COSTA RICA - Industry
Director General, Alimentos Prosalud
Federico Alvarado holds a master’s in banking and finance from the University of San Diego, California. He worked for eight years in Phelps Dodge as regional director of finance. Prior to this he was director of finance of several companies for over 16 years. He has been director general of Alimentos Prosalud for eight years and director of finance for nine years.
The company was founded in 1973 originally as a sardine producer. However, five years later an opportunity arose to start producing tuna because it was a source of cheap protein and a good supplement. In 1976-1978, Costa Rica went through a crisis, and the company wanted to offer an inexpensive product, and tuna was ideal for that purpose. In 2002, we inaugurated our new production facility in Barranca in Puntarenas. It was a modern and state-of-the-art 25,000sqm plant that replaced a 7,000sqm facility in Cocal. This new plant allowed us to expand to the international market. We started to export to the US, Europe, and even Asia. We continued to grow and are currently one of the largest companies in Latin America—no doubt the largest in Central America—in the tuna business. In 2005, we acquired Tesoro del Mar, which at that time was the second-largest tuna producing company. In 2012, we decided it was time for the company to innovate and participate in different types of businesses, and we changed our name from Sardimar to Alimentos Prosalud. We started working aggressively in innovation and entered other markets such as dry pasta; we also started working on our own R&D department, where we have many people working on different formulas for completely new products. Now, we sell rice with chicken, pesto sauce chicken, and many other different products that many people had not thought of before. In 2018, we will start working with two new categories through the acquisition of two companies; these are different from our current segment but are growing rapidly worldwide.
Costa Ricans have been consuming tuna for 70 years. It is the fourth country in the world in terms of per capita consumption; hence, it is a large and interesting market. However, the Costa Rican consumer is also demanding in terms of quality. They do not buy cheap products that come from other countries. We own around 75% of the total market share of Costa Rica. Of that 75%, close to 60% are for Sardimar and Tesoro del Mar, which are our premium brands. Of course, these have a price difference compared to other brands, but people are willing to pay for them because they know they are paying for quality. Costa Rica is an attractive market for that reason; eventough, competition increases every year and we have to be even more aggressive, efficient, and creative.
We constantly offer customers new flavors and new presentations. We have to invest significantly in marketing to create brand loyalty and that has given us good results. If we look at what this company has launched, mainly of the Sardimar brand, we used to launch 20-25 products a year, some of which are stable shelf products, while others are seasonal.
Central America is similar to Costa Rica; it is a small market. It behaves a little differently because it prefers sardines to tuna and does not have such a strong tuna culture. This leads to competition being aggressive in Central America. We face competition from Asia, Africa, and Ecuador; it is simpler or cheaper to produce in those countries; for example, labor costs are much lower in Mexico, Ecuador, and Thailand. This makes our efforts to compete a little more complicated. We are not leaders in Nicaragua or Guatemala in the sardine business because competition is tough and regulations are not as established. There are extremely cheap products that arrive without taxes from Mexico, so there are barriers to entry in those countries. However, we are leaders in tuna products. Our prospects are brighter in areas like the US, Europe, and certain countries in Asia, because they are willing to pay for quality. We have 70% of the market share of the gourmet tuna in the US with the brand Tonnino and have been growing around 30-40% a year for the last eight years. The US will be the second-most important market for us in the coming years. We are investing in that and creating a whole team for the country; we have high expectations for what we can do there. Our strategy there is to offer high-quality, high-priced products with good margins and offer them to specialty chains such as Whole Foods. We have had excellent results so far and are trying to implement the same strategies in Germany, France, Italy, Qatar, and Bahrain, which have high incomes per capita and where such items are typically accepted.
We invest large sums of money in mainly three different areas. Education is the best way to prepare the people of a country for the future, and we are committed to investing in education. We concentrate our efforts in the Puntarenas area, and every year we provide the schools there with 6,500 book packages. We have also cooperated with them in the maintenance of their buildings. We go there annually to have people from the Puntarenas region that are now managers or chiefs in our company to give speeches to encourage children to continue their education. The other area where we help significantly is health; we recently donated to the local hospital in Puntarenas an ambulance for newborns, the first in the country. We also donated all the equipment for a new room for newborn care with incubators. The third one is related to the environment and sustainability. We only purchase our raw materials from certified ships that respect other species such as dolphins; we do not buy a single kilogram of fish from a boat that is not certified as dolphin safe. We force our suppliers to respect the mating season; if they do not comply, we stop purchasing from them. We have a strong respect for social and environmental responsibility.
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