THE RECIPE FOR GLOBAL SUCCESS

HOW FAILURE LIFTED LOVE AND ® FROM THE FAMILY KITCHEN TO THE WORLD STAGE

 by Steve Lowery, GlobalTradeMag.com

 

EXPORTING TAKES THE CAKE When its main clientele, the airline industry, suffered after 9/11, Andy Axelrod looked abroad to sell Love and Quiches’ cheesecakes and desserts.

From the Publisher: Love and Quiches® is a great representation of how a small business can expand internationally. It is the kind of business that benefits greatly from the international expansion program developed by Fluent In Foreign Business to assure that every international expansion undertaken by its clients is successful.  If your business is seeking to expand internationally, or would like to bolster its current global expansion efforts, please contact us and tell your “Road Abroad” story

Andy Axelrod spends a lot of time on airplanes. His company, started “by accident” 40 years ago, has seen its overseas sales increase for the better part of a decade. As Axelrod’s business has grown so have his frequent flyer miles, making it fortunate that he is not a nervous flyer … well, except for that one thing.

Takeoff? No problem. Landing? Easy. In-flight movie? As long as it doesn’t feature anything in the Teen-Vampire-Without-a-Date-For-the-Prom genre, he’s just fine. No, there’s only one thing that raises Andy Axelrod’s airborne anxiety: dessert.

Chances are that if he’s flying the kind of airline that serves dessert—dessert, not a sad excuse of a cookie packed in a pouch equal parts kryptonite and frustration—they’ll be serving one of Andy’s. Love and Quiches, the Long Island, N.Y.-based company of which he is president, is a leading producer of fine desserts, and quiche, served in eateries and on airlines around the world. Chances are just as good that if you’ve had a great salted caramel brownie, slice of cheesecake or bacon-tomato quiche in a restaurant—fine dining or chain—at a food court or on a flight, you’ve tasted one of Andy’s products. If Andy happened to be in that restaurant or on that particular flight with you, be assured he watched intently as you took that first forkful, waiting for your initial reaction in what, for him, is a moment of delicious torment.

“I’m always watching what happens right after that first bite,” he says. “That moment always feels like forever. Fortunately, it’s always worked out.”

The same can be said for Love and Quiches’ overseas operation. Business is good; very good; an increase in sales of 20 to 30 percent each of the last five years, good. Still, global success is a relatively new thing for the company; it was only 2003 that Love and Quiches, founded by Andy’s mother Susan Axelrod, finally ventured overseas and then only when forced by lean times. Success itself has been transitory; stretches of triumph tempered by tragedy, days when any of a number of issues, including world events, threatened its very survival.

Love and Quiches desserts hitch a ride with a large food distributor that works with a specialized freight consolidator for the long ride overseas.

There’s a name for all of that: Business. More specifically, Small Business, where margins can be as narrow as the window of time one has to learn what they’ve done wrong and make it right. Exporting was like that for the Axelrods. Like so many small business owners—their company employs about 250 people—they had the typical reservations about taking their business overseas: they were too small, too specialized, their product was too fragile; they didn’t speak the language, know the customs or local regulations and had absolutely no idea how to go about getting a New York cheesecake from their bakery in Freeport, New York—44 miles east of Manhattan—to a chicken restaurant in Saudi Arabia. You know, the usual.

“The most common themes I hear from small business owners is not knowing where to start,” says Dario Gomez, associate administrator for International Trade at the Small Business Administration (SBA). “[They’re concerned] about not knowing what to do if something goes wrong and not knowing how to find clients.”

Clients have not been a problem as, today, about 25 percent of Love and Quiches revenue comes from exports. Those numbers would have seemed unfathomable to the Axelrods 10 years ago. They figured large-scale exporting was not in the cards for them because their product was so dependent on not only tasting fresh but being true to its name.

“A New York cheesecake has to be made in New York,” Andy says. “We had people saying, ‘Why don’t you just ship the ingredients overseas and have someone make them over there?’ But we would never skimp. People want to eat a real New York cheesecake. That’s what they’re paying for.”

That problem found a solution when Andy discovered that flash-freezing his products immediately after they were created ensured that they would remain fresh on the shelf for up to a year. Still, the flash-frozen solution raised another issue: How could Andy be sure that his product would remain frozen through the shipping process? Any fluctuation in temperature could ruin an entire shipment. He was introduced to recording devices that not only monitored each shipment’s temperature but alerted officials any time there was a break in the container seal or atmosphere fluctuation of the food-delivery system.

“I’ve eaten cheesecake that’s been on the shelf for more than a year and it tasted very fresh,” he says. “I’ll tell you it tasted much fresher than an item that was sitting in a bakery’s glass case all morning.

“These devices are amazing. That’s what comes when you deal with reputable people, reputable carriers. You get a high level of professionalism that leads to solutions. You have to do your homework to find them, like anything else. You interview, get background through things like trade publications and directories. But, I must say, the system has worked out really well for us.”

It’s possible for a small business owner like Andy to be overwhelmed by logistical issues and unaware that a revolution of sorts has been going on the past couple of decades as third-party logistic providers have made it a point to help small businesses with limited resources tap into vast assets, new technology and new thinking that allows them to reach far-flung markets previously thought unflungable.

These logistical providers—call them 3PLs, logistical experts, freight forwarders, consolidators, supply-chain managers, whatever—offer a full and wide-ranging suite of services specifically geared to get small companies products to their overseas destinations in an efficient, cost-effective manner. It’s in part due to this that, in the past three years, the amount of U.S. small businesses exporting goods or services has increased from 52 to 64 percent, with those exports valued at nearly $2.3 trillion.

In Love and Quiches’ case, it’s made it possible for the company not only to find customers far from where they ever thought possible, but to assure Andy he’ll see the proper, first forkful response, whether sitting in an airliner or in a South American café, something that would have been unthinkable little more than a decade before.

 

“To be honest,” said Susan Axelrod, who’s incapable of being anything but, “we really didn’t know that much about exporting. Then again, we really didn’t know much about anything.”

Founder Susan Axelrod. Using flash-freezing techniques, Andy Axelrod says even after a full year, his Love and Quiches cheesecakes taste fresher than mid-day bread from the local bakery.

When she’s not traveling to one of her bucket-list destinations with her husband—they recently returned from Egypt; Morocco is next—Susan is picking up awards, giving talks and readying for the publication of her book, tentatively titled An Accidental Business, chronicling her success as a business leader and entrepreneur. As undeniable as her success is, she is the first to say it was unplanned and unlikely; nothing in her background or upbringing seemed to foreshadow it. Yes, she attended college, but it was during the ‘50s, a time when most women were thought to be on campus for reasons other than commerce.

“Someone like me was expected to get married,” Mrs. Axelrod explained.

She did and began raising a family, a vocation that included cooking, something for which Susan began to demonstrate real talent. She was particularly good at baking and creating a dish new to America called quiche. She likes to say that she was fortunate to learn how to cook before anyone knew there was something called cholesterol, her creations including crepes stuffed with Brie, dipped in beer batter and deep fried in a cauldron of clarified butter. Friends swooned and Susan saw possibilities.

She created her home-based business in 1973, initially offering the then-exotic sounding quiche. Desserts would soon follow. If it sounds as if there was a plan, there wasn’t, business or otherwise. To Susan that was another world with a language all its own. She called receivables, “oweables” because “that’s what people owed us.” There were no “payables,” since the business had no credit and paid for everything upfront. She made nearly $25,000 that first year with a labor cost of $222, which is very efficient and a complete mystery to Susan.

“We must have paid somebody for something,” she says, “but for what, I can’t recall.”

Soon enough, production outstripped her kitchen and distribution outgrew the family car. The company moved into a local storefront, bought a second-hand truck and added eight employees. Everyone pitched in—Andy and his sister, Joan, would come home from school, drop their books and start breaking eggs. It was a grind but, perhaps a bit to her surprise, Susan found that she liked the grind. A lot. Rather than drain her, it seemed to feed a drive she’d been unaware she had.

“You have to have a tremendous capacity for work and I found I did,” she says. “Ambition is important, of course. But you have to have a very good idea, one that you are not going to be dissuaded from, because you will be challenged. Business is made up of challenges and if you can’t take the pain, you can’t be an entrepreneur.”

After going away to become a lawyer, then coming back to work in the company in the early ’90s, Joan—now Joan Axelrod-Siegelwax—returned to become vice president of Sales and Marketing. Business continued to grow as did the lessons; they learned that bankers were lovely folks, when times were good. They learned about being diligent about price points and the value of considered risk. After an unannounced change in packaging was met by customers with something bordering on outrage, the Axelrods became even more mindful that the people you sell to are not your clients but your partners—and that partnership doesn’t end when the product is delivered. The company fosters long-term relationships by keeping customers up with flavor trends—they’re very excited about a new Greek yogurt cheesecake—portion sizes, plating designs and serving suggestions.

There was another lesson to be learned, one that almost destroyed the business.

No segment of the economy was more affected by the terrorist attacks of September 11, 2001, than the airline industry. At the time, Love and Quiches had concentrated a large amount of its business with it and, virtually overnight, it disappeared.

“Things just came to a grinding halt for us,” Susan says. “Hundreds of thousands of dollars of cancelled orders.”

The lesson was simple but devastating, bringing Love and Quiches to the brink of ruin. They had focused too much of their business in one area.

“One of our philosophies since then is to not have concentration in any one customer or channel,” Andy says. “It can be a strength, but it can also make you very vulnerable. We certainly were vulnerable [after 9/11].”

Like all Americans, the Axelrods found themselves in utter shock and needing to grieve, and yet, they also knew they needed to act quickly or they would lose their business as well. They made changes immediately, converting to a lean manufacturing model, applying for a disaster loan from the SBA and searching out grants wherever they could find them. They hunkered down and, for the next couple of years, focused on growing sales, domestic sales, making the common mistake that many small businesses do: that it needs to be profitable domestically before it can even think about going outside the country.

“We tell [small businesses] that 95 percent of your potential customers live outside of the United States,” says the SBA’s Gomez. “Most foreign markets are growing from four to 10 percent each year. Companies that export are by and large more successful than those that don’t.”

Their foray into exporting had started small, with a single chicken restaurant chain in Saudi Arabia. It was easy to manage and they knew the owner. When, a few years later, the Axelrods believed it time to go larger, they were concerned that they didn’t have enough business to ship efficiently, that they would be paying for a lot of empty container space. It was then that they were approached by a consolidator who told them that he specialized in containers for clients that required multiple items. They had been approached by a large food company that specialized in food-court dining, they required a number of items to be shipped from the States, and Axelrod’s desserts would join the crew.

From that time on, things clicked. Love and Quiches expanded quickly in the Middle East and then in South America. The company has entered some European markets but finds it a bit glutted. Where they’re really interested is the whole of Latin America. And everywhere else.

“It’s a big world,” Andy says. “We have a lot of targets we’d like to pursue.”

Ironically for this accidental business, their biggest growth came through the lessons they learned from their own missteps and hard times. Things they didn’t foresee but things that, in the long run, made them, and their business, better. Here and overseas.

“You know, it’s funny, whenever I’m invited to go talk or be a panelist, they want to hear about all the great things you’ve done,” Susan says. “But I find I always end up talking about what we did wrong and the lessons we learned from that. It’s okay to make mistakes, it’s not the end of the world, as long as you learn from them. It’s not enough to believe in luck, you have to go out and make it. I mean, look at me, it took me a long time to become smart.”

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About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

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