Gordito's Meats

Overview
Goridto’s Meats of Ogden, Utah, is a prime study of moving to a specialized ethnic market—marketing pork to the U.S. Hispanic’s. The company had small beginnings. Its first effort in May 1996 was to market seven custom slaughtered pigs from the back of a pick-up truck. By December 1998, Goridto’s Meats was slaughtering 700 head of hogs per week. Taylor McDonald, plant manager, explains how this was accomplished: “It’s all marketing and attitude. We never produced anything we didn’t already have sold.” This study illustrates how one firm instigated a direct marketing program and worked within the context of the changing structure of the swine industry to successfully market pork products to an under served and growing Hispanic market in the Southwestern states.

In 1990, Utah marketed 45,000 head of hogs. By 1997, annual marketing was 301,000 head. The region’s very small number of market hogs made it difficult for packing plants to survive. The last packing plant in the region closed in 1993, leaving producers without access to local packing facilities.

Background
In the mid-1980s a group of 12 viable independent pork producers joined together as the Utah Pork Producers. They began to purchase premix feeds from Ohio as a way to cut costs and improve profitability. When the last packing plant closed, they began to jointly ship market hogs to packers in Los Angels, CA, and Twin Falls, ID. They also jointly shipped semi loads of sows to Omaha, NE. Although pooling hogs for transport helped alleviate the unit cost of transportation, it clearly was not overcoming their comparative disadvantage. Unable to further cut costs, they pursued the idea of obtaining greater value for their hogs by finding a way to direct market hogs or pork products.

After unsuccessful attempts to market hogs to Mexico and Russia, the group began to consider markets closer to home. In May 1996, as an experiment, it custom slaughtered seven hogs and delivered them in a pickup truck to the Talamaho grocery store, which served primarily Hispanic customers. Within only a month, 20 hogs per week were being delivered to the grocery. Sales continued to grow so that by January 1997, they were shipping 50 hogs per week in an 18-foot refrigerated trailer pulled by a pick-up. By June 1997, 100 hogs were being custom slaughtered and delivered to Mexican-American grocers in Salt Lake City. As acceptance grew for the pork, the owner of Talamaho grocery store had begun to deliver slaughtered hogs to other Mexican-American grocery stores in the area.

Although unrelated to Utah Pork Producers at this time, two entrepreneurial young men, Taylor and Bo McDonald were selling beef door-to-door in Salt Lake City. A third, Robert Sterling was selling pork door-to-door to Latino customers in Logan, UT. The efforts of these three gentlemen served as an excellent opportunity for direct contact with Mexican-American consumers to find what they desired in meat products. In the end, Goridto’s Meats would arise as a collaborative effort between these players.

In January 1997, Taylor McDonald joined the marketing side of the operation of Goridto’s. Taylor brought two critical components to the operation: 1) He had sales and marketing experience with Hispanic customers, and 2) he spoke Spanish. The addition of Taylor allowed Goridto’s Meats to contact other Hispanic operated groceries rather than relying on Talamaho grocery to produce expanded markets. Additional Hispanic markets were developed in the Salt Lake area and additional opportunities arose in Los Angeles. Calls were starting to come in for orders.

What was the niche that Goridto’s had tapped into? Goridto’s customized its pork products to the preferences of the Hispanic customers. Initial trials involved marketing the whole carcass. The vast market for pork in the U.S. is for boxed primal cuts. In Mexican-American cooking, the spine bone is an important cut for making stews (pazole). This cut is completely unavailable once the carcass is split as in most packing plants. Secondly, there is some preference for leaving the skin on the carcass. This occurs for two reasons: 1) Some cuts are simply left with the skin on, and 2) when the meat-cutters skin the carcass a small amount of meat is left on the skin. This increases the value of the chicherones (fried pigskin). For example, chicherones without any meat attached, retail for $0.99 to $1.99 per pound, while chicherones with some meat trim left on sell for $4.99 per pound. Hog heads are also very popular during tamale season, which extends through November and December.

Many Mexican-American groceries offer Carnicerias (delis) that feature canitas, tacos and other pork items for consumption on premises and for take-out. In addition, pork is used extensively in chorizo (sausages). Chorizo is highly variable with each store using different recipes to attract customers. All of these unique factors combine to add value to the pork delivered by Goridto’s to Hispanic markets.

Opportunities
Goridto’s had not set out to buy a packing plant. But in 1997, when the two custom plants doing its slaughter could not process the number of needed hogs on a dependable schedule, the company decided to purchase an unused plant. The plant of 800 head-per-week capacity was purchased for $200,000. An additional $20,000 was needed to make the plant operational. Goridto’s found that it could slaughter a hog for $20-25.

Based on customer preference, Goridto’s has moved toward slaughtering lighter weight hogs in the 180-220 pound range. With 700 hogs slaughtered per week, Goridto’s was faced with the problem of hog procurement. The solution to the problem came from Circle Four Farms. As with most all-in-all-out large-scale producers, Circle Four is often faced with lighter weight or runouts on finished hogs. This synergy has resulted in value creation for both Circle Four Farms and for Goridto’s.

Goridto’s has also confronted the “boxed convenience” versus whole carcass preference trade-off by offering “Hispanic style” vacuum packed primals, where the cuts of pork are customized to meet the specific market demand of clients. By 1999 about half of sales were as whole carcasses and half were as boxed primals.

Goridto’s attributes its success to the fact that it is doing what other players won’t do. Everything has been a solution to someone else’s problem. Hispanic markets wanted whole carcasses, but had trouble sourcing them. Circle Four Farms tried to add value to its lighter weight hogs and Goridto’s provided a market. Direct interaction with Hispanic retail stores allows them to continuously interact with customers giving them access to new ideas for forming new products for customers.

Goridto’s is considering entering other regional Hispanic markets, as well as franchising small Mexican-American retail stores.

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