FRANCISCO G. SADA, President, Wisdom Import Sales Co. Inc.

When Francisco G. Sada, 41, was tapped in August by one of Mexico’s largest breweries to run its U.S. distributorship in Irvine, the industrial engineer from Monterrey, Mexico, was ecstatic. Sada, a scion of one of Mexico’s wealthiest families, trained at Mexico’s Monterrey Institute of Technology and the London School of Economics. He presides over Wisdom Import Sales Co., the West’s largest beer importer and the largest Mexican-owned concern in Orange County. He recently spoke with staff writer Cristina Lee.

Tell us something about the parent of Wisdom Import Sales Co.

My great-grandfather was one of the original founders of Cerveceria Cuauhtemoc S.A., which celebrated its 100th anniversary in 1990, making it the oldest existing brewery in Mexico. This brewery is the basis for the formation of the Visa Group, Wisdom Import’s parent in Monterrey, Mexico.

The group owns the world’s largest franchise bottler of Coca-Cola, producing Coca-Cola products for the 20 million inhabitants of Mexico City. In 1987, it acquired Cerveceria Cuauhtemoc and Moctezuma and became Mexico’s second-largest brewing group and the world’s 14th-largest.

Today, the group is involved in a number of industrial activities in Mexico. Its packaging division is a major producer of glass, metallic, plastic, corrugated and paper packaging materials in our country. Recently, the group expanded into the banking business by purchasing the assets of Bancomer, Mexico’s second-largest banking group, for $2.5 billion from the Mexican government.

With over $1.6 billion in sales and a net income in excess of $100 million a year, the Visa Group is one of Mexico’s leading industrial concerns. Wisdom Import, as a subsidiary of the group, has access to the group’s resources.

Give us a brief history of Wisdom Import.

When Donald Wisdom founded Wisdom Import at the end of Prohibition in 1933, it was among the first beer importers in the United States. Donald made his living by buying various imported beers from ships that call at the Port of Long Beach.

He began importing Germany’s Lowenbrau beer into the western United States from the 1930s until the brand moved to licensed brewing in the 1950s, when he began importing a number of products brewed by Cerveceria Cuauhtemoc: Carta Blanca, Bohemia, Tecate and Chihuahua. From England, he imported Watney’s Exports Beer.

The firm prospered, but it didn’t really grow and become a professional importing company until his son, Frank, took over in 1963. Frank expanded imports to include Penafiel Mineral Waters from Mexico.

Since then, Wisdom Import was primarily a Western regional importing agent until 1986, when the Visa Group acquired it. Even though Frank sold his company to the group, he remains chairman of Wisdom Import.

Why did the Visa Group acquire Wisdom Import Sales?

First, when Frank Wisdom decided to retire in the late 1980s, he wanted to ensure that the company he worked so hard to build continued to be managed by professionals. Second, Wisdom has acted as the U.S. agent for Cerveceria Cuauhtemoc for many years and his company has the staff and marketing expertise we needed. They knew our brands and the markets. Finally, the Visa Group wanted to be more competitive in the U.S. market and it saw a chance to get directly involved in the development of its U.S. business by acquiring Wisdom Import.

And has the acquisition paid off?

The acquisition represented a sound business investment. When we acquired Wisdom Import, its annual sales volume was 3.7 million cases and revenue was estimated to be about $40 million.

Today, Wisdom Import is the eighth-largest beer importer and among the fastest-growing beer importers in the United States, with an annual volume of nearly six million cases and nearly $70 million in sales.

What are the Visa Group’s long-term goals for Wisdom Import?

The goals are to expand distribution and sales volume of the Cuauhtemoc brands in the United States and to provide the group with a growing stream of income from its U.S. operations.

Besides Wisdom, what other U.S. operations does the Visa Group have?

The group acquired Bancomer in April, and the bank has several branches in major U.S. cities, including Los Angeles and New York.

If the North American Free Trade Agreement gets approved by the governments of Canada, Mexico and the United States, what impact will this have on Wisdom Import?

What we do understand at this point is that during the next five to seven years, a 14-cent per case import duty on beers from Mexico would be rescinded. However, this will have very little impact on the retail prices consumers pay for Mexican beer.

We could benefit from lower freight costs. The trucking firms we hire will not have to go through tedious paperwork along the U.S.-Mexico border, and this will make the transfer of goods more efficient and lead to reduced costs for us. We will benefit from reduced paperwork and administration due to more streamlined import procedures.

But it’s hard to estimate what those savings are. Potentially, these savings could be offset by a marginal increase in petroleum cost, which would drive up our transportation costs.

How are you preparing Wisdom Imports for the free trade agreement?

U.S. consumers are becoming more aware of Mexican customs and products. So we see an even greater opportunity for developing our brands, particularly in the border states of Arizona, California, New Mexico and Texas.

We are doubling our marketing efforts in both the Hispanic and general-market consumers who inhabit those border regions. We see great potential for the future expansion of our company by focusing our activities in the states most likely to benefit from the free trade agreement.

On the North American Free Trade Agreement. . . .

“It should make life easier for Mexican exporters like us to do business in this country.”

On the effects of free trade on Mexican companies. . . .

“Many Mexican companies are modernizing their factories to become more efficient and to prepare for more competition from the Americans. My job is to expand our U.S. market quickly. Since many Mexican immigrants in this country are familiar with some of our brands, like Tecate, it is possible for us to grow quickly. I would like to see us move from among the top 10 companies to the top five import companies in three years.”

On acquiring or building a brewery in the United States. . . .

“There’s no reason for us to brew our beer here. Some of our breweries are near the American border. . . . Mexico’s labor cost is much lower.”