CASE STUDY: LuLu’s Dessert

THE COMPANY

For Maria de Lourdes Sobrino, it all began in 1982 in a 700-square-foot storefront in Torrance, California, with a milk crate for a chair and her mother’s Mexican-style recipe for gelatin. From humble beginnings and driven by her entrepreneurial spirit, Sobrino, known as LuLu to her friends and customers, began preparing tasty treats—and soon thereafter founded her own company, LuLu’s Dessert.

Starting with snacks from her childhood, such as jalapeno-flavored carrots and roasted peanuts, Sobrino soon graduated to making jiggly fruit-flavored taste treats known in Spanish as gelatina. Unlike Jell-O®, which then was made only in powdered form, Sobrino’s gelatin was ready to eat from the time a customer bought it—a concept that Jell-O® would not market for another 11 years.

With gelatins such as Fruit Fantasia, Orange Blast, Creamy Vanilla with Cinnamon, and Sugar Free-De-Light, LuLu’s has something for everyone. With total sales projected to reach $10 million for 2005, LuLu’s is pleasing the palates of customers in the United States and Mexico.

THE CHALLENGE

Sobrino began exporting to Mexico in 1992 and opened offices and a distribution center there, but despite her knowledge of the Mexican market, she faced great difficulty in selling her product because of her inexperience in the export process.

She often had only vague information on potential distributors of her product and did not know how to ensure that they were qualified and legitimate. She also did not have the most updated market research reports on Mexico.

After reading an article about Sobrino in a local newspaper, however, Tony Michalski, a trade specialist at the U.S. Commercial Service’s Export Assistance Center in Newport Beach, California, contacted her to see how he could help her realize her exporting goals. Michalski and Sobrino soon began their partnership.

THE SOLUTION

With the help of Michalski, who provided services such as export counseling and market research, Sobrino began to make progress. She was put in touch with organizations such as the California Trade and Commerce Agency and the U.S. Agricultural Trade Office. As a result, LuLu’s Dessert began to have greater success in foreign markets, especially Mexico.

Today, the company competes with local food manufacturers in Mexico, having contracts at grocery chains like Wal-Mart and Oxxo and an exclusive distributorship in the Mexican state of Baja California.

The success of LuLu’s Dessert in foreign markets has been boosted considerably by the assistance of the Western U.S. Agricultural Trade Association (WUSATA), which has provided money to LuLu’s Dessert and other companies for marketing outside of the United States. The funds gave Sobrino the opportunity to travel, to participate in trade shows, and to create brochures targeted to overseas markets while being reimbursed a large percentage by WUSATA.

Today, Sobrino has far-reaching goals for LuLu’s Dessert. Currently, exporting accounts for 2 to 3 percent of the company’s total revenues, but with a greater production capacity, LuLu’s is on a course for explosive growth, especially internationally. Sobrino would like to expand her sales beyond Mexico and into other parts of Latin America. “We think that all the world deserves one of our treats,” says Sobrino. “The Commercial Service saved our company time and money, and I highly recommend their services for firms looking to increase their export sales.”

LESSON LEARNED

Sobrino says that the biggest lesson learned early on was not to try to do it alone when it comes to exporting. At the time Sobrino began exporting, she had no idea that government resources, like those of the Commercial Service and the Export-Import Bank, were available. “I spent 10 years trying to make international sales and continued to run into all kinds of problems—especially buyers who wouldn’t pay or couldn’t afford letters of credit.”

Sobrino says that one time she even went to Chile to try to collect a debt from a customer but had no luck. By using Commercial Service and Export-Import Bank services that provide background checks on potential partners and letters of credit to guarantee payment, she has much more confidence in doing business with foreign partners.

Sobrino also says she could have benefited from the Commercial Service’s customized market research reports much earlier in her export endeavors. She advises that companies be diligent about trademark protection, because in one European country, LuLu’s trademark was stolen and used by another company.

Sobrino also found that customers abroad often prefer sweeter desserts than do people in the United States. “When it comes to exporting, don’t do everything by yourself,” she says. “When I go out to speak, I give businesses a good lesson in exporting.”

ACTION

How can you get the assistance you need?

  • Use the resources of government agencies. For financing assistance, contact the Export-Import Bank, which can provide seller as well as buyer financing at very competitive rates. For more information, visit www.exim.gov. The Small Business Administration (SBA) provides a full range of export assistance to small businesses, particularly those new to exporting. Counseling is provided at no cost. To learn more about the SBA, visit www.sba.gov.
  • Talk to the U.S. Commercial Service.

Make your nearest U.S. Export Assistance Center the first stop on your road to export success. The Commercial Service offers market entry strategies, export counseling, and much more.

  • Do your research. Good market research can help you determine which markets are right for your product. For a complete listing of the market research the Commercial Service offers, visit www.export.gov/mrktresearch. Once you find the right market, the Commercial Service can also help you find international buyers in that market with services such as the International Partner Search and the Gold Key Matching Service.