Intercorp Excelle Foods Inc. History

Address:

1880 Ormont Drive
Toronto, Ontario M9L 2V4
Canada

Telephone: (416) 744-2124
Toll Free: 888-473-6337
Fax: (416) 744-4369

Private Company
Incorporated: 1985
Employees: 100 (est.)
Sales: $25 million (2003 est.)
NAIC: 311941 Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing

Company Perspectives:

A Passion for Quality--We believe that in order to produce quality you have to start with quality. Our products are made with premium quality, fresh ingredients, such as fresh garlic, fresh buttermilk, eggs and real cheese--never any preservatives or MSG. We offer only the best-tasting products for you and your family.

Key Dates:

1985:: The company is founded.
1988:: Private labeling begins.
1997:: The company makes a public offering of stock.
1999:: Canadian rights to A-1 Steak Sauce are acquired.
2001:: The company is taken private.

Company History:

Based in Toronto, Canada, Intercorp Excelle Foods Inc. is a family-owned and operated manufacturer and distributor of more than 300 kinds of salad dressing, dips, meat and steak sauces, marinades, and mayonnaise to the retail and food service markets. Products lines include Renee's Gourmet Originals salad dressings, Renee's Naturally Light Dressings & Marinades, Renee's Grillin' Sauces, Renee's Sizzlin' Sauces, Renee's Gourmet Dips, and the Canadian marketing rights to A-1 Steak Sauce. Intercorp also produces private label products for customers in both Canada and the United States. The company is making a concerted effort to expand its presence in the United States.

Origins

The basis of what would become Intercorp were the combined talents and experience of a married couple, Renee and Arnold Unger, who lived in the Toronto area community of Downview. While Renee's gift for cooking provided the spark for the business, she was also a natural entrepreneur who had a role model in her mother, Faye Mendelson, owner and operator of a Toronto store called The Adorable Hat Shop. After Renee's father died when she was 12, her mother continued to run the shop, despite having no financial need after inheriting her husband's real estate holdings. Renee spent time at the shop watching her mother conduct business, and she also displayed a strong aptitude for math. She even studied math at college for two years before transferring to a teacher's college. After teaching elementary school for a few years, she quit to start a company with her sister-in-law, importing clothes and jewelry. Her husband also displayed an entrepreneurial spirit, with an emphasis on selling. From 1970 to 1973, he ran his own marketing firm, Global Incentives, working with such major clients as General Foods, Carnation, and Heinz. After selling the business, he became involved in the building industry, but by 1984 he was in trouble and forced to declare bankruptcy.

By Renee Unger's own account, she had a vivid sense of taste. She told The Toronto Star in 2000, "I see things in colours. If a taste is flat, I see brown; lively, I see spikes of dancing colour. It's like music." She was known to prepare spectacular, multi-course dinners. For Christmas 1984, she and Arnold gave out homemade food baskets as gifts to their friends. He made the baskets and she provided the homemade dressings, which proved so popular among their set that soon Renee was beset by requests for her dressings whenever friends hosted dinner partners. The couple sensed a business opportunity, one they desperately needed after Arnold's business failure. After some study, and learning the basics of the food industry, they became convinced that there was an emerging market for low-fat, low-cholesterol salad dressings made from fresh ingredients without preservatives.

Incorporation in the 1980s

The Ungers invested $50,000 of their own money and procured a $30,000 credit line from Toronto Dominion Bank and launched Intercorp in 1985. A major hurdle to overcome from the outset was the limited shelf life of Renee's dressings, which could only stay fresh for two weeks. Working with an area food laboratory, they were able to modify the recipes to produce a product that with refrigeration could stay fresh for six months. Refrigerated dressings, moreover, was a market at the time that offered less competition and provided a greater chance for new products to succeed. The couple also researched the name of the product line and engaged a company to design the packaging. The Ungers then began to share their products with gourmet grocery stores, which loved the dressings but were worried that the new company might not be able to fill orders. To address this concern, the Ungers, who at this stage were labeling their product in their garage, arranged a co-packing agreement with an established manufacturer.

The Ungers hoped to achieve revenues from $200,000 to $250,000 in their first year, but when their initial line of four salad dressings (Caesar, Greek, blue cheese, and poppy seed) began shipping in the spring of 1985, they were disappointed to generate sales of just $1,300. June brought only modest improvement to $3,900. They hired professional brokers who had relationships with buyers and began to make inroads with retailers while also making sure that the products were properly displayed. Sales now began to take off. Moreover, once small stores agreed to carry Renee's dressings, it was easier to approach larger chains. By the end of Intercorp's first full year in business, May 1986, sales far exceeded the Ungers' expectations, reaching $600,000, and greater prosperity was on the horizon. In March 1986, Intercorp participated in a trade promotion called "Ontario Week," held at Macy's department store in New York City. Macy's was won over and began to stock Renee's dressings. Back in Ontario, most of the area supermarkets also agreed to stock the product line, which would soon grow to ten in all. Preparations for moving into sauces were also in place. The first major supermarket chain to sign on was Mr. Grocer, followed by IFA, A&P, and Loblaws. By the end of the second year, the company generated nearly $2 million in sales.

Having quickly established itself in the marketplace, Intercorp was able to drop the co-packing arrangement and establish its own manufacturing operation. Arnold was responsible for outfitting the plant, and he also used his building background to construct trade show booths in which Renee conducted hundreds of demonstrations. Arnold also proved to be a relentless salesman. Renee told the Toronto Star in a company profile, "Arnie won't take no for any answer. If you turn me down four times, I'll go away. Not Arnie. Turn him down 20 times and he'll be back." With hard work and persistence came recognition and greater opportunities. In 1988, the president of Loblaws, Dave Nichol, asked Renee if she could replicate an unknown dressing from the Orient he had in a jar. He was satisfied with the result and entered into a private labeling agreement for what would be called Memories of Szechwan. It was Intercorp's entry into private-label products and the first in a line of "Memories" sauces produced for the Loblaw chain. Over the years, the private label customers among supermarket chains would include Sobey's (Our Compliments), A&P (Masterchoice), Western Canada Safeway stores, and Shaw's in the United States. Restaurant clients would include The Keg, Pat and Mario's, Mr. Sub, and East Side Mario's.

The business was so successful and respected in the food industry that in 1989 the Ungers were courted by major corporations wanting to buy them out. Best Foods, known for Hellmann's mayonnaise, engaged in a bidding war with Kraft Foods, which finally offered $9 million. Although pleased by the attention, the Ungers declined the offer, opting to remain independent. By this time, the Ungers were having problems with their marriage. They separated in 1989 and eventually divorced. Selling the company would have provided an easy exit strategy, but they decided instead to carry on working together, primarily for the sake of their daughters, who were already very much committed to the business. Both Lori and Alysse Unger were involved with Intercorp since its inception. Lori joined the company on a full-time basis in 1990 after earning a marketing degree from Toronto's Ryerson University. Alysee also participated in the founding of the company. She would study Food Science as well as business and become involved in the development of salad dressings and sauces as well as one day heading New Business Development and spearheading the company's push into the United States. In addition, her husband, Andrew LuePann, worked at Intercorp, joining the company in 1993 and becoming director of national sales. (The couple met on the job.) A third daughter, Karen, practiced as a criminal attorney before eventually becoming a director of the company. Their parents, despite the breakup of their marriage, found a way to continue working together despite the awkwardness, with Renee acting as president and Arnold as CEO. Renee was now free to emerge as an executive on her own abilities in an industry that was dominated by men. According to a profile in Western Grocer, "When Renee walked into a boardroom they barely gave her a second glance. 'They would talk directly to Arnie,' she says. 'Even when I asked a question they would turn to Arnie and answer.' Determined to gain respect of the boys' club, she learned all she could about every aspect of the industry, from the manufacturing machinery to the fine points of money management." Renee Unger told The Toronto Star that her frustration with her role in the business was a major factor in the breakup of her marriage: "The wife was supposed to be in the backseat. I didn't like it." She would go on to win a number of business awards, including being named "Woman Entrepreneur of the Year, 1998" by the Women in Food Industry Management organization, and became a role model for many women executives and entrepreneurs. While contentious at times, the relationship between the former spouses sometimes worked to the benefit of the business. Arnold would push Renee to introduce new products, and she would hold off until satisfied with a recipe. "I have to yell and scream (to get new products)," he told the Toronto Star in December 2000. "She cries, 'We're too big, Arnie.' I say, if we don't grow, we'll die." In the words of the newspaper, "Their creative differences--her perfectionism, his gung-ho salesmanship--seem to contribute equally to the company's success."

Challenges and Growth in the 1990s and Beyond

In 1993, Intercorp won a major contract providing coleslaw dressing to Kentucky Fried Chicken in Canada. In the same year, as the company moved into a new plant, Intercorp also faced its greatest period of challenge. A $1 million cost overrun in construction adversely impacted cash flow. Sales continued to grow but margins were thin and the company had trouble keeping up on its payments to suppliers and other vendors. Although the banks provided the necessary funds, they also kept close tabs on Intercorp. To help them better manage their finances and make the difficult cost-cutting decisions, the Ungers hired Fred Burke in 1994 to serve as chief operating officer, described by Renee Unger as "the proverbial Mr. Slash-and-Burn." He came to the company with several years of experience in the food industry, holding positions at Robinhood Multifoods, Inc. and Effem Foods Ltd. After a period of belt tightening, Intercorp returned to fiscal health by 1996.

In October 1997, the Ungers were able to take the company public; it began trading on the NASDAQ at $5 per share. Over the next few years, Intercorp made progress on a number of fronts. In June 1998, the company launched a new line of sauces and marinades. It also landed a pair of supply agreements later in the year. Intercorp became the exclusive supplier of dressings for Mr. Sub, a 500-unit sandwich shop chain, and the Westfair Foods supermarket chain in Western Canada. The company's line of Naturally Light Sauces were named the Best New Condiment in the Canadian Grand Prix New Products Awards in May 1999. To achieve further growth, Intercorp also looked to make acquisitions, hiring PricewaterhouseCoopers to assist in the effort. In August 1999, the company acquired the rights to "A-1 Steak Sauce" for the Canadian marketplace from Campbell Soup Company. A-1, the roots of which could be traced back to England 1835, had been sold in the North America for nearly 100 years. Intercorp picked up all of A-1's assets, including inventory, formulas, and manufacturing equipment. Renee Unger tinkered with the recipe, taking out the preservatives, so that in addition to the "original" sauce, Intercorp would also come out with its own "zesty" version, resulting in a 40 percent increase in sales within a year.

Intercorp scouted for more acquisitions and was especially interested in buying a "synergistic" firm or possibly a plant in the United States. Increasingly, the company looked to the vast American market. Although by the start of the 2000s, Intercorp had made some inroads--its product lines selling in New York State, North Carolina, and Minnesota--the Ungers proceeded cautiously. Arnold Unger told Profit in 2001, "To take on the United States all at once will destroy us. We couldn't handle all that business initially."

Despite achieving steady growth over the years, Intercorp never received much respect from investors. The company's stock dipped below $1, was relegated to trading on an over-the-counter basis, and in late 2001 the Ungers bought back the outstanding shares, taking the company private once again. Although its refrigerated products dominated the Canadian market, the future of the company clearly hinged on its ability to succeed in the United States, where it was hoped that its preservative-free products would find a receptive clientele among the country's more health-conscious consumers.

Principal Competitors: Kraft Foods Inc.; Lancaster Colony Corporation; Unilever plc.

Intercorp Excelle Foods Inc. History

Company Perspectives:

Key Dates:

Company History:

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