Redefining Market Niches for Chili-Based Products

The evolution of consumer tastes and the revalorization of traditional ingredients such as chili have created a business opportunity for players that target the right niche, says Alfredo Vences, Founder and Director General of Sabomix.

Sabomix is a Mexican company that specializes in the production of sweet and spicy powders and sauces, also known as chamoy, with tamarind pulp as their base. It has found recent success in the creation of a product that cater to specific consumer demand for chili. “We noticed that in the south and center of the country, there was not a ready-to-go product that could be used by consumers in their prepared beers, or micheladas,” says Vences. Although the product was launched to cater to the beverages segment, Vences says that its use has expanded to include snacks and fruit.

The company is a participant in the Orgullo Morelos program, which provides an authenticity seal of guarantee for products from Morelos, where Sabomix started. Vences says the company’s entrance to national retailers such as Soriana and Oxxo has helped to distribute the product to a much larger region. “We started with distribution in Soriana stores in Morelos. When they saw the product was selling fast, they asked us to start distributing the product to Soriana stores in Mexico City and then in the State of Mexico.”

Vences says the company has been in Oxxo stores for one year and the results have surpassed the retailer’s expectations. “Although people at Oxxo’s central office had already tasted the product, they did not understand how to commercialize it. We had to put together a study where we showed them how consumer preferences in the center of the country would favor a product like Sabomix when buying beer and snacks.” While the sauces and powder chili categories are heavily competed in the Mexican market, Vences says that Sabomix’s products are among the Top 5 sellers for the category at Oxxo. “We have surpassed brands and products with more tradition.”

Even though Mexican consumers are accustomed to eating chili, Vences says that Sabomix entered the market at the right moment, when there were changes in patterns of consumption of chili snacks. “We started to see that products like those offered by Sabomix were coming into vogue when several establishments started to commercialize fruits and chips with chili and chamoy more aggressively.”

Convincing retailers to sell Sabomix’s products was the second half of the equation. Vences says that SMEs must prove that they have an existing and loyal customer base in making their business case to convince retailers to sell their product. In a country where well-known brands also commercialize sweet and spicy powder and chamoy, positioning a new product is a challenge. “We realized that we could not compete directly with them, so we decided to focus on their weaknesses. One brand has high quantities of sugar, while the other has large sodium quantities, so we decided to market Sabomix as an option in the middle that caters to the likes of people who choose products from both our competitors.”

Although Sabomix is commercialized in more than 8,000 points of sale across the country, Vences says the company still manages an artisanal production operation. “Our production capabilities are based on the number of people working with us. Whenever we enter a new sales point, we hire and train more people for the production process.” Still, Vences acknowledges that there will come a point when this will no longer be possible, especially considering the success the brand is enjoying. “Oxxo is asking us to distribute our product in their stores in Michoacan, Guerrero, Puebla and the State of Mexico,” he says. An increase in sales points would force Sabomix to automate some of its production and build a distribution center in the State of Mexico, says Vences. “We are trying to cover more territory. Having our own distribution center would give us the flexibility to reach the north of the country.”

Reaching the northern border and the US market is a priority for Sabomix, particularly when considering the number of Mexicans who live in the US. “We see a great opportunity to commercialize our products in the nostalgia market.” Although Sabomix is already working to obtain the necessary permits and certifications to export to the US, Vences says the company remains focused on covering a greater part of Mexico. “Our challenge is to continue expanding and promoting our products without losing the confidence of consumers and the high quality that characterizes us,” he says.