Sometimes, it seems as if it would take an act of nature to make a business boom.
And sometimes it does.
Adriana Kahane can thank Mount Etna for a large part of the success of her business, which is importing and distributing gourmet, organic blood orange juice.
Three years ago, an unexpectedly large eruption of the Sicilian volcano damaged a perfectly good blood orange crop being grown near the mountain. That made the crop unfit for sale as a fruit but perfect for juice.
Soon after, Dream Foods International LLC began selling its imported “Italian Volcano” organic juice at Trader Joe’s, becoming a popular item at the market chain.
“The good news after the eruption was that the plant we use in Italy said, ‘Hey, now we can squeeze these into a juice for you,'” said Kahane, who had started her business importing the fruits.
Blood oranges are a variety of orange with crimson, blood-colored flesh. And while the Moro variety is grown in Southern California, the Sanguinello and Tarocco varieties grown in Italy in the volcanic soil in the valleys and hillsides next to Mount Etna are said to be sweeter and tastier.
Whatever the gustatory truth of the matter, the product has been a hit with the kind of discriminating, super premium shoppers who frequent Trade Joe’s, Whole Foods Market and Wild Oats.
The juice, which is not from concentrate, generally sells for $5 for a 750-milliliter glass bottle and about $2.40 for a 250-milliliter size. Sales were $500,000 in their first year and revenue has hit about $1.5 million in 2006, helped along by distribution at Ralphs and other supermarkets.
The high-end grocery markets declined to comment on their products, but beverage consultant Gary Hemphill said almost any new and good juice has an advantage.
“The juice category, with very few notable exceptions, has been a pretty sleepy sector,” said Hemphill, senior vice president of the Beverage Marketing Corp. in New York. He cited POM Wonderful pomegranate juice an exception, because of its uniqueness, packaging and “hip” factor.
(POM Wonderful is owned by Los Angeles-based Roll International Corp., which is controlled by Stewart Resnick, founder of the Franklin Mint.)
“Blood orange has some of those same properties, hipness appeal and uniqueness, so there is some potential there, but so many factors go into making a juice product successful,” Hemphill said.
Enter Mount Etna
How the eruption of an ancient Italian volcano eventually led to Kahane’s business success is a story that began in 1998.
That was the year Kahane was finishing up her M.B.A. at USC’s Marshall School of Business. Kahane had been doing some research on blood oranges for a class.
The research led to her meeting Pino Modica, who eventually became her husband. Modica was visiting from Sicily, where his family owned blood orange farms. It was not long after that Kahane, armed with Modica’s knowledge of the Sicilian market, decided to begin importing and selling the fruit.
She considered selling juice, but couldn’t find a grower in Italy willing to pasteurize or rush it to the United States, so she settled on importing the fruit. She worked with a local L.A. distributor Melissa’s World Variety Produce in Vernon which sold them to higher-end stores like Bristol Farms, and even big box retailers like Wal-Mart.
Sales the first two years were about $70,000 and grew to $300,000 a year over the following two years. Then Etna struck.
The largest active volcano in Europe rests on the eastern coast of Sicily. Eruptions occur every few years, but rarely of the size of the one that occurred in January of 2003. Mount Etna threw up a column of ash so huge that it could easily be seen from space. Ash fell as far away as Libya, across the Mediterranean.
Many houses on the flanks of the mountains sustained damage and the orange crop that Kahane has planned on importing was covered with volcanic ash. Much of the fruit was scratched on the outside, which made it unfit for shipping.
That would have been disastrous for Kahane, had she not switched course and the processors not come around.
Kahane’s company which was initially financed by credit cards, personal funds and a Small Business Administration loan spent about $5,000 on a fast feasibility study and flew one palette of the juice out to California for a test run at a trade show. Soon after, Dream Foods’ “Italian Volcano” organic juice line was launched.
“It was clear right away we had something that would have national appeal, and we were shipping by June,” Kahane said. “We wanted something available year round and demand for the juice was so good.”
Dream Foods also distributes a bottled juice made from Italian tangerines and organic, not-from-concentrate lemon and lime juices that come in small plastic squeeze bottles. In terms of dollar sales, blood orange and tangerine juices and the smaller lemon and lime squeeze bottles are nearly equal.
About 56 percent of the sales come from the Italian juices, though Dream Foods moves more physical units of the lemon and lime squeezes into retail outlets through produce distributors. Those cost consumers $2 for a 200-milliliter container or $1.30 for 100 milliliters.
“If you look at our two product lines, there are obviously higher margins on lemon and lime because they are smaller, lighter, closer to ship,” Kahane said.
The company sells its blood orange and tangerine Italian Volcano juices as super premium juices and is trying to follow a path similar to POM Wonderful pomegranate juices, which outsell it many times over.
“We sort of thank the pomegranate juices for creating more room for higher-priced super premium juices,” Kahane said.
Dream Foods International Inc.
Year Founded:
1999
Core Business:
Importation and distribution of organic citrus juices
Employees in 2005:
2
Employees in 2006:
3
Goal:
To push the Italian Volcano juice line further into the mass-market supermarket chains
Driving Force:
The desire of consumers for a distinctive, upscale and healthful fruit drink
