The path to profits may be clear to Ritthaler, but the road hasn't been easy. There have been the other businesses to run. Additional farmland to acquire in Venezuela. Buildings to erect. Seedlings to germinate. Laborers to hire. And bad luck to endure. In June 1997, not long after Ritthaler got his processing plant fired up, a real fire broke out in the flour mill. That set him back nearly a year. Delays in well drilling and importing irrigation equipment proved disastrous when a crippling drought affected his crop last spring before his installation of irrigation, which to date has cost about $300,000.
As he stood by his trade show booth in October, watching hand after hand reach for his five flavors of yuca chips, Ritthaler was hoping to finally roll out his product in the United States in early 1999. Tropic's has been sold in a few outlets in south Florida since last June. The chips are available in five flavors: Original, Picante 'n' Cream Cheese, Sour Cream 'n' Onion, Garlic 'n' Cilantro, and Original Barbecue. Visitors to the Tropic's booth almost universally applauded the black package, which suggests the upscale nature of the chips: the package photograph shows them in a Waterford crystal bowl against a Caribbean sunset. And most people seemed to like their taste and crunch. Not only are Tropic's chips thicker than traditional potato chips, and therefore better for dipping, they're considerably less greasy. Yuca chips absorb less oil than potato chips, allowing the company to proclaim that its chips contain "40% less fat than regular potato chips ." Also higher in fiber than potato chips, Tropic's chips have no preservatives, no artificial color, and no cholesterol, enabling Ritthaler to position them as all-natural. And switching to a more expensive kind of sunflower oil, he says, will extend the product's shelf life from four months to six.
"I like it. I think it's an excellent product," said John Jarvis, president of Jarvis Sales Co., in Aurora, Colo., an independent snack food broker, after he'd just sampled the chips. "This yuca chip is different. We'd look at it as something new we're coming out with. Take a look at the bag. Look at the colors. This is class. That's going to help." Like dozens of tasters who had sampled the chips before him, Jarvis handed his trade-show badge to the vice president of sales and marketing at Tropic's, Robert Anderson, who scanned it into a device that captured Jarvis as an interested lead.
Comments like those only reinforce Ritthaler's abundant faith in his product, a characteristic entrepreneurial zeal that has fueled him during Act I of his start-up journey: creating a tasty niche product in an attractive package. "I know it will sell," Ritthaler says. "I wouldn't be this far if I didn't. I'll do a taste test with any potato chip in the United States. I'd be very surprised if I didn't win."
The market and competitors
By many measures, Act II of the Tropic's story--year one of its marketing push--will be no less challenging than its protracted opening act. Ritthaler may well need that safari jacket. For in forgoing a commodity business and its inherent pitfalls, he's run headlong into a different set of problems in the archly competitive snack-food business, a jungle of an industry in which the challenges only begin with an 800-pound gorilla.
In the salty-snack business, Frito-Lay casts an intimidating, $10 billion shadow. The undisputed King of Chips has gobbled up foot after foot of supermarket shelves, typically commands entire rows inside vending machines, and rules supreme in other venues such as Subway sandwich shops, where franchisees can stock as many as 12 varieties of chips--all made by Frito-Lay. "I don't think yuca would be worth their time and effort," says Ritthaler, who believes his narrow niche will protect him from Frito-Lay's mass-market might. "There are too many other things they could do to get a faster return."
In the years it's taken Tropic's to ready its rollout, a key portion of the playing field has changed. Until recently, the natural-foods industry served as a low-cost-of-entry incubator for small companies like Ritz Foods. Those days are disappearing, if not already gone. "It's kind of like all bets are off," says Steven Hoffman, publisher and cofounder of Natural Business, an industry journal. For one thing, the number of new natural-foods products has soared, increasing competition. When Ritthaler first set his sights on yuca, the new-products showcase at the Natural Products Expo was just that, a single glass case. Today it takes several such cases to house all the wanna-bes. And the cases don't contain any of the favorite-son competition that's out there--the growing number of house brands now shelved at outlets like the Whole Foods Market chain. "There's such a plethora of new products and such a fight for shelf space. Just as that led to slotting fees in the supermarket industry, we're now seeing those kinds of things in the natural-products industry," says Hoffman. And there are fewer distributors. Industry growth has sparked the inevitable consolidation, concentrating entrÉe increasingly in the hands of two companies, Tree of Life and United Natural Foods.
The players have also changed as Ritz has ramped up. Goya, an established maker of ethnic foods, has introduced cassava (another name for yuca) chips in metropolitan New York supermarkets. In Ritthaler's neck of the woods, Florida, no fewer than three small food companies that sell primarily to the Spanish population, also through supermarkets, have expanded production from plantain chips to yuca chips. While none of those products is positioned as a premium chip, a well-established, high-end brand of nonpotato chips--Terra chips--already stares out at Ritthaler from the very shelves he covets.
