After one and a half hours by car from Huanta (Ayacucho) and a long journey on foot through seven grocery stores in Vinchos - a little Andean town with barely 5,000 inhabitants, Jorge Namisato(*), Commercial Director of the Industrial Products Business, finally found a small grocery store selling Bolívar detergent and Don Vittorio noodles. The joy that was initially felt turned to professional passion as we began reaching the high Andean zones, so that these new consumers have access to high quality products. It was not an isolated case since this scenario was the same in all the localities Namisato visited to verify Alicorp’s presence on the expanding remote market - 200 of 1,800 districts of Peru.
These are urban areas and most of them are located on the coast. They were not places randomly chosen but those showing a growing economy as a consequence of economic activity such as mining or chosen as beneficiary for social programs by the Peruvian State. The logic was simple: 60% of the economic support is destined for consumption. For this reason, the presence of Alicorp in these places was essential.
That’s how the BdP Project (Base of the Pyramid), a new distribution model in remote urban areas - with less than 20,000 inhabitants and a maximum of five hours distance - was created to meet the basic consumption needs of this sector of the population. For this reason, the traders noticed how the price of Alicorp’s brands increased as a consequence of intermediation works in the distribution and how TV campaigns were valid for the large cities only. «It was not fair. We had to be able to reach those populations with affordable prices and take well-being to them, and we did it», Namisato said proudly.
First, 200 new districts were the goal and we worked with DEX - its exclusive distribution network - asking to hire local people to reach the new grocery stores with a weekly delivery. We also bought special five-ton trucks especially for distribution in these areas. In less than six months we reached our goal and had 10,000 additional clients.«We are doing our bit to take high quality products as part of their basket of goods and services. It is a future investment and we also contribute with the well-being of a population that starts to feel part of the economy», said Jorge Rivas Plata, Alicorp’s Sales Channels Strategy Manager, thus, summarizing the high level of personal satisfaction of this project for the team.
The BdP Project shows how important it is to be flexible to adapt to different realities and be agile to penetrate new markets which has allowed it to succeed quickly. Alicorp visualized these markets and got outcomes in a short period of time. «We are growing little by little and we already have good numbers and will continue to grow in next two years», predicted Miguel Quintana, Brand Manager, who was also part of the team in charge of the BdP Project. Nowadays, 900 TM of products are sold monthly and it is estimated that 12,000 TM will be sold in 2013. The project is in progress and we are trying to increase the number of districts, even the most remote rural areas. Why not? Alicorp already reaches populations located 3,000 meters above sea level and we still have further to go throughout Peru.
There are two ways to grow: with the increase in sales of the brands and by acquiring companies. Both of them have qualities and a strategic value for Alicorp who expects that 50% of its sales will be coming from other countries of the Latin-American region by 2021. «We know who our competitors are, their strengths and weaknesses. Competitors have to be kept close», said Stefan Stern, Director of Large Industry and Food Service.
In Alicorp, a multifunctional team is responsible for the acquisition strategy. They understand and discover the value of every company and its contribution for the future. «We are interested in valuing the company to capture synergies and make an action, work and business plan allowing us to be better», said Alexander Pendavis, Corporate Finance Manager. «Before purchasing a car, you check it everywhere. The team in charge of the due diligence assembles and disassembles it. It is a deep and complete radiography», said Stern. It allows us to make the best possible purchase, thinking about the present and its contribution for 2021 goals. For example, Salmofooda fish food company in Castro city, Chiloé, is a supplement for the portfolio of Animal Nutrition for fish jointly to Nicovita.«This purchase allows us to keep growing in the region», said Juan Enrique Rosales, Development and Research and Technical Advisory Director of the Animal Nutrition Business and General Manager of Salmonfood.
In the case of Ucisa, when assets were bought, as well as brands of the oils and grease derivatives business, our strategic position in north Peru is consolidated, especially in Piura. Industrias Teal, with its brand Sayón, provides brands that allowed us to enter in new segments of the market. With the acquisition of Incalsa and its brand Alpesa, we have the supplement for our sauces portfolio for Food Service.
After acquisition, the next step is the integration to guarantee «the after purchase.»«In the case of Industrias Teal, we have found people that have been in the same position for forty years», said Ana Cecilia Monzón, Acquisitions and Integration Director and General Manager of Industrias Teal. For Alicorp and Cecilia, it is clear that the most important thing is to meet the workers of the new company because they are responsible for its success.
Alicorp has been developing a plan to work closely with its workers, mainly in its industrial plants. As a result of this, the work environment at the plants changed in 2012. We got a satisfaction level of 70%representing an increase of 9% in comparison to the previous year upon the outcomes of the Great Place to Work survey. It is an important achievement for a company, where people are a very important aspect
How was an increase of 9% obtained? The key was to focus on the head-worker relationship, a five-year work process. «The heads are not the only people responsible for the work environment; workers are also great part of the final outcome», remembered Gloria Maza, Work Relationships Coordinator.
One of these scenarios was the “Clima en Acción” workshops, where skills regarding decision making and errors related to plant workers were discussed. Daily routines disconnects people and the challenge was to create scenarios and moments for interpersonal connection. We were looking for a closer leadership through example, respect, and collaboration. «And this was what the heads did at the plants, they got closer to their workers and created a better work environment for them», remembered Juan Antezana, Manufacture Peru Director. An important aspect was that for the first time we shared the previous year results of the work environment survey with the workers, so that they could understand the real relevancy of the matter.
Another important issue was the permanent advisory to improve treatment and know how to manage and deal with people. «If there is something that Alicorp has strengthened is its standardization criteria to manage people», states Eduardo Martínez, Corporate Work Relationships Director. In Alicorp, we know that to reach our 2021 goals people have to be trained and developed. Martínez says: «They will have to train the younger ones with our company’s culture since today». If we do it with passion for our job, the achievements related to the work environment will continue to strength the company’s sustainability.»
Tiago and Cayetana are loyal consumers of quinoa. They are almost seven years old and they have already tasted it in many foods - such as snacks topped with chocolate, energy bars, cookies and pasta - thanks to their mother’s concern, Lorena Carrión, Brand Manager of the Peruvian Agricultural Products Platform.
Before becoming one of the defenders of the potential of the Andean grains, Carrión only knew about quinoa due to a series of financial analysis reporting about 25 million dollars of increasing export, until she ate it and discovered that in addition to figures and benefits - high protein value in comparison to other cereals - its versatility was applied to countless delicious recipes.
Then a question arose: How can we provide an added value to the traditional native products? How can we take advantage of Alicorp’s know how to transform these products? Quinoa was the starting point, the hobby horse to open the market. «It is a challenge that breaks paradigms because it is an entirely new category for Alicorp», , said Javier Quinde, Director of the Peruvian Agricultural Products Platform Development. It was him, along with Lorena Carrión, Brand Manager and Ronald Campbell, Brand Manager who led the project until its launch. Since the beginning, they had a clear goal: taking advantage of Peru’s great biodiversity.
The idea is to create new products from national raw materials with high nutritional, nutraceutical and functional value(Andean grains, Andean plants, and natural colorings, respectively) in the international market. That’s why apart from quinoa, millenary nutritive food, there are other Peruvian harvests such as kiwicha, cañihua, sacha inchi, and others which are the base of our new category. The project was powerful.
Thus, the basis for a new business were established: Peruvian Agricultural Products Platform, dedicated to strongly enter an international increasing market which category of food supplements grows at an annual percentage of 6% and revenues around a 100 billion dollars. Projections are good. The challenge comprises various and nutritive native harvests, whose consumption is increasing in the USA and Europe. The grain is sown.
There’s not such a thing as chance. Paola Ruchman, Innovation and Consumer Insight Director is certain of it and said that to imagine the new consumer -an imaginary entity at the beginning- It is necessary to have a lot of empathy and intuition. Making decisions through intuition is only possible due to a collective and accumulated insight acquired from years of experience: the consumer has been growing with the company. Most of Alicorp's Most of Alicorp’s consumer goods products are made for housewives, so if we want to implement an initiative related to oils, for example, it is important to know how their daily living has changed and products are used in comparison to past generations as well as predict future changes. «We understand them and can test different ideas with them»,said Ruchman. When you get closer to a consumer, you must be able to discover something new. «See their routine with fresh eyes to find opportunities. We are thinking about how the housewife in 2021will be». It is using an educated guess or calculated risk. The prospective is not random but it is based on possible insight.
Two marketing managers (only a small sample of all brands managed by our company) make a permanent multidisciplinary work since insight may appear within any part of the organization. Arturo Francia (Detergents category) and Javier Rota (Sauces category) had to read to be informed, make ad hoc studies (focus group), personal interviews, talk with experts, and live with consumers for certain periods of time. «Ten years ago, Alicorp was the pioneer in the application of this tool inherent to ethnography», said Ruchman. «We formulate credible hypothesis and compare it to «We formulate credible hypothesis and compare it to verifiable information to substantiate its credibility», said Rota, who still visits markets to check the offer related to sauces in bulk. For this reason, two and a half years ago, we decided to learn all the secrets throughout Peru to create the best chili cream to complement the national food. We looked for the best people and made an alliance with Gastón Acurio, an emblematic chef seen by Peruvians as a representative of the gastronomy boom in our country and abroad. As a result of this research, Tarí was created.
«We can create a spectacular product but if it is not what the market wants, we will have to push to sell it. On the contrary, if we first understand the consumer, we only have to announce it and it will sell by itself.» It is true. A delicious sauce can be created but if it does not complement most of the typical Peruvian food it will fail. «We are the number one in sauces, because we revalue and increase the production scale of homemade sauces, with the spice rack and creativity of the Peruvian women in every kitchen.» said Ruchman.
Francia stated that knowing the consumer is an important and complex challenge. «In Alicorp, working together we can put in the consumer’s shoes. Based on a conversation, we have to discover what they need and how it can become an idea». In Detergents, growing with the consumer means keeping track of technology related to washing machines, always getting even more sophisticated, as well as the development of new garments and fibers in the textile category. The launch of Trome Trome in Peru, a detergent -there was also soap with the same name- addressed to a segment of the population in rural areas not reaching the offer in the other home care lines, was a new conquest. This new brand of detergents has seduced consumers in the north and east of Peru with three fragrances: floral (aromatic variety introduced by Alicorp into the market), lemon, and baby.