Frontier Home Business Week Home Contact Us Business Week Archive

Advice and Columns
Navigation
 
ENTREPRENEUR PROFILES

8.6.98  
Ritz Foods: Upscale Chips from the Lowly Yuca?
A new snack food has to overcome doubts, droughts, fire -- and an unusual main ingredient

Gerald Ritthaler is more than happy to show you the object of 10 years of devotion: a dusty, lumpy root sprouting a few bedraggled sprigs, otherwise known as a yuca plant.

It's a tough plant to love. Yuca is a starchy, bland, and unglamorous staple of subsistence farmers in the Amazon and other tropical regions that's also widely used as animal feed. And in its raw form, yuca is poisonous, a natural source of cyanide.

But Ritthaler has a dream. He's determined to turn the lowly yuca into an upscale "natural" snack in a form American consumers can relate to -- as a chip. But separating yuca chips from the potato kind is price, at $3.79 for a seven-ounce bag.

You could call it a modern entrepreneurial love story. But it's not entirely unrequited. After many setbacks and more than $5 million invested in his company, called Ritz Foods International Inc., Ritthaler's Tropic's Yuca Chips are just now appearing on store shelves in Miami and Boca Raton, Fla. His intent, ruddy face betrays little doubt that consumers will pounce on the glossy, black bags with the tropical sunset logo: "I'm aiming for $15 million to $20 million in sales. And I'm going to spend the money to make it happen," he says during a recent interview with Business Week Online in New York.

Ritthaler, 68, is known to don a bush hat and vest for media appearances that make him look a bit like Indiana Jones. But the former corporate tax specialist is no stranger to serious global business, and the one-time Nebraska farm boy says his devotion to the starchy root, also known as cassava or manioc, didn't arrive in some epiphany: "It came to me through the back door," he says.

An 18-year career as an executive at Gulf+Western ended in 1983 after its chairman, Charles Bluhdorn, died, and the company began downsizing. Ritthaler formed a partnership, Argus International, with some former colleagues to manage and ultimately buy some industrial and commercial companies, and he moved to Caracas. Venezuelan laws that banned imports of agricultural products inspired them to mount a biotechnology laboratory and hire a staff agronomist to grow Belgian endives in Venezuela. Alas, almost as soon as they started, Venezuela's newly elected President opened the market to imports. "It immediately made the investment worthless," Ritthaler recalls.

It wasn't a total loss, however. The agronomist had introduced him to a family friend, a Harvard University-trained biophysicist, Leopoldo Viegas Polanco. Moved by an Indian student's accounts of privation near the Venezuela-Brazil border, Viegas had devoted himself to improving the yield of the yuca, the Indians' main crop, and was eventually cloning hybrid plants that produced up to seven times the normal yield.

Viegas' work was a major breakthrough for a plant that never had much commercial value. "No one grows yuca, except on a minuscule scale. Itinerant truckers collect it and sell it in the market," Ritthaler explains. There's not much written about it to guide commercial-scale growers, and the tubers deteriorate right after harvesting, making it a poor export.

Then there's its toxicity. The yuca contains cyanogenic glucosides, which decompose into cyanide. Ritthaler dismisses that as a nonissue, because the glucosides are destroyed by heat or soaking, he explains. Besides, he uses a low-toxin, sweet variety. "Once it's processed, there's no toxicity. But obviously," he allows, "you don't want to eat it raw."

High in fiber and carbohydrate, yuca is eaten fried, boiled, and baked by hundreds of millions of people in tropical regions around the world, and Ritthaler had developed a personal passion for any dish made with yuca, says Maria Cristina Gonzalez, general manager of Ritz Foods, in a phone interview from Caracas. "One day, he brought me a package of yuca chips he bought by the side of the road. He said, 'I really like this thing, and I'd like to get into this business.'"

His initial foray was bit of a bust. In 1989, Ritthaler bought his first yuca farm to research how to grow the stuff commercially and soon hit a snag. "There was no water on the property. There was no water for 15 to 20 miles. That's where I missed," he says ruefully.

The following year, he bought a second nursery farm, this time with water, and began propagating cloned seedlings. In the meantime, he was scouting for a larger property where he could grow the plants on a commercial scale. "It took me two years to find a farm," he says, noting many properties in petroleum-rich Venezuela have oil in the soil or are too isolated. He finally found a 5,000-acre ranch in the flat eastern part of the country not far from an abandoned government yuca flour mill. He bought them both for about $900,000 in 1994.

But Ritthaler was still a long way from the starting line. Predictably, after sitting idle in the tropical heat for about a decade, none of the equipment in the plant would budge, says Gonzalez. "Motors had been been stolen. Cables were missing." It took two years to renovate the facility. And to make chips, he'd need real chipmaking production equipment. He found it in an old factory in Michigan, which he bought, dissassembled, shipped to Venezuela, and then reassembled -- only to see part of it go up in flames in 1997 just as production was starting. That set him back another year. More recently, nature has also conspired against him as El Nino brought drought to the region, reducing the crop and requiring more investment in irrigation.

But, now he says he's poised for the orders to flow in. "We're going to run like crazy because that's how you make money," he says. He already has a vending-machine contract, which he says will be "a real test."

Getting into stores is another matter. Food distributors say grocers exact cold cash to let new items onto their crammed shelves. And there's already competition. Dana Alexander Inc., now a unit of Hain Food Group Inc. in Uniondale, N.Y., has grown to $20 million a year in sales on a fancy, multicolor root-mix called Terra Chips, which is 10% yuca (and also happens to come in glossy black bags). Co-founder Dana Sinkler sees little threat from Ritthaler's yuca chips or his upscale strategy. They might have "a limited market, maybe in some of the the inner boroughs," he sniffs. "If anyone could take the product upscale, we could. Yuca's not upscale."

Undeterred, Ritthaler says enthusiastic responses at natural-food trade shows and from brokers, who help get products in stores for a fee, convince him he's on track. "Maybe 10% won't like it, but if you go into the best restaurant in town, they will," he contends.

Indeed, Ritthaler's chips get a thumbs up from Linda Palermo, the manager and an owner of The Boy's Farmers Market in Delray Beach, Fla., where the chips have been on display for about a month. "They're selling," she says, noting that Ritz didn't have to pay to get on to her shelves. "Next week, we'll probably place another order. They're good...we like to sell odd types of chips."

Ritthaler puts a stoic spin on the Herculean efforts it has taken to get this far. "After you investigate, you throw your chips on the table," he says, without cracking a smile. The potato-chip market, he points out, is immense. And what is the potato, after all, but a lumpy, dusty tuber?

By Julia Lichtblau in New York
julia_lichtblau@businessweek.com

Top

RELATED ITEMS

Entrepreneur Profiles Archives


Business Week Logo

Copyright 1998 Bloomberg L.P.
Terms of Use