| |
| |
| Tumaro's Gourmet Tortillas' Healthy Flour tortillas contain organic unbleached whole wheat flour. This allows the company to include an American Heart Association health claim on the product. |
| |
| Tumaro's Gourmet Tortillas manufactures several varieties of tortillas, including flavored tortillas, low-carbohydrate tortillas and dessert tortillas. |
| |
| Tumaros' Gourmet Tortillas employs a uniqe manufacturing agreement that has the company staffing and operating production lines but not owning any facilities. |
In the beginning there was white bread. Then came wheat, variety and premium offerings. The fast growing tortilla category is aping this evolution by expanding from corn and flour varieties to flavored, dessert and low-carbohydrate tortillas.
Tumaro's Gourmet Tortillas, Los Angeles, is on the forefront of this expansion, placing an intense focus on research and development, an area that can be easily overlooked in the tortilla category. This focus on research and development and innovation has yielded successful results for the company.
Since Herman Jacobs and his son Brian acquired the ethnic entrée manufacturer in 1995, they have launched a slew of unique tortilla varieties, including flavored tortillas, whole wheat tortillas, dessert tortillas and low-carbohydrate tortillas.
Natural history
For the Jacobs family, innovation runs in their blood. Herman Jacobs' father, George, was one of the great pioneers of the natural food industry and bought Hain Pure Food Co. in 1953 when it had only $100,000 in annual sales. Throughout the next 17 years, George Jacobs and his two sons, Herman and Jerry, morphed the company from a small carrot and celery juice supplier to a multi-million dollar food manufacturer.
As sales for the company increased, so did interest from prospective buyers, and the company was sold in 1970. Herman Jacobs and his brother continued to work for the company in senior executive roles. "My dad retired in 1970 and sold the business to a bunch of sophisticated Wall Street venture capitalists that thought natural foods would be the product of the future," Herman Jacobs says. "They were right and they were good business people, but they didn't have the expertise in natural food manufacturing and marketing."
As a result, the company's stock plummeted, which presented Herman and Jerry Jacobs with an interesting proposal—buying back the business that their father bought 20 years ago. They jumped at the opportunity and bought Hain Pure Food Co. in 1973, marking the second time the Jacobs family had owned the natural food manufacturer.
As soon as the second generation of Jacobs took control of the business they restored a sense of innovation and research and development to the company. This focus on research and development paid huge dividends as the company's sales skyrocketed from $5 million to $50 million in a few years.
Behind the growth spurt were several innovative products, such as Hollywood Safflower Oil and sugar-free salad dressing. These two products boosted Hain's sales and enhanced the Jacobs family's reputation in marketing and research and development. Unfortunately, at the zenith of Hain's success Jerry Jacobs unexpectedly passed away, an event that caused Herman to sell the business and retire.
Re-establishing Tumaro's
Twelve years into retirement, Herman Jacobs started getting his entrepreneurial itch again. Partially, because he had been away from the food business for so long, but mainly because he wanted to provide his children with a great laboratory to learn the ins and outs of the food business.
The Jacobs family's first idea for reentering the food business echoed back to the family's original entrepreneur business: Hain Pure Food Co. Again, the company made an attempt to purchase the natural food company but came in second in the bidding process. Next, the family spent a couple of years scouring the natural food industry for companies ripe for buying until it stumbled on Tumaro's.
"Buying Tumaro's was out of frustration because I seriously tried to buy five other companies, but we weren't able to make a deal," Herman Jacobs says.
Herman Jacobs purchased Tumaro's in 1995, taking over a modest frozen entrée company that was posting annual sales of $400,000. "We took the company over and we immediately knew we needed to do some research and development with the product line," Brian Jacobs, Tumaro's Gourmet Tortillas' vice president, says. "What we really liked about the company was the concept of a handheld ethnic food item, and we thought we could grow the company on that concept and expand the ethnic line."
The company's evolution from frozen entrees to tortillas occurred out of necessity. The company was running into serious problems with its frozen burritos because the tortillas kept cracking. To resolve the problem, the company returned to its research and development background and formulated a tortilla with a healthy dose of honey. In the tortilla formulation, the honey served two purposes. First, it acted as a humectant, keeping the moisture in the product and preventing it from cracking during the freezing process. Secondly, the honey imparted a strong flavor on the tortillas, something that was rare in the traditional corn and flour tortilla industry. "A light bulb went off and we asked ourselves 'if we can add honey to the tortilla dough then why can't we make flavored tortillas,'" Brian Jacobs says.
Flavored tortillas
Mimicking what Wolfgang Puck did for the pizza category, the company began formulating flavored tortillas. "We shifted our focus from the frozen entrees to shelf stable dry items for the grocery stores," Brian Jacobs says.
However, formulating flavored tortillas was not the only challenge facing Tumaro's new owners. Wanting to keep its focus on the natural foods industry, Tumaro's created unconventional formulas that used organic unbleached whole wheat flour and canola oil, and were low fat and contained no trans fat.
"The research and development process took a good three years of living in a tortilla factory and under-standing the functionality of a flavored tortilla," Brian Jacobs says. "No one had really made a flavored tortilla before, and there's a lot of chemistry involved in a product like this."
Although formulating a line of natural tortillas that were low in fat and used organic ingredients was a challenge, it also presented its fair share of benefits. By using a whole wheat flour, the company was able to obtain the American Heart Associations' (AHA) whole grain health claim on its products. Today, this AHA endorsement is prominently displayed on the company's Healthy Flour 8- and 10-in. wraps. "I knew that if we met the AHA criteria, it would be a great way to tell people about the benefits of our products," Herman Jacobs says.
Mainstream appeal
Although Tumaro's markets its tortillas as a natural food product with organic ingredients, one of the company's biggest missteps was placing its sales focus on natural foods super-markets. To gain shelf space in these stores, the company was prohibited from using preservatives in its formulation. As a result, the company's line of tortillas only had a 20-day shelf life.
"I made the mistake of saying that our product would turn over in 20 days, and that was a mistake because tortillas were not as popular then as they are now," Herman Jacobs says. "When the product first hit stores, it sold very well. But as the product sat on store shelves you could see mold spores growing."
Instead of packing it in after the failed natural foods market experiment, the company retooled its formulas for mainstream supermarkets by adding preservatives. Although these preservative prohibited it from the natural foods markets, the company kept its focus on natural foods and maintained its use of organic whole wheat flour and non-hydrogenated oils.
This combination of a 90-day shelf life for a product made with organic and natural ingredients proved a winning solution for the company and the entire tortilla category. "At that time, most tortillas in the Midwest and Southeast were sold in the refrigerated section," Brian Jacobs says. "By formulating a 90-day shelf-life product, we enabled the retailer to sell the product in the bread aisle, the ethnic section or the deli."
Innovative tortillas
With a business plan firmly in place and proving successful, Tumaro's is focusing all of its efforts on continuing to innovate and broaden the tortilla category. The company has accomplished this by a series of unique product launches that have brought a new look to the tortilla category. Besides a full line of Healthy Flour flavored tortillas, the company also manufactures low-carbohydrate tortillas and dessert tortillas.
The company's low-carbohydrate tortillas use soy flour, oat fiber and wheat gluten to lower the net-carbohydrate content to only five grams per tortilla. The product also contains eight grams of dietary fiber. For the foodser-vice industry, the company developed an 11-in. multigrain tortilla with only five grams of net carbohydrates.
Although the carbohydrate craze appears to be simmering in other bakery food categories, Brian Jacobs says that reduced-carbohydrate dieters are still shopping for low-carbohydrate tortillas. "We continue to have repeat sales and new authorizations," Jacobs says.
The company also manufactures dessert tortilla wraps under the Wrapp Around brand name. These innovative products come in apple cinnamon, chocolate, blueberry and pineapple-banana flavors.
Manufacturing arrangement
When the Jacobs family acquired Tumaro's in 1995, it acquired a small production facility in the bottom of an old hospital. As sales grew, the company formed joint ventures with three tortilla manufacturers to produce its products. On the surface, these joint ventures resemble a traditional contract baking situation. However, the agreements extend far beyond this type of arrangement.
In each of its tortilla-partner manufacturing facilities, Tumaro's employs its own slate of full-time workers. These employees monitor the production lines, serve quality control functions and help make research and development ideas into a reality.
"Our employees are supervising every single production run that we do," Herman Jacobs says. "We do everything but own the plants where the products are produced. We have full-time staff at each of the manufacturing facilities."
The company also controls 90% of the purchasing at each of these facilities. And, it uses its basement production facility to prepare the flavor blends and mixes that go into its products. The company also has a research and development lab and raw ingredient storage in this facility as well.
From its innovative tortilla varieties to its unique manufacturing arrangement, Tumaro's truly is a unique company. And this uniqueness is paying off as the company continues to post impressive sales numbers.
Even more important is the company's penchant for changing the way people look at tortillas. "We took a commodity item that was normally sold for 10 to 12 cents a piece and added higher quality ingredients and made them healthier," Herman Jacobs says. "By these measures alone, the price for our product doubled, and we were still able to get consumers to purchase it."
With tortillas that retail for $2.49, the company easily sells one of the most expensive tortillas on the market. However, consumers appear not to mind the high price point as long as it tastes great and is healthful. Although it's hard to believe, the company even sells its products in Mexico. "We created a new tortilla segment because we positioned ourselves as a value-added product," Brian Jacobs says.