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Badia Inc. Symbolizes South Florida's Knack For Nurturing Latin Entrepreneurs
By Doreen Hemlock
June 29, 2003
It's lunchtime at the Miami headquarters of Badia Spices Inc., and a Cuban-style meal of rice, beans and ground beef is being served to the staff -- all 97 of them, from top executives to factory workers and even temporary help loading trucks.
Company owner and President Joseph "Pepe" Badia smiles at the fast-growing team he's assembled and treats daily to lunch -- on the house.
Badia can hardly believe this is the same business his father started in a modest home in Miami in 1967, where he'd help out using colored construction paper as makeshift funnels to fill small bottles with spices that he'd deliver in his own station wagon to nearby Hispanic shops kind enough to buy.
"It wasn't a very glamorous life," said Badia of those early days building a company that expects a record $30 million in sales this year. "I used to sleep a few nights a week in the warehouse, because at 2 or 3 in the morning, I'd be up packing and labeling things. I tried to leave the business twice, but my father cried."
Badia's story -- from his arrival from Cuba at age 14, alone, speaking no English -- is a classic tale of Hispanic entrepreneurship in the United States and the special role that Cubans and South Florida play in growing U.S. Hispanic success. The story also shows the serious hurdles Hispanic entrepreneurs face beyond greater Miami, where Hispanics make up a smaller minority and where a support network of fellow Latino entrepreneurs is harder to find.
"If I'd starting doing this in any other city, I probably would have been driving a truck," joked Badia, 56, surveying a warehouse full of seasonings, marinades, teas and other goods bound for sale across the U.S. East Coast. "Without that pocket of Cubans helping each other, I wouldn't have made it."
South Florida's strength in Hispanic business made headlines Tuesday, when Hispanic Business magazine of Santa Barbara, Calif., released its annual survey of the 500 largest Hispanic-owned companies in the United States.
The survey found four of the top 10 and eight of the top 25 companies hail from greater Miami, more than any other major metropolitan area.
Badia Spices made the list for the first time, entering at No. 167 based on revenues of $24 million last year.
Analysts say South Florida excels because Hispanics in the area are richer and better educated than elsewhere, and therefore more likely to start and grow companies.
The 2002 U.S. Hispanic Market Report found Latinos in greater Miami, spanning Miami-Dade and Broward counties, commanded average buying power topping $15,000 last year, or almost $2,700 more a year than those in No. 2-ranked greater Tampa. And the main income earner in Hispanic households in greater Miami had at least a college degree in 34 percent of homes, vs. 25 percent in second-ranked New York, said the report by Miami-based Synovate.
"The early population of Cuban-Americans [who fled communism in the 1960s] were businessmen ... so many started businesses here," said Dick Thomas, Synovate's vice president. "Now, the [Hispanic] business infrastructure is here, including banking, so they can help other businesses get financed. That's why Hispanics in Miami have a leg up."
South Florida's trade- and service-based economy continues to attract more of Latin America's professionals, rather than the Latin working class who flock more to Texas, California or New York, often seeking jobs on farms or in factories, said Max Castro, a sociologist and senior researcher at the University of Miami's North-South Center.
Miami is the U.S. entry point "of the airplane, where the middle classes go when they're distressed by political turmoil or violence. We have a more politicized people, not fleeing poverty but seeking opportunity. They're more educated, more experienced in business," said Castro, citing recent waves of Colombians, Venezuelans and Argentines.
"And once you have this development, it's a self-reinforcing process," said Castro.
Joining dad in business
Badia's Cuban family was among the early immigrants who helped Miami evolve into a Hispanic business hub.
Young Pepe arrived first, sent away from Cuba in 1961 by his parents who feared Fidel Castro's revolution might wrench away children for care by the state. The plan was for the 14-year-old to stay with a family friend for a few months, until the Americans helped oust communism in Cuba.
But after the U.S.-backed Bay of Pigs invasion failed in Cuba, the United States became home. Pepe was sent to stay with an uncle in New Jersey, wound up living alone in a motel and working as a busboy for a while, then got drafted into the U.S. military for two years during the Vietnam War.
By then, his parents had moved from Cuba and were working in Puerto Rico, making ends meet by helping a company that sold spices to small groceries. His father sought to expand the Puerto Rican venture to Miami, but soon opted to strike out on his own in Florida, launching his personal spice label: Badia.
It was the second immigrant-entrepreneur experience for Pepe's father, who had left his native Spain during the Spanish Civil war and ended up owning and running a hardware store in Cuba. His new spice venture initially mixed seasonings commonly used in Latin cooking and sold them in small plastic bags to neighborhood Hispanic groceries, with labels written in Spanish.
Out of the military and in college, Pepe started helping his dad, mixing spices in a plastic bucket and filling bottles on a long Formica table. He eventually abandoned plans to become a dentist, instead partnering with his father and betting on their future in South Florida's fast-growing Hispanic community.
An opportunity seized
Their big break came when oil price increases and recession in the 1970s prompted several major U.S. supermarket chains, including Grand Union and Pantry Pride, to pull out of some Miami locations. Smaller Hispanic markets in Miami, including Sedano's, snatched up the vacated space -- complete with shelving and refrigerated gondolas -- at bargain prices, becoming serious players in South Florida and helping their Hispanic suppliers like Badia Spices expand their sales.
"It was like a conga line I followed," Badia said.
By the time Publix and Winn-Dixie staked their claim in the Miami area, it was clear stores needed Hispanic items to compete, especially in mostly Hispanic areas. Publix tried out Badia Spices in 12 stores in Hispanic neighborhoods such as Hialeah, then gave the spices a chance in all South Florida locations. Rivals such as Winn-Dixie followed.
Meanwhile, Badia started selling to a distributor in the New York area specializing in Hispanic groceries there.
But with Hispanics the minority in those colder climes, not the majority as in Miami-Dade, it has been harder to cross over into the mainstream. Badia's products often are pigeonholed in the ethnic foods section of big supermarkets in New York or New Jersey, not displayed in the spice section with McCormick and other brands as in Florida.
"It's not integrated up north," said Badia, who also faces difficulties breaking into big warehouse stores such as Sam's Club or BJ's outside of the Sunshine State.
The Latin explosion
Still, prospects look bright longer-term for Badia and other Hispanic businesses, as Latino power rises in America.
This year, Hispanics unquestionably became the largest U.S. minority. Their numbers rose 10 percent since 2000 to 38.8 million in July, or about 13 percent of the U.S. population, according to U.S. Census data. And Hispanics could make up 30 percent of U.S. residents in 2050, said researcher Synovate.
Corporate America is so hot on the Latinos these days that many big companies are starting diversity programs to buy more from Hispanics and hire more Latinos, too.
"All of a sudden, it's cool to be Hispanic," said Jorge de Cespedes, president of Miami-based hospital supplier Pharmed Group Corp., which ranked No. 9 on the Hispanic Business 500 this year. Pharmed sales rose 42 percent last year to $553 million, thanks partly to new contracts with U.S. hospital chains seeking Latino suppliers.
South Florida is sure to maintain a strong leadership role in U.S. Hispanic business, as already well-established companies including Badia Spices expand their sales both in the United States and to neighboring Latin America.
"I used to dream about becoming a $10 million company," said Badia, recalling the early days when his mother would seal plastic bags with spices by hand. "Now, I can see being a $50 million company soon."