Jesús Navarro Navarro (Novelda, 1956) heads the third generation – along with his cousins Jesús Navarro Alberola y Paco Escolano Navarro-, which is in charge of Carmencita, the company from Alicante that produces 60% of the spices and 50% of the sweeteners that are sold in Spanish stores. A family company that is about to exceed the barrier of one hundred years of existence -it will be in 2023, when it also hopes to open the new factory it is building in the municipality of Novelda- at a time of full expansion, after the boost that the changes brought about by the pandemic have given the food sector. After establishing themselves as the kings of supermarkets, they now want to conquer restaurants as well and bring the Spanish flavor to the whole world.
How do you get a family business to survive 100 years?
I think the key is the family itself. The entrepreneur was my grandfather, who back in the 1920s realized that there was a business opportunity, but the one who brought us together was the grandmother. The family home and the porch (as spice packaging factories are called in the Alicante town of Novelda) were united from the beginning: the porch was part of the family and the family was part of the porch. And that love for the company that Grandma instilled has remained.
Even so, it is not very common for a company to survive two generational changes already.
It is not normal, but in our case the key was the entry of Ebro in 1989. Our parents were then about 60 years old and we were in our twenties, and they were afraid of how the distribution was evolving. It was the time when Pryca and Continente arrived, and they saw that Carmencita was very well established in traditional stores, but poorly in hypermarkets. So they decided to sell 50% to a multinational, which was Azucarera Ebro, and that helped us to modernize the company and remove all the family miasmas that might exist and make it serious. Because Ebro was listed on the Stock Exchange and had to be reported every month. Ebro’s participation during those 13 years served as family protocol and made all the family messes that could have arisen disappear. Then, in 2003, we decided to buy back that stake -because Ebro was getting bigger and bigger and we were the only investee they had 50%- and we went back to being a 100% family business, but professionalized.
With covid and confinement, demand skyrocketed, and its turnover grew by 25% in a single year, to 93 million. Has the pandemic changed the market a lot?
Look, we sell jars that are worth a euro or a euro and a bit, and they last two or three years in the kitchen, until they expire and you end up throwing them away. During the pandemic what we saw is that people renewed their pantries. He threw away everything he had, bought it back and started cooking with more joy and using new spices. Normally there are six or seven spices that are 70% of sales, but during the pandemic, cooking so much, people started trying different things and mixtures that were not usual. That has stayed and, for example, we have launched a Moroccan spice -‘ras el hanout’- that is selling very well, because now, after the pandemic, people dare to try new things. What is also true is that consumers filled their pantries in confinement and, logically, many continue to have them full and the growth of 25% in 2020 last year was a drop of 5%, but we have remained well above 2019.
So, has this change in mentality caused by the pandemic generated more opportunities for them?
Yes, it means more opportunities. As he told him, 70% of the market is a few spices and the rest are innovations that we are continually bringing out. The difference is that now the public responds much better than before. It is also true that consumers are now very interested in health issues and we are taking great care that the spices are free of allergens or gluten. And, in addition, we are going to the origins to look for the raw material. All spices are produced at the level of the equator, either in South America or in Southeast Asia, and a few years ago our volume did not allow us to bring full containers. Now yes and that has allowed us to close agreements with local producers in Vietnam, Sri Lanka, Indonesia or Bolivia to buy directly from them. In this way, we control the entire process.
What goals do you have for the coming years?
The first objective is to reach 100 years in 2023 with a turnover of 100 million and, beyond that, I calculate that in five years we could reach 120 million. Then, another of the objectives is to improve our presence in the restoration. Because Carmencita is very well established in the distribution channel -that’s why we grew so much in the pandemic-, but we have a relatively small share in the Horeca channel. I always say that the cook has Carmencita in his house, but he doesn’t have her in the restaurant, and I think that’s our fault, that we haven’t found the channel to reach professional catering. It has to change. It is a project we are working on and where we have significant growth capacity. And I am talking about entering the professional kitchen, with new packaging and new products, as well as the products that go to the table in the restaurant. For example, we have launched giant salt mills with truffles, salt mixtures, pink salt or peppers of all kinds.
You have just opened a new subsidiary in the United States. Is another of your growth strategies exporting?
Yes. The truth is that we began to export by chance in the 1980s. We saw that the Canary Islands were taking away an enormous amount of products and we began to investigate and we saw that it was for the ships that were going to Venezuela, so we began to send coloring to this country with great success. In fact, in Venezuela, local brands call the dye “Carmencita”. And from there, that export door was opened. Our motto, although it sounds pretentious, is “to lead the flavor in Spain and lead the Spanish flavor in the world”. We are already consolidated in South America, mainly in Mexico, Chile, Paraguay or Brazil, and in the Hispanic markets of the United States, and we are also in the Arab markets, which we also started there in the 1980s and, at the beginning, they put us in a lot of trouble because Carmencita was a woman’s face and we had to develop a specific brand, which is the Al Diafa brand. But after the year 2000 we managed to keep Al Diafa with the infusions and we have begun to introduce Carmencita with the spices, already with the face of a woman.
Where do you see more possibility to continue growing?
Where we can grow the most is in Latin America and the United States, where we have created that subsidiary to have nationalized product there and be able to reach small distributors who are not capable of importing directly. We are going to start with the small distribution before making the leap to the large distribution. In the next five years we hope to triple what we are doing now.
In Mexico they are with Walmart, are there possibilities of entering this chain in the United States?
In Mexico we are exclusively with Walmart and it is true that Walmart’s door in the United States is always sought through Mexico, but McCormick (the main multinational in the sector) has it very well controlled and there is no way. In any case, Walmart is so big that it would be very difficult to ship from here to supply all its stores. We do supply Mexico from here, because we gave them the exclusive rights and we are like their brand.
In Spain, what has the relationship with Mercadona meant?
It is like an industrial partner. It has allowed us to give enough volume to modernize all processes, go to the source to find all the raw materials, recover processes that we had outsourced, such as grinding, and become specialists in products that we did not know, such as sweeteners. Because at Mercadona we have spices, but also sweeteners, where we also have a 50% share. All this has been a consequence of the relationship with Mercadona.
How is the price increase affecting you?
We are in the perfect storm and now you realize the balance that was in 2019. Everything was simple. You made an order and in a month you had it here. Transportation was working, raw materials were stable… But today, we are in the perfect storm. For us, raw materials have risen 24% and auxiliary materials, such as plastic or glass, the same. The transport has been crazy, containers that you brought from China for 1,000 euros came to cost 12,000 euros. It is true that we were lucky to be essential at the time of the pandemic, so we do not want to complain about these problems now. Yes, it is true that we have had to pass on part of the increase to the consumer.
What measures have been adopted to counteract this rise in costs?
The main measure is to be very aware of the costs of the different crops and what we have done is buy a lot when the conditions were better. For example, we have pepper or garlic for almost a year. We have doubled the stock of raw materials, on the one hand, to ensure prices, and on the other, to guarantee supply.
Do you see a solution to this situation?
I see a solution, but I don’t think we will return to the prices we had in 2019. I think a new balance will come, especially if the war in Ukraine ends, but with higher costs than before covid.
As an entrepreneur, what would you ask the administrations?
I always tell the mayor of Novelda: don’t bother. That they do their work, that they make their decisions, but that they make things easier so that we can continue to grow and provide employment.
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The agri-food industry has become one of the objects of desire for investment funds. Are they knocking on the door?
After the pandemic, they realized that the agri-food sector was much more powerful than it seemed. Yes, they are calling us continuously, I won’t say every week, but they are calling. Both funds and large companies that want to diversify. But we already had our experience outside the family and we became family again. Our goal is to continue growing as a family business.