Powdered juices have come a long way since the days of sugar-saturated, Technicolor products that did little more than quench one’s thirst. Michael Sommers talks to Alexandre Müller, Director of Brazil’s Brassuco, to discover how his company remains a refreshing presence after close to a quarter-of-a-century in the powdered drink market.
In factories across Brazil, it used to be that when lunchtime rolled around and thirsty workers lined up for a refreshing drink of ice cold fruit juice, considerable time and labor were involved in the preparation and serving of this simple beverage. “Back then the juice was prepared by kitchen staff in great buckets. A nutritionist would come and add ice before redistributing the juice into pitchers. Once chilled it could then be poured into glasses and finally served. We thought this wasn’t a very efficient system and that we could do a lot better. So in 1985, we created Brassuco around the idea of supplying concentrated juices and beverage dispenser machines so that people could serve themselves,” recalls Alexandre Müller, director of São Paulo Brassuco.
The idea was simple, but at the time Brassuco was a pioneer. The company took its concept to large industrial kitchens of plants and factories throughout São Paulo state, focusing in particular on the region’s booming automobile manufacturers. Before long, it counted among its clients giants such as Ford, Volkswagen, and Fiat. With Brassuco dispensers and juices, there was no ice or mixing required. The juice was chilled in and served out of the same recipient with major savings for clients as well as improvement in terms of hygiene and taste. Within a decade, the company had quickly conquered this niche and was a market leader in the sector. It was feeling confident enough to branch out in a completely new direction by entering the retail market.
For its foray into retail, Brassuco launched two lines of products: in 1997, it extended its original line of powdered juices and, shortly after (in 1999), it introduced a line of powdered chocolate drinks. “Demand for these products is very high in Brazil,” explains Müller. “Brazilians are the third largest consumers of powdered drinks in the world after Americans and Mexicans. Today, powdered drinks constitute a one billion real ($568 million) market in Brazil. Meanwhile, powdered chocolate drinks are extremely popular at breakfast. Although the segment is dominated by major brands such as Nescau and Toddy, this 1.2 billion real ($681 million) market continues to grow and there’s room for many more players.”
To give both of these distinctive markets the individualized attention each required, in 2006, Brassuco restructured its entire commercial team, appointing two separate managers to lead specialized teams. The company also embarked upon an aggressive sales strategy that included a serious marketing campaign, with ads in print and on TV, to increase brand awareness and distinguish it from its rivals, many of whom, according to Müller, tend to place less emphasis on advertising.
In order to go up against larger competitors, however, it was also necessary to dramatically increase its production capacity. Brassuco did so in 2004, when it renovated its entire industrial plant in Itu (62 miles from São Paulo). It made significant investments in new equipment and technology: fully automating its plant so that from the moment the raw material arrives it is being packaged and sealed in sachets; no human manipulation is required. “This is a major advantage we have over many of our competitors, most of whom are only partially automated,” confesses Müller. “Full automation means no risks, no losses, and standardization in terms of both processes and products. It allows us to offer a consistently high level of quality to our customers, which was a big factor in our obtaining ISO: 9000 certification in 2005.” Such investments in infrastructure coupled with the enlargement of its plant to 8,000 square meters (26,200 square feet) of constructed area subsequently allowed the company to quadruple its monthly production capacity to 300,000 boxes of powdered drinks (each box containing 120 individual sachets).
These progressive actions have already borne considerable fruits for Brassuco. From 2006 to 2007, the company’s revenues increased by 25 percent, with total revenues for 2007 hovering around 49 million reais ($28 million). Within the food service sector, Brassuco is undisputed leader as a supplier of juices to industrial kitchens. In terms of retail, the success of its Brassuk line of powdered juices – currently with 12 flavors available in packages of 30 grams and six in packages of 460 grams – has placed Brassuco among the top 10 brands nationally – no mean feat, in a market with more than 80 brands, among them Tang (Kraft), Frisco (Unilever) and Camp (General Brands). In São Paulo, Brassuco’s performance has been even stronger: it currently ranks fourth in the market of Brazil’s most wealthy and populous state.
Increased production capacity meant that Brassuco could not only consolidate its hold on the markets in which it operates, but also move into completely new segments. “Although our monthly capacity is for 300,000 units, we were only producing 120,000 units for our food service and retail clients,” says Müller. “One of the new areas we decided to focus on was exports.”
Initially, this gamble paid off handsomely. In 2003, international sales were responsible for 14 percent of the company’s total revenue. Brassuco was exporting to 15 countries throughout Latin America and Africa. The only problem was that the U.S. dollar began to plummet. “In 2003, $1 was worth 3.2 reais. Today, it has fallen to 1.75 reais,” explains Müller. “Moreover competition on the international market is very difficult due to rival products from Chile and Turkey. As a result of these setbacks, we now only export to four countries and overseas sales account for a mere 2 percent of earnings. For the moment, we don’t see a lot of opportunities in exports. We hope that the dollar will recuperate. Meanwhile, we can’t completely abandon overseas markets, and so we continue to battle on.”
More successful has been the company’s foray into outsourcing. Brassuco began by making powdered drink products for private brands such as Dia (the brand of mega supermarket chain, Carrefour) and then ventured into making high-quality powdered chocolate drinks for cafés such as Brazil’s Starbucks. “The client purchases the packaging and we manufacture the product, package it, and send it to them,” explains Müller. “We began this outsourcing service in 2004, and although it’s still very small in terms of our overall operation – representing 3 percent of our business – it’s a very promising segment. Over the next three years, we hope it will grow to comprise 15 percent of sales.”
Other future plans involve developing new products that keep up with latest industry trends. As in most segments of the food industry, society’s growing concern with nutrition has led to an increasing interest in the creation of healthy products. Brassuco has successfully launched lines of diet juices with less sugar and calories and additional vitamins such as Vitamin C, and is currently developing drinks containing soya and fibers as well as chocolate drinks that use organic chocolate. Since in the past, the company has had difficulties in exporting to Europe and North America because consumers on both continents favor drinks that use all natural ingredients, it is also planning to launch a line of natural products that include dehydrated fruit pulp. Already for 2008, Brassuco is planning to launch six new products for the retail market.
Says Muller: “Many people still continue to associate powdered juice with brightly colored, overly sweet artificial chemical drinks. But we aim to prove them wrong. Our mission is to prove to consumers that powdered juice is not only easy and practical, but nutritious as well.”