From Local Peruvian Beginnings to Global Reach: The Multifoods Success Story

Michael DeBakey, the visionary behind Multifoods, unveils the compelling story of transformation from a small-scale operation in Peru to a dominant force in the global food industry, with a significant emphasis on kosher certification. Starting with the challenging acquisition of a bankrupt local company, DeBakey navigated through the intricacies of Peru’s distribution landscape, steering the company towards becoming a pivotal co-packer and private label powerhouse for the US market and beyond. This journey not only showcases the strategic shifts and expansions Multifoods undertook but also highlights the pivotal role of kosher certification in unlocking new markets and fostering trust with a diverse clientele.

Michael DeBakey My journey with Multifoods started with the acquisition of a bankrupt company in Peru, which catered to the local market with a focus on mustard, soy sauce, and vinegars. The initial phase of rebuilding was challenging, primarily due to the difficult distribution landscape in Peru two decades ago. The larger supermarket chains held a mere 20 to 30% of the food business, leaving the bulk of the market in the hands of small mom-and-pop stores spread across the cities. 

To engage with these stores effectively, two main resources were essential: a comprehensive distribution network, complete with our own delivery trucks, and the financial capacity to extend credit to these stores, all the while bearing the risk of potential closures that could affect our receivables. 

We then sought to collaborate with local distribution companies, but were met with a dilemma. Nearly all of these companies had their own private labels, which competed directly with our products, making them hesitant to distribute our ketchup, mustard, or soy sauce alongside their brands. 

It became apparent that thriving in the local market required a different strategy. It was not about growing our own brand but adapting to the market by becoming a private label manufacturer or co-packer for established brands with the necessary distribution and financial strength. 

This led to Multifoods spearheading the private label production for essential condiments for supermarket retailers in Peru. We also began manufacturing for distribution companies that had their private brands. 

From these efforts, Multifoods grew modestly. By around 2004 or 2005, we were a small but established player in the market, with annual sales reaching a couple of million dollars. However, given Peru’s limited market size, it was clear that further growth would require us to look beyond our borders. 

This realization brought me to consider exporting, with the United States being an obvious choice due to my familial connections and personal history with the country. Having been educated in the U.S. and with a deep understanding of the market from my time living and working there, it was my first target for seeking out new clients for Multifoods’ international expansion. 

Breaking into the U.S. Market 

OU Kosher: Michael, can you walk us through Multifoods’ venture into the US market and the development of new product lines? 

Michael DeBakey In 2005, I personally took a trip to the US with product samples in my suitcase, landing in New York to attend the Fancy Food Show. This was where I initiated contacts, aiming to set up meetings with potential clients. One New York client introduced me to what they referred to as commercial balsamic vinegar, an affordable alternative to traditional Italian balsamics that was gaining traction in the US for both cooking and sauce production. 

We took this concept back to Peru, created samples, and engaged in continuous testing, sending out weekly samples to our clients in Oregon. This dedication paid off when one client confirmed their interest and we began shipping containers of our product, marking the beginning of our exporting journey. 

The following year, during another trip to the States in search of clients, the suggestion to produce lemon juice came up, considering Peru’s abundance of lemons. Drawing from past experience working for a company with a lemon juice producer in northern Peru, I returned home to develop the product. This led to us exporting lemon juice, and by 2007 or 2008, these exports constituted a significant portion of our sales. 

Recognizing the potential in the US market, we invested more time in cultivating relationships with clients. This strategy bore fruit when we connected with a client heavily involved with dollar stores, for whom we developed value segment products like lemon juice and balsamic vinegar. 

The financial crisis in 2008 shifted consumer behavior significantly towards dollar stores, and we capitalized on this by increasing orders and expanding our product range. I visited major value retailers like Dollar General, Family Dollar, and Dollar Tree, and as demand grew, so did our product line, including fruit spreads, jellies, salad dressings, BBQ sauces, mayonnaise, and ready-to-drink juices. 

Now, exports represent 70% of our sales, with the remaining 30% in the local Peruvian market. Notably, 90% of our sales are from private label or co-manufactured goods. 

OU Kosher: Does Multifoods have a presence in Mexico as well? 

Michael DeBakey Yes, we have expanded into Mexico, engaging with a few retailers there, including Waldo’s Chedraui and Walmart Mexico. While our top market remains the US, followed by Canada and then Mexico, we also have a significant presence in Colombia, the Caribbean, and Central America. The US, however, constitutes the largest portion of our business. 

Embracing Kosher Certification  

OU Kosher: Michael DeBakey, reflecting on the significant growth Multifoods has experienced, especially in the East Coast of the United States, could you speak about how kosher certification became a part of your products? 

Michael DeBakey Last year we shipped around 2,200 to 2,500 containers to the US, which underscores our tremendous growth over the past 23 years. Our strength in the US market, particularly in the tri-state area, dates back to our early days when clients began requesting kosher certifications for many of our products. This led to the development of a strong relationship with the Orthodox Union (OU) and adherence to their certification standards. 

OU Kosher: Before your first customer requested kosher certification, were you familiar with what kosher meant? 

Michael DeBakey Yes, having attended school in the US where there was a sizable Jewish community, I was aware of kosher practices. This awareness was also supported by my Jewish friends in both the US and Peru, and interestingly enough, there’s a kosher store not far from where I live in Lima. While I didn’t know all the details, I was certainly aware of kosher and the importance of certification for the Jewish community in the States. 

OU Kosher: Do you apply the kosher symbol to your products distributed in Mexico or other countries, or is it exclusive to the US market? 

Michael DeBakey We primarily use the kosher symbol for products in the US market. However, we have produced for Israel, where we also include the OU symbol, as required. Our clients in Mexico and Central America haven’t requested that we add the symbol to the products as of yet. 

OU Kosher: Regarding your product range, do you produce superfoods or ethnic Peruvian products? 

Michael DeBakey No, our focus is not on ethnic or typical Peruvian-origin products. We specialize in mainstream products that cater to the US market, such as various salad dressings like Ranch, Thousand Island, Blue Cheese, and Caesar, as well as juices including cranberry, orange, and apple. We also produce BBQ sauce and lemon juice, among other items. 

OU Kosher: So, in the competitive US market, is price a significant factor in your strategy? 

Michael DeBakey While price is important, our position as a co-packer and private label manufacturer means that our clients, which include large retailers like Dollar General and various others, prioritize good service, product reliability, and no-fuss transactions over price alone. They need a price point that allows them to position the product effectively on the shelf, but once that’s achieved, they prefer to work with a partner that ensures quality and timely delivery. 

OU Kosher: And in this market, you’re competing with US manufacturers? 

Michael DeBakey Yes, that’s correct. We do compete with US manufacturers. 

OU Kosher: Do you have any of your own brands, or is everything co-packed? 

Michael DeBakey About 10% of our sales are from our own brands, but these are exclusively sold in Peru. We do not export our brands; hence, everything we export is under private label. 

Operational Challenges and Solutions 

OU Kosher: Michael, could you describe the process Multifoods underwent to achieve kosher certification for your plant? 

Michael DeBakey Certainly. When we began 23 years ago, we operated out of a small plant just five minutes from our current location, producing mainly ketchup, mustard, soy sauces, and vinegars. At that point, we were not exporting, so kosher certification wasn’t necessary. 

 However, as we moved to the current plant and began exporting, the need for certification became apparent. We encountered challenges with certifying products like balsamic vinegar due to its complexity. But with lemon juice, which is a simpler product with only four or five ingredients, obtaining kosher certification was more straightforward. We reached out to the OU, who guided us through the process, and because we have a dedicated line for lemon juice, it was a relatively easy product to get certified. As we expanded, we started receiving requests for kosher certification for other products like fruit spreads, other juices, and salad dressings. By then, we were familiar with the certification process. 

 Whenever a certification was needed, we’d contact our OU representatives with ingredient lists and production details. They would visit, inspect the lines, and if changes were necessary, we would implement them. Fortunately, obtaining kosher certification did not require significant investments. 

OU Kosher: When you say you were asked to get certified, was it at the request of retailers or customers? 

Michael DeBakey Yes, our clients would request the kosher symbol on our labels, and in turn, we would coordinate with the OU to secure the necessary certification. 

OU Kosher: It seems that your ability to add a range of products to your offerings reflects both customer trust and the quality of your work. 

Michael DeBakey Absolutely, one of our growth strategies is cross-selling. If we’re providing lemon juice to a client, we aim to also sell them salad dressings, fruit spreads, BBQ sauces, cranberry juice, and as many products as we can. It streamlines the process for them—just one invoice, one shipment, and the possibility of mixed containers. 

OU Kosher: Do your clients specifically request OU kosher certification? 

Michael DeBakey Clients usually don’t specify the certification agency. Sometimes they ask for specific certifications like FAB Kosher for Passover, among others. Since we have an established relationship with OU Kosher, I decide to pursue certification through them. 

OU Kosher: What led you to choose OU for your initial certifications? 

Michael DeBakey It goes back about 15 to 18 years when I met Shooshan Gori, OU Kosher Rabbinic Coordinator, at a fancy food show in New York. He visits Peru often, and through our interactions, we developed a friendship and a professional relationship, leading us to work with the OU. 

Building Business Relationships 

OU Kosher: Regarding the staff at your plant, are they required to understand kosher certification? 

Michael DeBakey The administrative segment of our company, particularly those in research and development and quality control, are well-versed in kosher requirements. This includes our QA manager and R&D manager. They maintain regular contact with Shoshen and others at the OU to ask questions and gather information, ensuring they’re knowledgeable about kosher practices. The production line workers at our plant, however, are less familiar with kosher since it’s not a common issue in Peru. 

 OU Kosher: Can you explain how you acquire customers for the co-packing side of the business? 

 Michael DeBakey We actively seek out new business by participating in two or three food shows annually, such as the Fancy Food Show, a nougat food show in Germany, and the Seattle Food Show in France. I frequently travel to the States to meet with current and potential clients, and we’re continuously sending out quotes in search of new business opportunities. 

 One strategy that seems to work well, particularly in the US, is our visibility to retailers. Potential clients often discover products labeled “Product of Peru” in stores, prompting them to research and contact us directly via the internet. Our website also attracts new clients who reach out to us. 

 OU Kosher: Do you find that being based in Peru is beneficial when discussing manufacturing opportunities with potential clients? 

Michael DeBakey Absolutely, Peru has built an excellent reputation in the States as an export country, especially over the last 25 years. We’re leaders in agricultural exports like blueberries and are among the top producers of avocados and grapes. The success of Peru in the fresh and frozen fruit sectors, as well as the foundation laid by established companies in manufacturing, has paved the way for us to enter and thrive in these markets. 

OU Kosher: So, do you source all your ingredients locally? 

Michael DeBakey We source both locally and internationally. Sometimes we need to import sugar due to high local prices or certain juice concentrates like cranberry and orange, which are not available in Peru. Therefore, we balance local sourcing with imports to meet our production needs. 

Planning for the Future 

OU Kosher: As you look ahead, what future developments or new products can we expect from Multifoods? 

Michael DeBakey Currently, we operate three manufacturing facilities and a large warehouse for finished products. Our original facility, which is kosher certified, produces our ready-to-drink juices like cranberry, orange, and apple. We have another plant for packaging beans and lentils, which has not needed kosher certification as it caters solely to the local market. These products are co-packed for Peruvian retailers, with some items sourced locally and others imported, such as lentils from Canada and corn from Argentina. 

Regarding our expansion, we recently purchased land to construct a new 20,000 square meter facility, which will allow us to increase production and develop products that we’ve been eager to create but were limited by space. This includes a range of pasta sauces and fruit spreads with higher-end glass packaging. This move to the new facility is expected to happen by the third quarter of next year. 

OU Kosher: Which of your brands sells the best? 

Michael DeBakey In Peru, we have three main brands. Ludin offers condiments such as ketchup, mustard, soy sauce, mayonnaise, and salad dressings. Londa is our line of ready-to-drink juices, featuring flavors like cranberry, apple, and grape. Derby is another brand that provides ketchup, mustard, and mayonnaise targeted at the price-sensitive segment, particularly the small family stores. 

OU Kosher: With the new facility, I assume you’ll be incorporating the latest technology? 

Michael DeBakey Absolutely. We’ve been updating our equipment over the past 18 months, not waiting for the new facility to be operational. The new location will feature modern production lines to enhance our capacity since we are currently operating at full capacity. 

OU Kosher: It seems like a significant undertaking. Is there any support from Peru in this expansion? 

Michael DeBakey We don’t receive much help from Peru, but as the saying goes, once you’re halfway across the river, there’s no turning back. We’re committed to moving forward. Additionally, we’re not alone in this venture. Three years ago, we sold a 25% stake in our company to Continental Grain, a large food company based in New York. Having them as partners provides us with the support and encouragement needed to continue our growth and expansion. 

OU Kosher: The expansion and new facility must be stirring excitement among your team. 

Michael DeBakey Indeed, and we’re planning for good air conditioning in the new facility, which is always a plus. 

OU Kosher: For companies interested in co-packing in Peru, could you give me your pitch in one sentence? 

Michael DeBakey At Multifoods, we stand on three foundational pillars when serving our clients: flexibility in fulfilling specific requests, whether it’s bottle shape or packaging type; efficiency in operations to provide competitive pricing; and a commitment to exemplary service, ensuring on-time deliveries without quality issues or delays. The absence of complaints from clients is a testament that we’re on the right track. 

Our goal for any partner is to offer fair pricing, reliability, and the assurance that their products are handled precisely as they wish, without any complications. That’s our standard practice for all clients. 

OU Kosher: Michael, thank you for sharing your insights. We wish you the best with the new facility and look forward to hearing about its launch.