David Ufberg left a career in the garment industry to start his own business making salsa. After trying to sell the product under his own label, he discovered that the costs of marketing were too overwhelming. Now he runs Alto Rey Foods, which develops recipes ranging from frozen foods to chips to pasta sauces; then the food is sold to a distributor that slaps its own label on the product. He spoke with Lauren Hollingsworth about the difficulties of distributing a food product under one’s own label.
I was in the garment industry and I was planning to start my own business. Someone at a party I was having liked my salsa. He said, “You know, you should market this stuff,” so I did.
The only way to market a brand name is to have money. We were losing money hand over fist. The retailers want you to use demos people sitting at a table in a grocery store asking, “Do you want to taste this?” But you have to use their people. Then they also charge you for co-op advertising. So you invoice them for $100,000 and you get a check back for $30,000. I needed a million dollars from my investors and I got a fraction of that, so I decided to go private-label. I learned how to do formula development: create something that could be produced on a large scale.
Saguaro Foods saw a product I was marketing at a food show. They said, “Sell it to us and we’ll put our label on the jar.” I swallowed my pride, big time. It was my brand name I was giving up. It was a choice. I was either going to go bankrupt or I was going to sell the company and turn everything around.
Now everything is based out of a house I bought from Peter Frampton I bought a rock n’ roll house in the Hollywood hills. When we produce, which is about four days a week, I contract at different places, depending on the product we sell. I do frozen entrees, bread pudding, pastas, chips. We have about three dozen or so customers. Our products are national. I develop every one of the recipes.
I agreed to develop a recipe from Tim Hauser (founder of the Manhattan Transfer) for his home-spun pasta sauce. I charged him a fee and I developed a mass product formula that he says is better than the one he made at home. Tremendous sauces. Those are the only instances I take someone else’s recipe.
