SMALL BUSINESS : Tortilla Maker to Roll Market Out to Illinois, Northern California

A small tortilla manufacturer in Newport Beach announced Friday that it has signed agreements with two supermarket chains that will allow it to expand its market into Northern California and Illinois.

Catalina Foods Corp., which makes tortillas under the Familia de Sonora brand, said it will sell its tortillas at Jewel Food Stores' 227 supermarkets in the Chicago area and 67 Raley's Supermarkets in the Sacramento and San Francisco areas.

Other stores that carry Catalina's tortillas include Vons, Ralphs and Albertson's, said Laurie O'Brien, the company's president. They are sold in 1,200 supermarkets in three states, including Nevada.

Later this month, O'Brien plans to introduce a new line of cholesterol-free tortillas in supermarkets. The new product, which will cost a little more than its regular tortilla, is made from flour and vegetable oil.

In 1989, Catalina's first year in business, the company sold an average of about 60,000 tortillas a month and had sales of $150,000. It now sells 432,000 a month and had 1991 sales of $500,000. The company expects sales this year to reach at least $750,000.

O'Brien attributed the sales increase to what she called a "strategic alliance" with other food companies that provide ingredients to the tortilla market. To get customers to taste her tortilla, O'Brien has linked up with salsa makers--Juanita's Foods and Petfoods Corp.--and cheese maker Kraft General Foods. Together, they have set up demonstration counters in several supermarkets, making quesadillas for customers.

The county venture has been so successful that she plans to start a similar marketing effort next month in Northern California supermarkets, she said.

"This can save us a lot of money," O'Brien said. "I know that there are many food manufacturers that are looking for ways to lower their demonstration costs because money's tight now."

Richard O'Brien, Catalina's chief financial officer and Laurie O'Brien's husband, said their brokers are negotiating with Safeway Inc., which has more than 200 supermarkets in Northern California.

"Our sales are up," Laurie O'Brien said, "but it would have been far better had it not been for the recession. I think our growth would have been quicker."

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