Betting on cranberry juice: An interview with L’Onda Beverages

After working for an American juice company, George Westphalen decided to start his own brand in Peru, L’Onda. His company now has several brands and exports 60% of its juices.

George Westphalen studied the behavior of the global market of cranberry for seven years. He previously became regional director of a leading American company and he managed to enter the Latin American market. He also introduced the idea of producing the product in Peru, but the transnational withdrew that proposal and the contract with Westphalen ended in good terms. And so, he began importing cranberry pulp from the U.S. to process it in Peru and then export it.

If the American company, after making a cost analysis did not think it appropriate to make its product in Peru, why did you think you could?

While the United States consumes more beverages in PET containers, tetrapack packaging is best known in Latin America and about 90% of juices are sold in a container made of that material. So I insisted.

Since the end of your contract, how long did it take you to start your own business?

As soon as our relationship ended, we decided to enter quickly with our own version. But bringing tetrapak took several months because it comes from Argentina and since we could not lose time by a matter of opportunity, we began the sell PET containers. I started with my own funding, some S/.400,000 in working capital, then I looked for credit with banks and a year later, my first partner, Sergio Escalante, arrived.

Your earlier job was more commercial, producing was a different totally different thing…

I do not have a plant. I already had all the contacts to outsource the production of juice here and to import American cranberry pulp. Since many already knew my way of working, they supported me.

You started producing in 2007, so how did you enter supermarkets so quickly?

We make good quality cranberry juice; our products are from 25% to 40% fruit, while a traditional orange juice only reaches 4% or 5%. We do not use essences and products packed in tetrapak last a year without preservatives. Also, I had a very good relationship with all the market chains in Peru because they used to be my clients. All that opened the doors for us but we had to be very patient.

What was your first supermarket?

Wong. We had a good price to compete with the other American product and we also invested in advertising through free tastings. We were a good alternative, with a smaller size and a better price than the competition.

If you imported cranberry pulp it is likely that your final product had a high cost. How did you manage to offer a better price?

If the competing product sold two liters for S/.15, we at sold 30% lower the price; to compete we had to work with low margins.

Was the market ready to have two brands of little known juice?

I always had great faith in the product because it is much consumed in other countries for its healthy properties. In addition, consumption of cranberry in the world reaches U.S. $ 3,000 million and 80% comes from U.S., Canada and a bit of Europe. I virtually introduced the product in Latin America and as we promoted the the product with the American company, that knowledge stuck. And the most logical thing was to present an alternative that was made locally.

How good are your exports from last year?

Even though in June and July there was a drop in the local market, our exports to Ecuador skyrocketed. In the case of Chile, we began with two shipments per year and then increased it to three. We now do shippings with a greater variety of products: the traditional cranberry, the cranberry with passion fruit, green tea, and Chile is about to approve the request of grape juice, our new line.

Why did you choose passion fruit to mix with cranberry?

First, because it is a well-known fruit in the U.S. and Central America and second because in Peru there are good suppliers of passion fruit pulp. The competition does not have this product and it is perfect for the preparation of drinks. Our starting point is the local market, but we are always looking outward. In early 2009 we started to export to Puerto Rico, Surinam and south Florida and the star products there are the regular cranberry and cranberry with passion fruit.

Why not start making a juice with a Peruvian native fruit?

Because if our goal is to export, the costs of bringing a new flavor into the market are millionaires! It was better to start with a product that is already known internationally, take it as our backbone and then from it, create new products with other inputs. Moreover, this year we will launch a new juice with pulp of a fruit native to Peru, but I cannot reveal it yet.

Source : livininperu