Tumaro's Gourmet Tortillas

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Tumaro's Gourmet Tortillas

5300 Santa Monica Boulevard, Suite 311
Los Angeles, California 90029
U.S.A.
Telephone: (323) 464-6317
Fax: (323) 464-6299
Web site: http://www.tumaros.com

Private Company
Incorporated: 1995
Employees: 26
Sales: $30 million (2006 est.)
NAIC: 311830 Tortilla Manufacturing

Tumaro's Gourmet Tortillas is the leading seller of flavored tortillas, a product category the company created in the mid-1990s. The company's tortilla factory in Monterey Park, California, a Los Angeles enclave, produces 180 million tortillas annually in 18 flavors, including Chipotle Chile, Salsa, Sun-Dried Tomato, and Spinach & Vegetables. Tumaro's Gourmet Tortillas contain 89 percent to 93 percent organic ingredients. The company also makes soy-fortified flatbreads in three flavors: Wheat, Soy & Flax; 8 Grain 'N Soy; and Apple 'N Cinnamon. The company's tortillas and flatbreads are distributed to 21,000 supermarkets, universities, and restaurants in the United States. Tumaro's Gourmet Tortillas exports its products to the United Arab Emirates and to Japan.

ORIGINS

Behind the success of Tumaro's Gourmet Tortillas stood the Jacobs family, a family whose commitment to healthful food was inculcated by its patriarch, George Jacobs. Born in 1909, Jacobs spent half his professional life working as a pharmacist before becoming an impassioned promoter of nutritional food, exchanging his steady paycheck for the far more precarious financial fate of an entrepreneur. His decision to forsake a career in a well-established, well-respected business for entry into the health-food business, a business decades away from gaining legitimacy in the mainstream market, added to the riskiness of his move and did little to improve his odds for success. Jacobs was 44 years old when he made the most profound decision of his life, but the seeds of change were planted when he was a teenager. Jacobs owed some part of his legacy as a health-food pioneer to the legacy of another pioneer, Dr. Harold Hain, whose devotion to nutrition became the foundation of the Jacobs family's multigenerational involvement in the health-food business.

In 1926, Hain founded Hain Pure Foods Co., giving him the commercial means to express his advocacy for the nutritional benefits of natural foods and juices. Through his company, Hain began producing all-natural carrot and celery juices and canned juices with an extended shelf life, the scope of his business for a quarter century. By 1953, the year he decided to retire and sell his company, Hain collected $100,000 from peddling his natural juices, the exact amount he charged Jacobs for ownership of Hain Pure Food.

The financial pressure on Jacobs was heavy from the outset. After paying an amount equal to the company's sales volume, Jacobs needed Hain Pure Foods to flourish from the start, but his hopes were dashed when his only juice press broke. Equipment failure limited Jacobs to the company's existing inventory and he quickly regretted his decision to abandon his career as a pharmacist. He tried to sell the business back to Hain, but Hain refused his offer. Out of desperation, Jacobs decided to redouble his marketing efforts by taking on the role of salesman. He loaded his station wagon with products and pamphlets extolling the virtues of a nutritious diet and began traveling across the country, stopping to talk to health-food store owners and their customers. In exchange for advertising the Hain Pure Foods brand in the windows of stores, Jacobs washed the windows, doing whatever he could to invigorate his company's sales. His efforts delivered results, spurring the growth of Hain Pure Foods to a level that allowed him to hire a sales team to promote the company's brand. Once he was able to free himself from marketing responsibilities, Jacobs turned to product development, tapping into his training as a pharmacist. He developed skin cream containing avocado oil, produced wheat germ oil and pure nut butters, and became the first to use the designation "No Cholesterol" on food labels. His greatest commercial success was achieved at the end of the 1950s, when he began marketing safflower oil and safflower-based products such as safflower margarine and safflower mayonnaise.

After a shaky start, Jacobs presided over one of the first health-food giants in the country by the end of his first decade in business. In 1961, he hired his sons Herman and Jerald to assist in running his expanding business, which was marketing an ever-growing list of products thanks to his achievements in product development. By 1970, when sales of the company's safflower products reached $5 million, Jacobs had developed more than 300 products during his time in charge of the Hain label. He sold the company in 1970 to Archon, a diversified holding company, and retired, going on to live another three decades before congestive heart failure ended his life at the age of 94.

The Jacobs family legacy continued after Archon acquired Hain Pure Foods. Brothers Herman and Jerald Jacobs stayed on after the acquisition of the company, with Herman running his family's former business and Jerald assigned to assist in the management of Archon's organic produce business. When Archon began to suffer from major financial problems in 1973, the brothers succeeded in buying Hain Pure Foods from the troubled holding company, reportedly paying only one-third of the amount Archon paid their father. The brothers led the company in tandem until Jerald was diagnosed with a brain tumor. When Jerald died in 1980, Herman began looking to sell the family business and reached an agreement with Ogden Corp. in 1982. At the time of the sale, Hain Pure Foods bore little resemblance in stature to the company George Jacobs had acquired nearly 30 years earlier. Sales, under the guidance of two generations of the Jacobs family, had swelled from $100,000 to $45 million.

1994 ACQUISITION OF TUMARO'S

Distraught over the death of his brother, Herman Jacobs decided to retire after he sold the family business. He focused on raising his children and traveling until his desire for returning to the business world led him back into the fray. When he decided to run his own business again, Jacobs brought his sons Brian and Jason into the venture, emulating the tutelage offered by his father. In 1994, the Jacobs family returned to the food business by acquiring a small frozen food business named Tumaro's. Founded 20 years earlier by a married couple, Tumaro's produced frozen burritos, tamales, and enchiladas, a business Herman and Brian Jacobs (Jason Jacobs later left the company) would build into a leader in a fast-growing niche of the food industry.

COMPANY PERSPECTIVES

Tumaro's created the industry's first flavored tortillas and today remains the best selling innovator of gourmet flavored tortillas and wraps in the country. Our flavored tortillas are trans fat free, kosher, cholesterol free, and do not contain lard. Our products have become known in the food industry not only for their health attributes and nutritional profiles, but also for their taste. Tumaro's has several prominent food Industry and media awards to prove it!

For the Jacobses, the company's greatest weakness represented its greatest potential strength. When the new owners sampled the frozen burritos, they noticed that the tortillas often were cracked, dry, and tasted acidic. They decided to correct the problem by making their own tortillas, utilizing the skills developed by George Jacobs and taught to Herman Jacobs during the Hain Pure Foods years. In a January 17, 2005, interview with the Los Angeles Business Journal, Brian Jacobs explained how the quality of the tortillas was improved. "One of the products my father developed," he said, "was sugar-free salad dressing using honey instead of sugar. We borrowed that concept, adding honey to the tortilla dough, and the honey made them more pliable and made them taste better." Altering the recipe improved the quality of the Jacobses' frozen burritos and provided the inspiration for what would become their signal achievement. "After a couple of years," Brian Jacobs continued, "we decided to get out of the frozen food business and go into the tortilla business because the tortillas started to take off. Then, it occurred to us to add other flavors, so we spent about two years developing a line of organic, flavored tortillas."

Tumaro's, which adopted the name Tumaro's Gourmet Tortillas as its strategic focus changed, became the first company of its kind, introducing the world to flavored tortillas. The timing was ideal, positioning the company in a market that would record enormous growth during the first decade in business. Between 1994 and 2004, sales of tortillas in the United States doubled, jumping from $3 billion to $6 billion, becoming a staple product that controlled an estimated one-third of the country's bread market. Despite offering a novel product in a fast-growing market, the Jacobses experienced difficulties at first. "We had a lot of rejection in the beginning," Brian Jacobs recalled in November 1, 2006, interview with the Los Angeles Times. "People liked the concept, but it didn't really sink in." To spark demand in the innovative product, Brian and Herman Jacobs began visiting supermarkets in California and pitched their product, borrowing a page from George Jacobs' playbook. A turning point was reached in 1997 when the supermarket chain Vons agreed to give Tumaro's a three-month trial. Herman Jacobs, emulating his father, stationed himself near the tortilla display, waiting to see customers' reactions to his flavored flour creations.

The public's positive response to flavored, organic tortillas provided the company with a steady stream of sales orders. Success was ensured once a manufacturing process to extend the shelf life of the tortillas to 90 days was developed, enabling national distribution. The organic tortillas could be marketed as more versatile and nutritious than traditional tortillas. "People kept seeing tortillas as Mexican food," Brian Jacobs said in his November 1, 2006, interview with the Los Angeles Times. "We saw it more as a bread replacement." A slew of flavor concoctions were developed to drive sales upward, including spinach, Indian curry, and Caesar salad. At one point, the company offered a line of dessert tortillas that featured flavors such as chocolate, blueberry, pineapple, and apple-cinnamon.

As Brian and Herman Jacobs completed their first decade in the tortilla business, their innovation drew praise from critics and won the business of consumers throughout the country. Tumaro's Gourmet Tortillas garnered more than a half-dozen prestigious food industry awards during its first decade in business, which encouraged the father and son to experiment with extending their product line. In the first years of the 21st century, they introduced a healthful alternative snack marketed under the name "Krispy Crunchy Puffs" that were featured on the television programs The Today Show and Good Morning America, hailed by each show as one of the best new products of the year. Although Krispy Crunchy Puffs were later discontinued, the Jacobs duo continued to experiment with brand extension. In early 2006, they formed a partnership with The Solae Company, an innovator in the research and application of soy protein, to develop a line of soyfortified flatbreads. The line, launched in January 2006, became the first nationally distributed soy-fortified flatbreads in the United States, offered in three varieties: Wheat, Soy & Flax; 8 Grain 'N Soy; and Apple 'N Cinnamon.

KEY DATES

1994:: Brian and Herman Jacobs acquire a frozen food company named Tumaro's.
1997:: The father and son team negotiate an agreement with supermarket chain Vons to carry their flavored tortillas for a three-month trial period.
2006:: Tumaro's introduces a line of flavored flatbreads.

INTERNATIONAL EXPANSION IN THE FUTURE

Tumaro's Gourmet Tortillas' dominance as the maker of the best-selling flavored tortillas in the United States placed the company in an enviable position, one that pointed to a promising future for the descendants of health-food pioneer George Jacobs. In the years ahead, the company figured to play a leading role in the fast-growing tortilla market. One of the areas in which the company was expecting to make advances during its second decade of business was on the international front. The Jacobses realized success in exporting their products to the Middle East and to Japan, which encouraged them to hatch plans for selling their tortillas in Mexico. "It's like selling bagels to Israel," Brian Jacobs commented in his November 1, 2006, interview with the Los Angeles Times. The father and son team was anticipating a January 2007 launch for their foray into Mexico, the birthplace of tortillas. After Mexico, the potential for further international expansion existed, as the Jacobs continued with their mission to make their flavored tortillas the choice of consumers everywhere.

Jeffrey L. Covell