The $2.3 billion tortilla chip market has steadily increased for more than 10 years and unremittingly closing the gap with potato chips, its market rival. Consumers are taking advantage of the healthier perception and economic value as well, evidenced by the 1.6% rise in tortilla chip unit sales compared with a slight decline for potato chip unit sales.
In an effort to capitalize on the growing market, Jose Gomez, president, started Prime Choice Foods in 2000 by purchasing a shuttered potato chip facility in Bristol, VA. After two years refurbishing and equipping the plant with modern systems and state-of-the art equipment, the facility was commissioned in 2002.
“When we first purchased the Bristol plant in 2000, it needed a major renovation that took nearly two years to complete,” Mr. Gomez said, speaking from the corporate office in Henderson, NV. “However, within five years, we were able to build a thriving tortilla business employing 45 people in a facility that started off with zero.” Seeing continuing opportunities for growth, Mr. Gomez and his son Mauro, vice-president of sales and marketing, took two major strides forward in early 2008.
“In January, we purchased the Nashville, TN-based Tennessee Chip Co., and, with that, a baked chip line, enabling the company to produce baked tortilla chips, pita chips and bagel chips,” Mauro Gomez said. “We relocated the line to Bristol in a separate 75,000-sq-ft warehouse that is also used as the storage and distribution center for all our prod- ucts.” The company retained some Tennessee Chip customers and opened up its market to new customers and opportunities in the baked chip market.
In February 2008, the company made its second acquisition, purchasing the 28-year-old Great Western Tortilla Co., Denver, CO. This well-established company, and 32,000-sq-ft production facility, supplies the lion’s share of the regional market, producing mainly private-label brands. “Great Western provided needed production capacity and a national presence,” Jose Gomez noted. “The products and operations are effi cient and flexible, and the two companies’ business strategies were very much in line with each other.”
The plant gained organic certification in 2002 but only had a few customers that marketed organic products. Prime Choice’s very similar focus and customer base made Great Western Tortilla (GWT) an obvious fit to its strategy, and it offered the company an opportunity to expand its market reach, according to Mr. Gomez.
The Denver plant, now known as Prime Choice Foods West (PCFW) contributed a 60% increase to overall sales compared with 2007.
Currently, PCFQ, produces close to 80% organic products; the rest being conventional. The plant is quite diversified with the ability to run organic or traditional items made from cooked corn or masa. “Our latest capability is to produce a very thin tortilla, which we then bake, cut and fry, and season only with a light salt application,” Mr. Gomez said. “This really brings out the flavor of the corn, and we find customers eating them right out of the bag with no salsa or other accompaniment.”
CHANCE FOR CHANGE.
The acquisition was a good change for the facility, according to Sarah Ralston, vice-president technical services, who previously served as QA Manager with GWT for 6 years. “The owners have a lot of drive and excitement, and it has brought in more business and allowed us to grow,” she said. “We have a good customer base in Denver, and we have great potential for growth here not only internally but also with existing and new customers as well because we’ve incorporated very efficient and flexible systems.” Ms. Ralston stayed with Prime Choice after the acquisition and was promoted soon after. “R&D is a big focus for the company and the Denver facility,” she noted. “Our current interests point at components incorporated into the dough such as color, flavor or functional ingredients versus topical applications as product extensions.”
For example, it is looking to put jalapeño flakes into the dough for flavor and color or chia seeds for texture and nutritional advantages. “This is an area of growth that could really push tortilla chip sales compared with potato chips,” Ms. Ralston said.
Prime Choice Foods’ R&D work is split between both facilities depending on the customer location and request for samples. The company has nearly 30 R&D projects in progress including baked and extruded items for which it works in coordination with both facilities to make sure if a customer wants national manufacturing needs they can be produced between both locations.
Mauro Gomez, vice-president of sales noted, “R&D is what keeps us ahead of the curve, it drives us to grow sales with current customers and the opportunity to bring in new customers. The company’s motto has always been if we feel it will give us a point of differentiation and expand or offerings then we will look at purchasing new equipment.”
The PCFW plant has two main production lines that share a fryer, allowing flexibility to run various products and flavors. The smaller R&D line is used for sampling and shorter specialty runs. “Scale-up from the R&D line to the main production line is so much easier than from a lab sample,” said Tom Henson, plant manager. “We also use the line to show customers our capabilities and just experiment with ideas that might come from within the company as well as customers.”
According to Jose Gomez, “Although R&D is currently spearheaded in Denver with input from corporate headquarters in Henderson, and associates at Bristol, we are planning to centralize R&D in Henderson and build a lab and pilot plant within a year, thereby opening up production space in Denver and allowing dedicated efforts in R&D and customer interaction at Henderson.”
Currently, the Denver plant has more than 30 full-time associates plus a labor pool of about 20 part-time employees to pull from, according to Mr. Henson. While 90% of production is private label, it owns three brands across company, including Mi Ranchito (produced largely at the Denver facility) and Go-Mex and La Primera (on the East Coast). Markets are split between retail customers (50%) and food service (40%) with the remainder going to club stores and exports.
All Prime Choice facilities have organic certification, although both organic and conventional products are run on the lines, which require thorough cleanups when changing over from conventional to organic.
“We began seeing a market shift and sales potential when the company was still in the conception phase and decided to strive for that market,” Mr. Gomez said.
PCFW received its certification from QAI in 2002. “It is a major and ongoing task,” Ms. Ralston said. “All processes as well as ingredients must be validated and ingredients must be segregated. There is a lot of paperwork, and the effort is ongoing as suppliers change. We need to be sure there is a paper trail up the supply chain.”
Both plants have undergone numerous certifications and earned superior ratings. “We have customer audits at least once per month and are currently working on SQF certification,” she added.
While 70% of product recipes use cooked corn, the remainder call for prepared masa flour. “Using corn allows us to better control the finished product texture, although it is more labor intensive,” Ms. Ralston said.
Production at Denver is 24/5 but varies based on season, and distribution is mainly the Mountain and Central States. “We have the unique issue in our region of eleva- tion, which affects air fill; moisture and oil absorption; shelf life; formulation; time/temperature parameters in the mixer, steepers and fryer; distribution; and other factors,” Ms. Ralston added. Although the plant is at the outskirts of the Mile-High City (5,280 ft), distribution west requires truck traffic to traverse the Rockies at elevations up to 11,000 ft. Depending on product, distribution route and other factors, some production runs require deflator attachments on the baggers that reduce the amount of air inside each bag to eliminate the potential of exploding bags from the decreased pressure of higher elevations, which causes air in the bags to expand.
“From the customer stand point, we believe having a facility in Denver give us an advantage” Mr. Gomez said. “Many of the snacks coming into Denver and Colorado have bags that look ballooned up. However, if they are produced in this facility, we can manage that pressure because of our team’s experience of running products here.
Prior to the Prime Choice acquisition, GWT made significant investments to operations in 2004 such as a new automated cook system and grinder for preparing corn. Its previous system consisted of long open vats. It was a major leap forward, according to Ms. Ralston. At the same time, the plant installed a large production line as well as the tortilla line, which broadened its production capabilities. Two new weigh scales and baggers were also installed. These installations required a 6-month shutdown of production.
“We also just installed an oil pump system for switching from conventional to organic oils,” Mr. Henson said. Conventional oil must be pumped out and stored; then the fryer cleaned thoroughly before organic oil can be pumped in. The opposite switch is not as critical with cleaning but since organic oil is much more expensive it is pumped out and stored as well.
The plant also installed bulk oil systems for both conventional and organic oil and an 82,000-lb capacity (approximately 10,000-gal) oil storage tank used to hold organic oil when not being used. Changing over from conventional oil to organic oil — expeller-pressed canola or sunflower oil, depending on market cost — requires a full cleanout of the fryer. Ms. Ralston noted that oils tend to last longer in the drier climate than in other areas of the country. “By not being exposed to as much humidity, free fatty acids (FFA) do not form as quickly,” she said. “But we do FFA tests regularly, and each oil is constantly filtered.”
ON TRACK AND TRACE.
As an 8-year veteran of the Marines, Mr. Henson knows a bit about teamwork and training and incorporates that knowledge to operations. “We do a lot of cross-training on the production floor, where employees are urged to participate,” he said. “The more an employee knows, the more valuable he or she is, and it leads to more ownership.”
A Management Information System (MIS) system ties not only all the plant’s processes together but also is linked to the Bristol facility’s MIS. “This ties scheduling, receiving, production and shipping; houses all orders; and stores process parameters, QA checks and results and ingredient lot numbers,” Mr. Henson added. “It standardizes everything, and data is available to anyone, anytime. It is scan based, and we can pull and check data from either facility — a single source of information.” He noted it is good for traceability and helps with mock product recalls, which are done monthly.
For production, dry corn is delivered in 2,000-lb totes in six varieties: white, yellow and blue corn: both conventional and organic. Masa is delivered in bags, in conventional white, yellow and blue varieties.
Processing starts with cooking corn in kettles from Lee Industries for approximately 30 minutes. Softened corn is then piped to any of 16 J.C. Ford steep tanks where it soaks for up to 24 hours, depending on desired finished product texture. When called for, corn is transferred through a washer to remove the pericarp then ground between two lava stones supplied by Casa Herrera. Using the lava stones provides a more authentic grind, according to Ms. Ralston.
J.C. Ford also supplied the two 400-lb capacity mixers for masa dough production. The plant’s two main production lines include a sheeting line for chips and a tortilla press line.
The chip line is a standard J.C. Ford system on which the dough is sheeted, die-cut and fried. The plant stores numerous roller dies for a variety of shapes — triangle, round, octagonal, strips — and dimensions.
On the tortilla line, dough balls are pressed in a variety of thicknesses and baked in a J.C. Ford 3-pass, infraredheated tortilla oven for about one minute. Upon exiting, a vacuum belt elevates the product to a multi-tiered cooling belt assembly, drawing out heat in the process. After a 5-minute cooling, tortillas are 96-count stacked using an Arr-Tech system, then off-center cut into triangles for a more authentic varied appearance. The cut stacks dump onto a Heat and Control FastBack vibratory conveyor with metal rod extensions to separate pieces, which are then transferred to the fryer located on the adjacent production line.
The Heat and Control fryer, installed in 2004, outputs up to 2,200 lb per hour. After a 60-second continuous heat treatment, the fried tortilla chips immediately receive a light seasoning and convey to packaging. An accumulation belt assures continuous flow to the two baggers and allows uninterrupted production during packaging changeovers.
Two Hayssen baggers each with 14-head Ishida weighscales provide packaging capabilities of 0.7- (100-Cal) to 96-oz bags. Some product is packaged in windowed kraft bags, which enhances the authentic perception of the product.
The smaller, isolated third line, known as the R&D line, is used as the name suggests as well as for short or special runs. “We’ve experimented with hundreds of different ideas including hemp chips, use of ancient grains, rice, wheat, a variety of ethnic flavors, sweetened dough or other seasoning incorporated into the dough,” Ms. Ralston said. Batch sizes on this line range from 100 to 1,000 lbs.
If all goes according to plan, not only will the R&D line be replaced, but the plant also may have a new address. “It is certainly a good possibility, in line with our company growth sales and geographic distribution,” Mr. Gomez said. “We’re primed.”