Step by step, Badia Spices built its empire

07/20/2014 7:00 PM

07/21/2014 3:52 PM

Joseph “Pepe” Badía didn’t start out to become Miami’s spice king.

“I wanted to be a dentist,” said Badía, president of Doral-based Badia Spices. As a young man, he had studied at Miami-Dade Junior College at the end of the 1960s, after a stint in the U.S. Army.

But once he tasted success while managing the family business, his ambition grew. Because of that, Badia Spices Inc. — a company that today ranks as one of the largest in the business — blossomed. Once a seedling, the business has become a towering figure in the world of spices. And now its products have been sold and savored in 78 countries, including all corners of the United States.

As Badía reflected recently on his company’s roots, he was surrounded by the infrastructure that helps nourish its success: a 100,000-square-foot production facility, 10 production lines, huge stores of raw materials, a fleet of trucks and a team of 187 employees. The company also has a 70,000-square-foot distribution center nearby. Badia today ranks as one of the country’s major spice companies, competing with concerns like McCormick & Co., the country’s largest spice producer, and Goya Foods. Its dollar sales last year “reached nine figures” for the first time, Badía said, and are poised to increase 20 to 25 percent this year. (The family name has an accent, but the company name does not.)

At the Doral production facility — while standing among tall shelves packed with bagged garlic from China, pepper from India, and other products from Vietnam and California — Badía described the company’s journey. Open and friendly, he conversed easily about the complexities of the spice business and the steps he took over the last four decades to grow his company. While clearly proud that Badia Spices has become an important supplier of products to domestic and international markets, he is modest about his accomplishments and never fails to give credit to his employees.

As he tells it, the roots of the company’s success lie in the wave of Cubans who fled to the United States after Fidel Castro took power. Among them were young Pepe, who at age 14 had been sent to Miami in 1960. He was then sent to New Jersey to live with friends and family. Later, his father, José, and mother, Azucena, arrived in Miami, and the family moved to Puerto Rico. In 1967, the elder Badía, who had been in the hardware business in Cuba, started a new career in Miami, this time in a tiny store at the corner of Southwest First Street and 22nd Avenue — the original Badia Spices. There he packaged garlic, pepper, vanilla and a variety of other spices, selling them to about 30 bodegas around the city.

Working part time, Pepe, as he is still widely called, helped his father mix and package 30 to 40 bottles a day of spices by hand. And by 1970, when the elder Badía needed a full-time employee to help manage the daily operations, he offered the job to his 23-year-old son who was fresh out of the Army.

“If I worked full time with the spice business, I could earn $100 a week. That was pretty attractive back then, so I accepted the job,” said Badía, now 68. “We had a very small business. But as the Cuban community grew in Miami, so did we.”

Pepe Badía and his father, José, worked together closely until the elder Badía’s passing in 1995.

Part of what has driven Badia Spices’ success was luck: It entered the Miami market at just the right time to meet a burgeoning demand. After the first large numbers of Cubans arrived in Miami, the city’s Hispanic community expanded even more in later years as tens of thousands came from Mexico and Central and South America. Immigrants brought with them a taste for the strong flavors and piquant dishes of their homelands. Demand for a broad range of spices increased across South Florida.

Badia capitalized on that by expanding into South Florida supermarket chains within and beyond the Hispanic community; using quality products with competitive pricing; broadening the product line; taking risks by entering new national and international markets; making steady investments; and hiring a first-class team of employees.

“And hard work didn’t hurt,” Badía said. Even after the tiny operation acquired its first mechanical packaging equipment early on, he continued to arrive before dawn to mix and package spices and get them ready for delivery: “I’ve done it all — mopping floors, filling bottles, running machines, driving trucks and selling our products.”

THE EARLY YEARS

To build the company, the Badías took several initiatives:

In the late 1960s and ’70s, Pepe Badía concentrated on expanding the customer base among bodegas, working until 3-4 a.m. to fill containers at a tiny store in Miami. Later, he used his station wagon to deliver packets of spices, chorizo and even brooms to clients during the day.

Meanwhile, Sedano’s — which today is the largest Hispanic-owned U.S. supermarket chain — was adding new stores in Miami at the time. Badía reached out to Sedano’s, placing its products in some of the chain’s earliest stores around 1970.

“We opened our first store in Hialeah in 1962, and started selling Badia products around 1970 with our second or third store,” said José Herrán Jr., Sedano’s COO. “We first carried small pouches and blends — people then sent them back to Cuba, as ‘care’ packages. We were definitely the first market chain to carry their products, and when competitors saw this, they started carrying them too.”

As Sedano’s added new stores, Badia products appeared on their shelves. Today, Sedano’s has 34 stores, and Badia spices are sold in all of them, as are products from its competitors, including McCormick. “We sell Badia products 10-to-1 against McCormick,” Herrán said. “Like any business, you cater to your customers. When Pepe and his father started, they knew what was missing in the market.”

EXPANDING IN ’80s

By the mid-1980s, Badia Spices began selling its products outside of the mainland United States. Pepe Badía saw sales opportunities in Puerto Rico in 1985 and launched his product line there in several Winn-Dixie supermarkets and other outlets. This was the company’s first foray outside Florida. Later in the decade, it sold to the Netherlands Antilles (Aruba, Curaçao and Bonaire) and found other markets in the Caribbean and Latin America.

Another major growth spurt for Badia came after Publix supermarkets introduced its products to a broader consumer market during the decade. “Publix began carrying Badia products in 1989,” said Nicole Krauss, media and community relations manager for the Miami division of Publix Super Markets. “They first appeared in a store in Miami Lakes and expanded eight months later to 12 stores.”

Today, Publix has 1,077 stores in Florida and five other states, and all stores are authorized to carry Badia products, depending on local demand.

The most popular Badia products sold at Publix are mojo marinade, garlic powder, complete seasoning ( sazón completa), herbal teas and minced garlic in oil. “At the time, only the Hispanic neighborhood stores carried this product,” Krauss said. “Bringing them to our stores allowed us to better serve our diverse customer base and provide them with the products they are interested in.”

’90s: MAKING INROADS

From 1990 onward, Badia steadily expanded its reach in the United States, launching products in the Tampa Bay area and Atlanta and selling Mexican chiles and spices in Texas. It also moved into the New York-New Jersey area and made new inroads overseas.

Badia reached out to the large Hispanic communities in the New York and New Jersey areas. It began working with Wakefern Food Corp., a regional food distributor to ShopRite and PriceRite stores in New Jersey, New York and adjoining states.

“Badia Spices has been a supplier for Wakefern Food Corp. for 25 years,” said Joe Gozzi, the company’s director of food service. “Wakefern is a cooperative made up of 50 members — all family-owned business, just like Badia. This makes for a natural partnership.

“The Badia brand has grown more mainstream over the years as more and more people explore the flavors of Latin American cuisine. In fact, what was originally offered in about 50 ShopRite stores has now expanded to a wide array of Badia products in more than 250 ShopRite stores and 56 PriceRite stores,” Gozzi said.

As the company grew, Badia also saw opportunities to sell a wider range of products. “We’re not just a spice company,” Pepe Badía said. “We also sell olive oil, hearts of palm, sauces, coconut water, tea, herbs, nuts, seed, toppings and specialty items.”

In the United States, the company has been riding a trend to spice up American cooking. “The spice market in the U.S. is growing by 5 percent per year,” Badía said. “Spices are universal. They’re used in all types of cuisines. Our sales even improved during the recession, since many people cut down on eating at restaurants, cooked more at home and bought more spices.”

A U.S. Department of Agriculture report supports this: “Rising domestic use of spices reflects growing Hispanic and Asian populations, a trend toward the use of spices to compensate for less salt and lower fat levels in foods, and heightened popularity of ethnic foods from Asia and Latin America.”

NEW MARKETS OVERSEAS

In recent years, the company has also expanded to Latin America, Africa and Europe. In Latin America, Badia is negotiating with Walmart to place products in hundreds of its stores in Mexico and Costa Rica.

“The key to expanding anywhere is to find a good distributor and salespeople,” Badía said. Distributors in the United States and overseas typically buy from manufacturers or wholesalers and sell to retailers. They have established relationships with supermarket chains, local markets and other types of stores, and are critical for opening up new markets. “I’m only as good as my distributors,” he said.

Badia representatives meet with distributors, assess their market reach and sign agreements with them. Often distributors come directly to Miami to meet with company executives and look over its products and pricing, Badía said. Company representatives also travel to other parts of the U.S. and overseas to meet potential distribution partners at trade shows or in person.

Sometimes, serendipity plays a role in the company’s expansion. That was how Badia came to be distributed in Ghana — its first foothold in Africa, where it is now expanding to Nigeria and other markets.

A woman from Ghana was visiting a family in New Jersey, Badía said, and tasted a chicken prepared by her hostess. The cook had used Badia’s complete seasoning, and the visitor liked it so much she contacted Badia Spices and began selling its products when she returned home.

“I didn’t go to Ghana — Ghana came to me,” Badía said.

FOCUS: TASTE, PRICE

Other elements that have been key to Badia Spices’ success — quality products, competitive prices and modern production capacity — will also likely determine its future.

“We offer an attractive, quality product at prices 30 to 50 percent below the competition,” Badía said. The company buys some raw materials from U.S. suppliers, but most of its spices come from overseas because many spices are not produced in the United States. China, India, Vietnam and Sri Lanka are major suppliers.

Recently, for example, Badia garlic powder, one of its most popular products, retailed at a local Publix for 38 percent an ounce below the same product sold by McCormick, Badia’s biggest competitor. Badia paprika, another big seller, costs Publix customers $1.10 an ounce, compared to $2.49 an ounce for the McCormick brand. Badia’s packaged product — labeled in English and Spanish — is 56 percent cheaper than McCormick’s brand.

Badia and McCormick buy the same quality raw materials, often from the same countries overseas. Badia, though, can sell at lower prices because it accepts lower margins than publicly traded McCormick, the company said. Also, it has lower overhead than market leader McCormick, including marketing and advertising expenses.

Asked if McCormick was concerned about Badia’s growth in the U.S. Hispanic market, Lori Robinson, McCormick’s vice president for corporate branding and communications, said: “McCormick has been in business for 125 years and we are accustomed to competition. Approximately 17 percent of our total sales for herbs and spices come from Hispanic buyers.” The company is not only the spice market leader in the United States, but also leads among Hispanic consumers, with a 41.2 percent value share, she said.

Robinson said that McCormick’s Lawry’s line has the No. 1 seasoned salt and garlic salt among Hispanic consumers. “We believe the Hispanic community is a promising market for our business, and with that in mind, we are developing new products such as the Galeo line of Hispanic spices available in select stores in the Miami area,” she said.

McCormick also sees strong growth ahead in the spice and herbs market. “The retail spice market is showing robust growth and is certainly an expanding market,” Robinson said. “The dry spice category is strong across both the general market and Hispanic market. Both markets grew herb and spice category dollars by 11 percent ($266 million) from 2011 to 2013. We are seeing growing influences from regions around the globe, including chiles and Mexican-inspired flavors, and anticipate that the market for flavor will only continue to grow as consumers expand their palates to include new, bolder flavors.”

While Badia’s lower prices attract many consumers, others say it’s the taste that counts.

Carolyn Wilson, a U.S. Postal Service employee who lives in Coconut Creek and shops at Publix, has been buying Badia spices for about 10 years. “I cook for a large family, and their spices are to my taste,” Wilson said. “They have more flavor than the other brands. For people who cook, it’s not about the price, it’s about the taste.”

Daisy Díaz, the chef and owner of Sabores Restaurant in Doral, buys Badia spices for her restaurant and home. “I use Badia Spices because they have amazing flavors,” said Díaz, who is from Ecuador. “I’ve tried other brands, but I prefer Badia — it’s the only spice I use. I make my own dressings, sauces and desserts at Sabores, and they have spices from all over the world, so their products are very important for my cuisine.”

LOOKING TO FUTURE

Badia also is investing in the future.

In the early years, Pepe Badía financed the company’s first steps with savings and, eventually, cash flow. To buy delivery trucks and costly equipment to process, blend and pack spices and sauces, he obtained bank credit and other financing.

As demand for the company’s products increased, Badía moved his business to larger buildings, acquired new equipment and expanded and trained his workforce. Last year, the company invested about $3 million for new X-ray equipment to detect any tiny bits of metal in imported raw materials, and to expand its product line.

Badía expects capital investment to be even higher in 2014 to expand the company’s Doral production center, add new air-conditioned spaces with state-of-the-art dust control systems, acquire 19 forklifts, and build new spice-blending facilities.

The company also is committed to sharing its success with the community. Badia donates a share of sales of different products to several charities, including the Dan Marino Foundation, the National Breast Cancer Foundation and Here’s Help, which assists young adults with drug problems. (What little TV and radio advertising the company does is usually linked to its charitable activities.) Badia contributes to a culinary school to help train young people at Here’s Help. It also provides scholarships at Florida International University. Last year, total dollar donations were in the high six figures.

Badía does not see himself as the only force behind a company that has grown to $30 million, $50 million and now around $100 million in annual sales. He works hard to provide a good work environment for employees and gives each one a $250 bonus for birthdays, a $500 bonus for Thanksgiving and $1,000 at Christmas.

“Our employees are why we are here,” Badía said. “I didn’t do this alone.”

The spelling of the Sedano's COO was incorrect in earlier versions of this article.

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