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Foreign connections

In a challenging economy, Medford's Sabroso Co. has remained competitive by tapping overseas markets

EDITOR'S NOTE: This is the final installment in a five-day series on business successes and challenges in Oregon.

Stories by GREG STILES

For decades, Sabroso Co. was known for producing fruit puree for baby food.

The Medford company's consumers today, however, are not just American babies happily feeding in high chairs, but international customers from Chile to China.

Fruit puree is still a staple in the privately held firm's sales, but in response to global market conditions, Sabroso Co. has reinvented itself. And much of that reinvention is tied to its foreign connections.

Those connections cut both ways, with the company selling its products throughout the world as well as importing foreign fruit and operating a dozen joint ventures in other countries.

Sabroso first became involved in Latin American markets in 1964 when one of its customers, Walnut Creek Canning Co. of California, went out of business.

They had sold their equipment to a company in Chile, says Sabroso President Jim Root, whose grandfather Myron Root began the enterprise 70 years ago. We made an arrangement to hire some of their key staff and entered the international market.

Competitive forces dictated that the company no longer rely on its traditional manufacturing and processing approach that merely supplied concentrate to food packagers.

We had viewed the market as a way to find a home for what we did and viewed suppliers as something we turned on and off as we needed their product for our manufacturing plant, says Root. We had to prepare our people for a whole different way of doing business.

Sabroso now converts ingredients into a final product, such as fruit juice, and packages them for customers who market the products under their own brand such as Island Oasis and Carbotrol.

We provide the product and the brand companies do what they do best ' selling it, says Craig Kirkpatrick, vice president of sales and marketing.

That change comes long after Sabroso had extended its reach into Latin America and Asia, contracting with foreign suppliers and producers to provide fruit ingredients for everything from snacks and beverages to cereal and dairy products.

North American Free Trade Agreement regulations make it much more affordable to import produce like Mexican strawberries or raspberries from British Columbia.

We're headed on a course that will sustain us for the next five years, Root says. We see our industry as one that will continue to consolidate and we hope to be one the consolidators rather than the one being consolidated. It's just a fact of life in our industry that you have to grow and get bigger to compete effectively.

Sabroso's primary foreign competition comes from South Africa, Argentina, Italy, France, China and Australia. The Medford company does not release financial information, but is widely recognized as the dominant player in a domestic field that includes J.R. Wood Inc. in California's Central Valley; Signature Foods Inc., and Smucker Co.

Sabroso's foreign sales have declined from a high of about 40 percent to 25 percent in 2001, and this year Root says it could be around 20 percent. Even so, a variety of forces ranging from NAFTA to foreign regulations dictate that the company's growth will be on the international front.

That growth will involve more imports of fruit as well as more export sales.

I'm sure we'll be producing more off-shore fruit for export to the U.S. just to be price- and cost-competitive, Root says.

Perhaps the greatest change has been converting the company's knowledge of soil, planting rotations, herbicides and pesticides and turning it into an information-age commodity.

Sabroso serves both as a consultant and an information provider, becoming a go-between for growers and processors, communicating soil preparation, chemical controls, harvesting, storage, processing, transportation and warehousing.

The biggest change we face today is how much quicker we have to respond to customers' requests, says Eric Larson, director of ingredient sales. Globalization has made it much more important to be aware of what's happening in other markets. We spend a lot of time finding new customers and finding new markets.

Sabroso owns two U.S. plants ' its 17-acre operation in the center of Medford and a smaller berry production plant in Cornelius, near Portland, that was obtained in April 1999 from Heikes Produce.

That allowed for product and market diversification, Root says, because we hadn't been that much into berries before.

Sabroso also has operations in Argentina, Chile, China, Ecuador and Mexico.

Investment capital wasn't flowing into the food production sector when Sabroso's transition began in the late 1990s. But that's changed of late.

For three or four years we had a hard time attracting capital and we had to be innovative, Root says. Rather than buying things we had to go to short-term leases contracting. Now we're finding capital is more available.

Sabroso began its venture into Latin America markets more than three decades ago and entered into two joint ventures in mainland China in the mid-1990s. The company operates 10 other joint ventures ' seven in Mexico, as well as Ecuador, Chile and Lynden, Wash.

The firm also has a sales office in Argentina that works in concert with the Medford office.

Reach reporter Greg Stiles at 776-4463 or e-mail .

How it all started

Sabroso Co. began almost as a hobby for the heirs to one of the original fruit shipping and packing companies in the Rogue Valley.

The Root family, which owned Myron Root and Co., wanted to do something with its cull ' or reject ' fruit, which is about 20 percent of the crop.

In 1963, a U.S. Department of Agriculture marketer suggested the family make the cull fruit into a puree to be used as an ingredient in other products. Making fruit into puree was common in Europe, but was rare in the United States.

The hobby became so successful that the family eventually abandoned its shipping and packing business to concentrate on Sabroso.

Here are some significant dates in the history of the company:

1932

' Myron Root, who lost his job in the Depression, starts Myron Root and Co., a fruit packing and shipping business.

1952

' Myron Root retires and passes the company on to his sons, Don and Bob.

1963

' The Root sons and a partner, Dunbar Carpenter, start Sabroso Co. as a subsidiary to Myron Root and Co.

1968

' Sabroso markets its puree as an ingredient for baby food. The baby-food industry eventually becomes the largest user of Sabroso's product.

1969

' Jim Root joins the family business after finishing college. He takes on jobs from fruit dumper to the sanitation crew to salesman.

1973

' The Root family abandons Myron Root and Co. to focus on Sabroso.

1988

' Jim Root takes over the business from several family members. He increases the number of fruits that the business processes from its four main kinds ' pears, peaches, apricots and apples ' to 19, including papayas, guavas and mangos.

1999

' Sabroso receives its third Oregon Export Company of the Year award and undergoes a &

36;6 million expansion

2000

' Sabroso acquires Heikes Produce of Cornelius, expanding its global sourcing capabilities.

About Sabroso Co.

Sabroso:

a home-grown, third-generation family business that makes fruit concentrates and purees.

Product:

Fruit concentrate and puree, which is cooked fruit pressed through a sieve or whipped in a blender into a soft, smooth consistency.

Plant:

The company has 150,000 square feet of space at its plant in south Medford and an additional 200,000 square feet of warehouse space in Medford.

Employees:

150 full time, in positions ranging from sanitation to food science to marketing. The business also employs about 150 seasonal workers, most of whom work up to nine months of the year.

Average wage:

&

36;33,000 a year.