For years, Mexican beverage company Jugos del Valle S.A. de C.V. (Juice of the Valley) has served an audience that many of its competitors are only just now taking into account: the United States’ rapidly expanding Latino population.

Although recent census figures predict this segment’s explosive growth to continue unabated over the coming years, many Latino-American families have historically found familiar products hard to come by, due in part to the US marketplace’s cautious response to cultural change.

Jugos del Valle, however, stood out from the pack. The company recognized the need for Latino-oriented products in the US marketplace years ago, and brought its juices, nectars, soft drinks and other niche products stateside.

Founded in 1947 and known in Mexico for popular brands such as Frutsi and Del Valle, Jugos del Valle set up shop and began selling its products in the US in 1996 with Jugos del Valle USA, Inc., a wholly-owned US subsidiary.
A July acquisition by The Coca-Cola Company and Coca-Cola FEMSA (Coca-Cola’s second largest bottler after Coca-Cola Enterprises) will bring the 60-year-old Jugos del Valle into a better position to meet the needs of its Latino constituency in the States than ever before. Miguel Longoria, CEO of Jugos del Valle USA, Inc., is excited about the move. “We will have all the resources from a much bigger company,” Longoria says. “FEMSA is approximately 20 times the size of Jugos del Valle.”

Because of the anti-monopoly issues inherent in combining the two large, Mexican-owned beverage companies, the acquisition took the better part of a year to pass.

Indeed, the combined company promises to be a powerhouse; Jugos del Valle products are already present in more than 40 countries, and Jugos del Valle and FEMSA are important players in the Mexican beverage business scene. Jugos del Valle reported $400 million in revenue worldwide and FEMSA reported revenues of $11.7 billion.

While this acquisition may be the largest that Jugos del Valle has seen, it is far from the first for the company. An initial deal in 1965 brought Jugos del Valle from Baja, CA to Tepotzotlán, Mexico, which remains home to the beverage maker’s global headquarters and largest plant.

(The Tepotzotlán plant contains one of the company’s points of pride, a water treatment facility, in which water is cleaned and then returned to the environment. “We have been certified as an ‘Industria Limpia,’ which means ‘clean industry’ by the Mexican government,” Longoria explains. “Some of the key initiatives are water treatment, correct disposal of toxic and nontoxic waste and use of natural gas instead of diesel.”)

A later acquisition by the Albarran family took place in 1978. The company finally went public in 1994, and has been listed on the Mexican stock exchange ever since. Now, approximately 3,000 employees strong, Jugos del Valle operates six plants, five in Mexico and one in Brazil, another of the firm’s key markets.

The Coca-Cola FEMSA acquisition will bolster Jugos’ already strong presence in Mexico and Brazil. Even more importantly, the increased financial backing and resources will allow the company to expand advertising and distribute its products more widely within different regions of the US, where, according to Longoria, many competitors are finally racing to put Latino-centric items on supermarket shelves. “This is an opportunity [for us] to reach the Hispanic section of the market with the Hispanic brands that they remember very well,” he says. “We are a very nostalgic product… [People] feel closer to their countries when they buy these types of products.”

Jugos del Valle’s current product lineup includes Frutsi, a juice-based soft drink launched in the 1970s, which remains a daily and party favorite for kids. Even the drink’s distinctive bottle has its admirers. “Kids in Mexico used to handle the bottle as a toy in many ways,” says Longoria; a child speeding noisily by on a bicycle with Frutsi-enhanced wheel spokes was a common sight on Mexican streets.

Even with Frutsi’s popularity, Longoria believes core businesses of the company are its Florida 7 line of citrus juices and nectars, as well as its Del Valle line of varied juices and nectars. Rounding out the brand profile are Barrilitos, a line of carbonated soft drinks; Clam Club, a tomato and clam juice drink; and Coconut water, a coconut water and pulp product.

While Longoria sees the Coca-Cola FEMSA acquisition as nothing but a boon to the company, Jugos del Valle USA would certainly not be suffering in its absence. The company recently reported a compound annual growth rate of 36.4 percent since 2001 in the US, and has a product presence in most of the country.

Despite its current success, the US subsidiary has faced a number of challenges breaking into the market, including meeting higher quality standards than those enforced in Mexico, and learning new marketing techniques in the face of stiff competition for US store shelf space.

Jugos del Valle USA is also challenged, in part, by its own unique business model: its US products are imported from Mexico and Brazil. The price of fuel, coupled with the added difficulty ensuring intact product delivery after long-distance travel, make for a costly combination. A possible solution, says Longoria, is to bring the product closer to the US. Longoria speculates that perhaps the company will be able to leverage the Coca-Cola platform to make the idea of a US plant presence more of a reality.

Longoria, now in his 10th year with Jugos del Valle and his sixth as CEO of Jugos del Valle USA, Inc., is optimistic about the future. It seems likely that 2008 will find the US subsidiary in a period of continued expansion. Whatever new successes or hurdles lie ahead, Longoria is certain he won’t tire of the process. “Every year is very exciting. This is not a boring job, I can tell you.”

VITAL STATS
JUGOS DEL VALLE
WORLDWIDE HEADQUARTERS: Tepotzotlán, Mexico
JUGOS DEL VALLE USA HEADQUARTERS: Houston, TX
’06 SALES (worldwide): $400 million
EMPLOYEES (worldwide): 3,000
GOALS: To continue to refresh millions, as it has for the past 60 years.

From Beverage World August 15, 2007