From a very early age, Javier Vélez-Bautista has had a compelling desire to make this world better. Now, as CEO of El Dorado Foods, he seeks to fulfill this vision, promoting the development of innovative Latin-inspired food and beverage brands in the US that generate value for consumers, customers, and investors.
Vélez-Bautista has three decades of experience in operational and financial management in the food industry. This successful Mexican executive spoke with Abasto Magazine about his professional life and his plans to promote the new company El Dorado Foods in association with the investment firm Berkshire Partners.
El Dorado is an acquisitions platform that seeks equity partnerships with successful companies with great brand equity, a certain size, and reasonable stable sales and cash generation explained Vélez-Bautista.
Vélez-Bautista studied at the Universidad Iberoamericana in Mexico City, where he obtained a degree in Industrial Engineering and later obtained his specialization in Business Administration at The Wharton School of the University of Pennsylvania in the USA.
From his academic preparation, Vélez-Bautista said that he obtained the best tools to fulfill the objectives that he set for himself since his youth. Upon returning to Mexico, he began working with the Development Bank of Mexico. He later joined GRUMA – the largest producer and marketer of tortillas and corn globally – as financial and planning director of GRUMA-USA.
Abasto Magazine (AM): What can you tell us about the work you did in GRUMA?
Javier Vélez-Bautista (JVB): GRUMA was the first large Mexican food company successful outside of Mexico, specifically in the United States. I think I played a key role in growing GRUMA-USA’s operations at that time from $ 180 million when I hit, to more than $ 500 million five years later.
Eventually, I became part of the three-person executive committee that ran the company instead of a CEO. I had the opportunity to lead GRUMA’s initial public offering in the international markets, at the New York Stock Exchange, and obtain the first major investment rating granted to a Mexican company by Standard & Poor’s.
AM: You were the CEO of Mission Foods in Dallas, Texas, for about six years. How did you manage to transform this business and turn it into one of the US leaders in tortillas manufacture and marketing?
JVB: The founder of GRUMA passed away in 2012, and the family called me to rejoin the board and assess the company’s strategic potential. The company, in general, was not doing well. I concluded that it could improve enormously, but Mission Foods was the most promising business, especially in the US. So, they asked me to join the executive committee again, to be a board member and CEO of Mission Foods in the US.
When I was there, Mission Foods was struggling, sales were stagnant, profitability was declining, but we could reverse those trends with tremendous profitability improvements simply by focusing our strategy on better serving the consumer.
AM: What do you think about the growth of Hispanic food products in the US, such as tortillas? What is being done well, and where do you see weaknesses that may affect the US Hispanic food product market’s development?
JVB: The growth of Latino foods has been driven by a strong Hispanic population demographic. Latino food is becoming increasingly popular with non-Hispanic consumers. With the great variety of options, it can have, Hispanic and Mexican food has that touch of authenticity and freshness that attracts new consumers because of its flavor.
But we must also recognize that private labels and especially value-added products are growing at the core market’s expense in general, not just the Hispanic food industry. So this growth is driven by these new consumer groups that I mentioned, and I think the industry’s weakness is at the same time the opportunity.
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We need to continue nurturing the existing Latino consumer base, not abandoning that base but evolving to serve their needs better while focusing on growing value-added products targeting these new multicultural segments. Millennials, Gen Z, are more multicultural than ever, they have more information about products, are well informed, and their preferences change faster than ever.
So by putting together this ever-refined portfolio of products, you may not only meet those needs but preferably anticipate those demands. Hence, you get the advantage of being the first to move.
This will be one of the key success factors for El Dorado Foods. We have to make sure we know the consumer, qualify the brands, evolve the products with a national vision, and go beyond the typical Mexican or Latino vision.
AM: When you retired from Mission Foods and became a private equity investment advisor to Berkshire Partners, what was the process like for you to partner in the creation of El Dorado Foods?
JVB: After I retired from Mission Foods, I evaluated all of my personal strategic options. And then, I concluded that there was an opportunity to replicate what we have done in Mission Foods but in all Latin products, not only in one of the categories that are tortillas but everywhere. And it was the ideal way to contribute to the evolution of the industry in the right way.
The main challenge is that the industry is still very fragmented. Many medium or small players could benefit from integrating them into a larger conglomerate with a national vision with best management practice that can lead the industry towards profitable growth by creating value for consumers and customers at the same time.
AM: The COVID-19 pandemic did not interrupt the launch of El Dorado Foods last September. Are you not worried about economic uncertainty?
JVB: On the contrary, I believe that change always creates opportunities. We have to look at this dramatic change with eyes that detect opportunity, and I have long believed that generally speaking, the food industry is recession-proof. I think some of the changes are here to stay. For the next year and a half at least, COVID and COVID restrictions will be here. The idea is to be prepared and anticipate the changes and what the consumer really wants.
AM: How do you plan to develop the El Dorado Foods business?
JVB: The idea is to create a multi-category leader in the food industry. We intend to buy companies and obviously integrate them to eliminate to some extent the fragmentation of the industry; gain economic sustenance, synergy, other operational efficiencies, but I believe that growth should be the main source of creation valid for all stakeholders, for consumers, customers, investors, employees and the community at large.
We need to create value. We need to make better products that better meet your needs.
We are talking proactively with companies. We already have a list of companies that we are approaching to talk about and present the benefits of El Dorado because our purpose is to grow the business.
El Dorado will be a Latin brand packaged food company; it will be involved in manufacturing and distribution. Our clients would be grocery chains, and our consumers will be the existing Latino consumer base. We intend to further penetrate core markets by targeting specific and fast-growing consumer groups.
AM: What do you expect from 2021?
JVB: Ideally, by 2021, we will have already made our first acquisition that will serve as a platform for other companies, and this aims not only to identify and acquire the company but to put everything together in terms of systems, management, prepare that platform to absorb, To integrate effectively, this will be our goal.
As for the economy in general in 2021, I can’t tell you because anything can happen. You never know.