A Melting Pot of Food Opportunity
The ethnic stew of Southern California is spreading new tastes in food and new food companies to the rest of the country. At latest count, 1,733 food companies were operating in the Southland, their ranks swelled by firms specializing in ethnic foods--Latino, Asian, Middle Eastern and others.
The local industry is made up largely of family companies that initially served their compatriots and neighbors here in the Southland and then expanded to other states as immigrant markets beckoned and competitive pressures gave them a shove.
Their stories point to opportunities and challenges for this area’s food businesses as well as trends in America’s changing taste buds.
The U.S. diet includes a lot more beans these days, for example--pinto beans, red and black beans--and more rice too. The growth of Latino communities is increasing bean consumption nationwide, but so is rising health consciousness.
“People are eating beans as a source of protein and fiber,” says Luis Faura, president of C&F; Foods Inc.
C&F;, a warehousing and transport company based in Industry, ships a lot of beans. Founded in 1975 by Jose G. Fernandez, an immigrant from Cuba with a background in agriculture, C&F; has grown to more than 200 employees and more than $100 million in annual revenue. Fernandez devised a better way to filter out the stones and dirt from raw beans, enabling C&F; to command a premium price for purity.
The firm has become the No. 2 supplier of beans, lentils, rice and popcorn to food chains nationwide. Only Trinidad Benham, a Denver-based shipper of the same commodities, is larger. Most other bean-shipping firms have sold out to food industry conglomerates or gone out of business.
C&F; might have joined that casualty list if it hadn’t expanded by setting up satellite operations in Hansen, Idaho, and Sikeston, Mo., that enable it to better serve the national market.
“I saw us trapped by competitors converging on us if we only had this one facility,” says Faura, Fernandez’s grandson and C&F;’s chief operating officer.
Kenny Yee, general manager of Wing Hing Noodle Co. in Los Angeles, faces a similar competitive challenge. Wing Hing, which makes wontons, fortune cookies and Chinese-style noodles for restaurants and other Asian food concerns, is still small at 37 employees and about $6 million in revenue, even though it supplies restaurants across the country.
But competition is heating up in Southern California as Taiwan-based firms are setting up to serve this region and big East Coast markets.
Yee’s response is to expand Wing Hing’s product line and customer base. In addition to cookies and noodles, the company wants to sell sauces, tofu, spring rolls and frozen ready-to-serve dishes to restaurants.
Wing Hing, located in a government-designated “enterprise zone” near downtown, is in the process of getting $4 million in tax-exempt industrial financing with the aid of the Local Development Corp., an agency allied with the city’s economic promotion efforts.
Yee wants to use the money to expand Wing Hing’s operations to serve restaurants in many parts of the country where knowledge of Asian food is not as sophisticated as it is in Los Angeles. Restaurants in the Midwest, for example, “sometimes don’t know the difference between Japanese, Chinese, Thai and Vietnamese food,” says Yee, whose immigrant father, Robert Yee, founded Wing Hing in 1978 while keeping his night job as a postal manager in Huntington Beach.
“They say, ‘It’s all Oriental food, isn’t it?’ ” Kenny Yee says. “So I say, ‘Come to me for all your Oriental food needs.’ I want to be their supplier.”
Food processing employs at least 65,000 people in the five counties of Southern California, making it the region’s 11th-largest industry, according to the Los Angeles Economic Development Corp.
And it’s a growing business, says a forthcoming report by the Community Development Tech Center, a nonprofit organization set up to help urban companies with research and contacts with government.
The Southland, with its varied population and a tradition of adventurous dining, is an ideal testing ground for new foods, some of which can become mainstream very quickly.
“People eat pita bread in sandwiches now, yet they hadn’t heard of it 20 years ago,” says the CD Tech Center’s Linda Wong.
And if Americans are eating more healthfully, they still demand flavor in their food. That fact led Orange County entrepreneur Joshua Cua to found a flavoring business called Key Essentials that is now 10 years old and has grown to 80 employees and $20 million in revenues.
Cua, a microbiologist and flavor chemist, recently moved Key Essentials into a gleaming, new technical center in Rancho Santa Margarita. The firm is making flavors for soy-based drinks, which have become popular among health-conscious consumers.
Still, the food business is no picnic, says Gina Harpur of Juanita’s Foods, a Wilmington company that makes menudo, pozole, mole sauce and other Mexican specialties.
Harpur cites the rising cost of energy, payroll, workers’ compensation insurance and raw materials as putting pressure on the 50-year-old family company that she now runs. For example, Harpur says, the price of tripe, the cow’s stomach tissue that is a key ingredient in menudo, has risen by 60% as beef producers export more to Mexico and Europe.
Growth of ethnic markets has made Juanita’s a successful business, with more than 100 employees and $40 million in annual revenue. “We have customers in Tennessee, Virginia, Minnesota” and many other states that never traditionally favored Mexican food, Harpur says. She is weighing new investment to broaden Juanita’s product line.
If Southern California’s family companies are still relatively small, that can be an advantage, says Faura of C&F.; He has seen bean shippers decline after being acquired by the food conglomerates.
“All of a sudden, they have to meet annual rates of return and they have to cut back to save money,” says Faura, 33, a graduate of La Verne University who went to work full time for C&F; 12 years ago.
“But sometimes you have to make investments in bad years. And you have to keep serving your small customers. If you neglect them, somebody else will serve them, and soon you’re faced with a start-up competitor.”
Many in Southern California are excited about prospects for the future.
“There is no manufacturer of Asian foods in Arizona and Nevada and only one or two in Colorado,” says Kenny Yee, as he watches a construction crew set to work on the expansion of Wing Hing’s plant.
And so Southern California, which has always been a trendsetter for the rest of the country, is emerging as its chief “test kitchen” and supplier of new flavors as well.
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California’s Cooking
The food processing industry has become a major factor in Southern California’s business landscape, driven by increased demand for ethnic and health foods such as soy and protein-rich bean products. Figures show food processing firms and employees for the five-county region as of year-end 2000.
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No. of County No. of firms employees Los Angeles 1,165 47,200 Orange County 286 8,800 Riverside-San Bernardino 219 7,600 Ventura 63 1,000
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Source: Los Angeles Economic Development Corp.
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James Flanigan can be reached at jim.flanigan@latimes.com.
