Colombina looking to further expand in US

Colombina looking to further expand in US

Colombina, the Colombia-based food manufacturer, has enjoyed solid growth in the last decade and, to maintain its performance, it is looking towards its growing line of healthier products and its international businesses. Ivan Castano spoke to marketing vice president Jose Fernando Ochoa and CEO Cesar Caicedo to hear more about the company's plans.

Colombina, a fast-growing Latin American food company, has its eye on rapid sales and earnings growth.

The company intends to lift operating earnings up to 10% annually and boost revenues to US$1bn by 2022 as it develops a new healthier foods line and expands in the US and Europe.

"Our growth in the last ten years has been a compounded 9% so we hope to keep it like that," CEO Cesar Caicedo tells just-food, adding both organic growth and acquisitions may be pursued to achieve that goal.

If all goes well, Colombina's EBITDA should grow 8 to 10% to hit over $120m in five years, up from a forecast $77m this year when it is projected to rise by a similar percentage. Meanwhile, net profits should gain around 3% yearly from $18.8m in 2016, Caicedo forecasts. Last year, the nearly 10,000-strong Colombina, owned by Caicedo's family, posted about $600m in revenues, operating from its headquarters in the south-western Colombian city of Cali.

Caicedo says the lion's share of the future gains will come from Colombina 100%, a new wellness line he hopes will account for over 50% of group sales in five years, up from 10%, or under $30m, in 2016 when the line grew 250%, the chief executive says.

Under the slogan "it's delicious to nourish yourself that way," the firm will work to gradually incorporate new Colombina 100% products into its 1,500-SKU portfolio featuring a range of candy, cookies, ice cream and canned food products.

Roughly half of future skus will incorporate Colombina 100% items while the other half will come from existing products that will be reformulated to fit the Colombina 100% "better-for-you" philosophy, Caicedo explains.

The bulk of Colombina's annual capital expenditures (roughly 3 to 5% of sales) will go to develop the fledgling trademark, which Colombian consumers are already embracing amid a growing wellness trend, Caicedo insists.

He says the firm will invest to streamline production and inventory to lower costs and bolster Colombina 100% and other products' EBITDA margins to remain above 12%.

While stopping short of saying Colombina 100% will be a functional-foods line, Caicedo says it will feature much healthier products with reduced salt and sugar levels and incorporating healthier ingredients like fiber, quinoa or amaranth.

One example is Craquinoa – a new biscuits line blending quinoa, amaranth and chia – he notes, while the firm recently rolled out a mango-and-chia salad dressing and a reduced-sugar jam. Colombina also recently launched a new baby foods line called Crios.

"We are not going to have artificial flavours, colorants nor artificial preservatives," Caicedo says, adding Colombina's 100% packaging conveys its new wellness attributes by juxtaposing a logo bearing "sun, heart and person" icons against a green background.

Caicedo hopes to launch around half-a-dozen Colombina 100% products a year that will have 30% less salt or sodium and gradually reduce genetically-modified ingredients so that 50% of the portfolio is GMO-free by 2020.

"We are going to be adding benefits or products that are in line with current consumption trends such as demand for quinoa or chia or gluten free products," the executive adds.

US and Spain on radar

Colombina also has aggressive expansion plans for Colombina 100% in the international arena with plans to introduce it in Ecuador, Peru, Chile and the US, as well as in Spain in the longer-term, marketing vice president Jose Fernando Ochoa tells just-food.

Colombina 100% should arrive in the US in early 2019 once the firm has introduced it to clients Ochoa says. The launch, coupled with plans to strengthen the company's other US activities, will help the firm triple its local revenues to $80m to $100m, he predicts.

In the US, Colombina sells its own products but also has a growing private-label candy and biscuits business chains including Dollar Tree. It supplies seasonal candies (like Halloween treats) for Wal-Mart Stores and Target and supplies sweets for concert and other events. It also offers its own candy and lollypop labels to Colombians and other Hispanics in the US.

The company's stronghold is in the so-called tri-state New York, New Jersey and Connecticut area but it also has a presence in Florida and mid-Atlantic states like Virginia and Maryland. Ochoa says those activities will be strengthened but will not provide more specific details.

Colombina also hopes to pepper Central America and the Caribbean with Colombina 100%, with a major focus on the Dominican Republic and then a gradual entry into Ecuador and Chile where it sells other products. At present, markets in Central America make up 40 to 45% of sales from Colombina 100%, while Colombia comprises 55%.

The company hopes Spain will be another growth engine for its business. Two years ago, the business bought Spanish confectioner Fiesta for EUR16.8m.

The group is engaged in a major strategic and marketing effort to revitalise Fiesta – which owns the household Coyac lollypop and competes with market leader Chupa Chups – to potentially double sales from the current $15-$20m in five years, Ochoa says, although he again declines to elaborate further.

Puerto Rico hangover

On the downside, Colombina is suffering in Puerto Rico in the wake of Hurricane Irma's devastation, Ochoa reveals, conceding the next few months will be tough for the company, which generates sales of $8m a year on the recession-hit island.

Ochoa acknowledges the storm damaged some of Colombina's warehouses, though not massively, while sales have plummeted, alongside with those of competitors.

"The country is destroyed. We had to throw some product away but right now we are focused on getting as much product to stores as possible and hedging our inventory," Ochoa says.

Luckily for the company, Puerto Ricans like its Nucita chocolate wafers as well as its Bombon chocolates, craquenas buiscuits and bridge wafers, which may see higher demand as people seek comfort in the storm's aftermath.

"We have been in Puerto Rico for 20 years and we have some brands that people like a lot," Ochoa says, adding Colombina 100% also had a successful launch in the country.

Overall, however, Colombina remains a business with growth ambitions at home and abroad.