Sweet Success

REVIEW SUMMARY
Company. Monin Gourmet Beverage
Industry. Manufacturing
Key. Using innovation to create new markets and increase sales

While planning the expansion of Planet Hollywood into the Middle East, Bill Lombardo had a big hurdle to jump: prohibition.

The restaurants he directed as executive vice president of food and beverage operations for Planet Hollywood would have to offer colorful, sweet drinks without alcohol. After some searching he found his solution in flavored syrup.

Lombardo discovered Monin Gourmet Beverage, a flavored syrup manufacturer in France that boasted innovative flavor combinations, which he applied to Planet Hollywood's drink menu. “I was a customer before I was the CEO,” Lombardo says.

Monin's owner, Oliver Monin (pronounced MOAN-in), brought Lombardo in to direct the company's operations in the Western Hemisphere in 1999, triggering an era of double-digit growth that would last until the strike of the recession.

Lombardo expects the firm, which was operating at $5 million in revenues when he started, to record $50 million in 2011 despite sagging consumer confidence and agricultural inflation wearing on the food service industry.

From Hollywood to flavor country
Lombardo knows his way around the service industry. He worked directly under Robert Earl, the CEO of Planet Hollywood, managing the multi-national restaurant's menu. So it was an easy transition for Lombardo going to work at Monin, where he started as CEO in 1999.

At the time, Monin had a small presence in the Western Hemisphere. The company did some business in Canada and had an importer that lived in the Clearwater area. “At first it was just a gentleman importing products,” Lombardo explains. “But the U.S. market had a lot of potential.”

The company began to tap this potential when it built its first manufacturing facility in Clearwater in 1996.

“It was definitely underutilized,” Lombardo says of the Clearwater plant before he was hired.

Juicy talent market
The Clearwater business environment usually brings to mind technology firms, but Monin is far from that. Walking into the manufacturing facility is less like taking a trip into the movie “Tron” and more like walking in Willy Wonka's factory.

White-coated workers tinker with test tubes and conveyor belts thrust bottles of colorful liquid throughout the factory.

As there is a reason why tech firms call the Tampa Bay region home, there are two reasons Monin fits. Reason number one: a fertile talent pool.

“Making syrup is not much different than making juice,” Lombardo says, “and with Tropicana and Minute Maid in the area there was a lot of talent that could be harvested.”

To manage the talent pool, Lombardo used the human resource consulting of Larry Gray, who now serves as chief people officer. Gray says some keys to the plant's productivity are employee programs he has implemented — such as a Monin soccer team. “We actually just won the league championship,” Gray says.

The second aspect that makes Clearwater attractive to the firm is its proximity to sugar distributors. “All of our sugar comes from the Everglades,” Lombardo says.

Monin saw double-digit growth in revenues from 2003 to 2008 and is hoping for the same this year. Lombardo says that the firm's success is not just from its location, but its leadership role in the flavor syrup industry as well.

“We work with 70% of the top 100 restaurants in the U.S.,” says Bob Hager, who is vice president at Monin.

When Lombardo came to Monin that number was much smaller, though he says it is not quantifiable. So he used the relationships he built with restaurant operators while working at Planet Hollywood and helped put syrup on the lips of American consumers — though not the kind they were familiar with.

“The only syrup Americans were used to was maple syrup,” Lombardo says, “food and beverage directors would say 'we don't make waffles or pancakes so why would we want syrup?'”

But Lombardo saw restaurants and fast food chains serving soft drinks and iced tea, and he pushed for them to give the beverages a twist. “I said 'you have iced tea, why not make raspberry iced tea?'”

The idea caught on and roped in one of the first, and largest Monin customers: Chili's.

The southwestern-style restaurant is known for its signature margaritas and flavored iced teas, most of which Monin helped create. “We made all of our business ourselves,” Lombardo says. “We created the market.”

Innovate to survive
The large vats churning thousands of gallons of sugary liquid at Monin's manufacturing plant are not difficult to replicate, admits Lombardo. And Monin doesn't have the capability to produce on a larger scale than it does now.

So Lombardo says Monin relies on pushing trends in the food and drink industry. “We have such a large share of the market that any innovation we make we can guarantee to make something from,” he says. Essentially Monin starts a trend and controls enough of the marketplace to profit from it.

For example, a fast food connessiour may notice the growing prevalence of flavored coffee being offered by McDonald's and other restaurants during the last decade. Lombardo says this was Monin's doing.

“The McDonald's executives came down from Chicago and we taught them how to make flavored coffee and even suggested frozen lemonade and smoothies,” Lombardo explains. The latter two are now fixtures at the fast-food place as well.

But Monin doesn't see any revenue from a syrup squirt into a McDonald's coffee cup after the chain switched to a cheaper supplier. “We probably haven't benefitted as much as we should have,” Lombardo says with a smile.

He's smiling because the flavored-coffee trend started at McDonald's and Starbucks — another behemoth corporation Monin has schooled in flavor science —is doing a lot for Monin regardless of the two tossing the French corporation aside.

Monin currently services 9,000 independent coffee shops, Lombardo says. And in a pseudo-revenge scenario, Monin provides free marketing products to the tiny shops, helping them compete against juggernauts like Starbucks.

Recession rebound
Although Monin has been on a positive growth path for most of its time on this hemisphere, the recession did affect the company. Lombardo says 2009 was the first year it didn't record double-digit growth.

Monin saw pressure from the economic climate and inflation affecting sugar. “When consumer confidence is down, people don't want to go out to eat,” he says, “and they definitely don't want to pay for some fancy drink.”

Although 2009 was slow, the company experienced 4.9% growth nonetheless.

Survival through the recession was hard because of reliance on consumer confidence, but the firm counters this trouble with the advertising power flavored drinks can bring to an eatery. “Casual dining restaurants were looking for something to draw customers in,” Lombardo says.

And inflationary pressure on sugar was counterbalanced by the firm's foresight: Monin signed a lengthy contract for sugar with a fixed price last year.

Lombardo plans to continue blazing a sugar-laden trail of flavor fancy. He clearly finds joy in his work, rushing through the loading dock to reveal the next set of products the company is developing, but he reluctantly stops himself. “You'll have to wait to taste that one,” he says.

The real-life Willy Wonka will continue the quest for new customers hoping to capture more of the market of 650,000 eateries in the United States. Says Lombardo: “I'm always happy to show people the light.”

Inventive Business

In good company
Monin has created flavors, trained food and beverage operators and done work that CEO Bill Lombardo prefers to leave undisclosed with some titans of the food service industry. Here are a few of them:
• Chili's
• McDonald's
• Outback Steakhouse
• Starbucks
• Melting Pot
• Hard Rock Cafe
• Planet Hollywood
• Garden Restaurant
• The Coca-Cola Company

Innovation stations
Flavor cafes are faux coffee shops attached to the Monin's Clearwater manufacturing plant and Dallas/Fort-Worth Airport where Monin executives court food and beverage operators from restaurants around the world. They showcase the flavor combinations that could transform an eatery's menu and offer advice on how to bring in more volume. “We may not make a deal every time,” Lombardo says, “but we let them know we're here.”