Cornering the Granite Market in Brazil
Granite countertops in kitchens and bathrooms are a coveted luxury in homes all over the world. And the businesses that import that granite take a huge gamble delivering it to showroom floors.
Just to get one 30 ton-block of stone from a quarry in rural Brazil, an importer may spend $16,000 to purchase it, $4,000 to truck it to a processing plant, and then another $3,500 to get it sliced into shippable slabs. All said, from quarry to showroom, a slabs journey could cost up to $40,000--only for the importer to discover a blemish that makes it worth significantly less, or even worthless.
It’s a gamble that business partners Marco Pereira and Vinny Tavares make around 300 times a year when they buy blocks directly from rural quarries in Brazil for their Austin-based company, Pacific Shore Stones.
The company made $26 million in 2012 selling these slabs directly to fabricators in the Unite States who, in turn, install them in homes and businesses. Revenue has increased 136% over the last three years, and the 8-year-old company, which employs 88 people, expects to earn $32 million in 2013.
Pacific Shore Stones is one of the many companies vying for a spot on the 2013 Inc. 5000 list. As applicants arrive, we thought it would be worthwhile to shine a spotlight on some of these fast-growing private companies. (For more information and to apply, go here).
Two to three times a year, Tavares, the company’s CEO, and Pereira, its vice president of sales, make their way down to Brazil--which exports 60% to 70% of the world’s granite--to purchase blocks and cultivate relationships with the hundreds of quarry owners and stone processors.
In an industry fraught with illegal prospecting, mining, and competition that often leads to political--and sometimes even physical--confrontation, Tavares and Pereira have an edge that very few others have: they’re the local boys who speak the language and know the culture.
Tavares was born and raised in São Paulo, making his way to the U.S. in 1999 to study business at the University of Texas at Austin, and Pereira, who was born in the U.S., moved to São Paulo when he was six years old, coming back to the U.S. in the mid-1980s to study business at Cal State L.A. and then Cal State Northridge.
"Trust is such a big issue in our industry," Pereira says, explaining that he and his partner are two of a very small group of Brazilians in the American, Indian, and Italian-dominated stone industry. "It’s a very different culture down there; it’s very relationship oriented. And the fact that we speak Portuguese--that we can connect with owners and their families--helps us reach them on that personal level."
It’s also a big advantage to have when it comes to navigating an industry built around a limited natural resource. According to Tavares, quarries tend to produce only 10 to 20 blocks a month, which can make purchasing a scramble for Pacific Shore Stones, whose clients expect it to import more than 100 quality blocks a month.
Pereira says that the typical granite importer--of which there are more than 300--purchases from 10 to 15 sources, but Pereira and his partner’s cultural acumen allows them to purchase from hundreds of sources. During their trips to Brazil, they see up to 50 quarries or processing facilities, driving up to 800 miles away from São Paulo to see the rural quarries that stay off of most importers’ radars.
Pereira founded the business in 2004 in Los Angeles after friends told him that granite importation was a booming business with tremendous opportunities for Brazilian locals. He remembers thinking to himself, "I could do some real damage there."
In 2005, he met Tavares through a mutual friend, and decided to bring him in as the company’s CEO, and together with his longtime friend, Donald Ciceri, the three make up the company's leadership.
Over the course of the last eight years, the three have targeted second-tier markets, opening up distribution centers in cities like Austin, Oklahoma City, Little Rock, Memphis, and Birmingham, Alabama.
Tavares says the plan for the future is to continue targeting cities with populations between 1 and 1.5 million. The company hopes to expand into the Midwest and the southern parts of the Eastern Seaboard.
Initial prospecting in South Africa indicate that Africa might be poised to become a new boon for the granite industry, but Tavares and Pereira seem undaunted.
"Oil comes from the Middle East; granite comes from Brazil," Tavares says.