ginger beer. The carbonated line was being distributed in 38 states. Goya also offered a wide selection of tropical nectars, teas, and juices, plus Goya Malta and Malta Light.

In an effort to reach out to non-Hispanic customers, Goya recast its labels in 1997 to include the English as well as Spanish name of each product on the front, instead of the back, as previously. Joseph F. Unanue, son of the company president, said the change also was an acknowledgment that Hispanics in the United States were becoming more assimilated, citing a recent survey that showed 35 percent considered themselves primarily English speakers. Accordingly, Goya’s English-language advertising was being refocused to target these acculturalized Hispanics by adding a more Latin feel and including rice and beans when prepared foods were featured. The U.S. Hispanic population was nearing 30 million in 1997, with buying power estimated at $228 billion annually.

Goya remained a private, entirely family-owned company in the 1990s. Two of the founder’s four sons and at least six of his 18 grandchildren were working for the firm. The Unanues had a combined net worth estimated at $400 million in 1993.