If you’ve ever enjoyed a bag of Circle K brand gummy worms while driving aimlessly around the neighborhood to avoid facing the crushing obligations patiently waiting for you back at home or the office, there’s a good chance that candy was manufactured here in the borderland.
Mount Franklin Foods, a manufacturing, retail and foodservice company with headquarters in Northwest El Paso, flies under the radar in the city.
The company employs nearly 4,000 people in Juárez, El Paso and North Carolina, making it one of the area’s largest private-sector employers. It manufactures candies for five of the top confectionery companies in the world, said Enrique Grajeda, the company’s new president and CEO.
Grajeda took the helm of Mount Franklin Foods on July 1 after former CEO Gary Ricco retired. Grajeda, 45, has worked for the company since 2014, previously serving as chief financial officer.
Mount Franklin Foods can trace its roots back to 1907 when the Azar Nut Company was founded. Azar is now a division of Mount Franklin Foods, and the company has since acquired other brands and operations.
Grajeda was born in Mexico City and grew up in Juárez. He graduated from the University of Texas at El Paso with a degree in accounting.
When he’s not working, Grajeda said he enjoys reading and spending time with family. He also sits on the Lee & Beulah Moor Children’s Home endowment board.
Grajeda’s favorite book is “The Alchemist,” by Paulo Coelho, and he said he recommends it to everyone.
“I always remember the part that says the universe will conspire for you to achieve anything you want — the secret is that you really have to want it,” he said. “That’s always stuck with me, and it’s one of my favorite books ever.”
Grajeda spent an hour talking to El Paso Inc. about the confectionary business, how they’ve been so successful and their expansion plans.
Q: What does Mount Franklin Foods do?
Our main business is candy and nuts. We function in three main segments: manufacturing, retail and foodservice. The manufacturing is divided into candy and nuts. The majority of that business is in Mexico. We have about 3,000 employees, three manufacturing facilities and two material distribution centers in Juárez.
We sell 99% in the U.S. market, mainly hard candy, gummies and fruit snacks. I cannot disclose the names of the companies, but we do business with the top five confectionery companies in the world.
The other side is our retail division. The manufacturing for that candy is also done in Mexico. We also acquired Hospitality Mints in North Carolina last year. We have private labels in our brand. The main ones are Sunrise and Fruit Shoppe fruit snacks.
In the nuts division, we have foodservice, manufacturing and retail in El Paso. It’s considered to be the leader in the foodservice industry for nuts. In the retail business, we manufacture private labels for several retail, grocery and convenience stores. We have our own brands in retail. One of our biggest brands is Brewhouse Legends.
Q: You have about 3,000 employees in Juárez. How many do you have in the U.S.?
We have 3,000 employees in Juárez right now. In the new facility we’re building, which will start manufacturing in May 2020, there will be an additional 400 employees. We believe our footprint between now and 2020 will be almost 4,000 employees just in Juárez.
In El Paso, we have 600 employees. That’s full-time and temporary. We believe that number will be close to 750 by the end of 2020. In the Hospitality Mints facility, we have 150 employees.
Q: How big are the facilities you have?
In Juárez, we have about 600,000 square feet of production floor. We have two distribution centers of raw material that represent about 150,000 square feet. The new construction will be a 250,000 square feet facility.
In El Paso, we have a 172,000 square foot facility in the headquarters and Azar nut facility. Our warehouse in Northeast El Paso is about 275,000 square feet. On Oct. 1, we’ll take over the entire building and will have a total of 450,000 square feet in the distribution center.
In North Carolina, we have 60,000 square feet of manufacturing and 50,000 of distributing.
Q: That’s a lot of space, and Mount Franklin Foods is also growing. How is the company financing it all?
To grow, we need access to capital. We have to finance the facility we are building in Juárez and the equipment to serve two of the largest food companies in the world. To accomplish that, our line of credit has to be significantly increased. Due to how good the business is doing right now, we haven’t used that line of credit. It’s still open. So it’s allowing us to evaluate more things, mergers and acquisitions.
Q: What changes in the market have you had to respond to?
The market trends are unbelievable. The confectionary industry is going through a lot of consolidations of the big players. Ferrero is penetrating the U.S. market. Because of that, we’re experiencing a lot of opportunities, especially in the private label segment and co-manufacturing segment.
Q: What kind of growth are you seeing in the market and experiencing?
The foodservice industry, at a national average, grows about 1.3% year over year. For the snack and nuts division, we’ve seen significant growth, at about 5%.
In the confectionery industry, especially in the gummies, fruit snacks and non-chocolate, the national average is about 3.2%. We’ve seen significant growth in the confectionary side, more than 10% growth year over year.
We’re going to be more conservative in the foodservice industry and more aggressive in the snacks and nuts. Confections are now pretty much at maximum capacity. That’s the reason we’re building a new facility that will give us an additional capacity of almost 120 million pounds available in the market.
Q: What’s driving the 10% growth in the gummies and fruit snacks division?
It’s a couple of things. One is the consolidation of the big players, in which they’re pushing their branded products. It’s giving us an opportunity for private label.
There’s also a big demand for gummies and fruit snacks. People love gummies.
We also believe there are some capacities that were available in the United States that used to manufacture gummy candy but have now moved into vitamins and supplements. There are higher margins in that category. But people love gummies and fruit snacks.
Q: Have tariffs impacted Mount Franklin Foods?
We have not been impacted by tariffs in any significant way. The only commodity that could have been affected is nuts coming out of Asia, but we don’t source anything from China.
With the tariffs that were going to be imposed between Mexico and the U.S., nothing went into effect, so we were lucky. That would have had a major impact on our business. We weren’t just worried about the business but about the consumers, because in the end the cost ends up with the consumer.
Some of the officers at the border crossings between Mexico and the U.S. were moved to help with the processing of all the migrants that came to the United States. That caused border delays and it cost us to continue crossing our products over to the U.S.
Things seem to be getting back to normal now that more officers are back on the commercial side. But it did affect our bottom line. We don’t think it’s going to continue. But if any major changes take place, everyone who does business in the border region will be impacted.
Q: How were you affected by the long wait times at the border?
While it usually took four or five hours to cross with a truck, it was taking us close to 20 hours. People had to stay overnight to cross the product in the morning. It has been coming back to normal, it seems, over the last couple of weeks.
Q: When did you acquire Hospitality Mints and why?
It was a team effort, and we dedicated so many resources to make it happen. It was effective Aug. 29, 2018.
We’ve admired and known Hospitality Mints even before they were for sale. We strategically look at companies that could be a good fit for us. Hospitality Mints is a company that’s been very successful in what they do, especially in the foodservice and promotional products area. When we found out they were for sale, we were probably one of the first companies to jump in.
Q: Where can people find Hospitality Mints products?
Pretty much every major food chain, and fast-food restaurants. At your favorite restaurant or fast-food chain, more than likely if you ask for a mint it comes from Hospitality Mints.
We’re also launching products with Hospitality Mints. Consumers do like sour candy. They love sour candy. So we’re launching a sour candy, individually wrapped, under Hospitality Mints. It will be part of the Party Sweets brand.
Q: What do you like about El Paso?
I love El Paso. My kids were born here. One of the things I admire the most are the sunrises and sunsets. The Franklin Mountains are amazing.
People may complain about it being so hot, but it’s not humid. It’s a very safe city, and I love the people. They’re friendly, hardworking, honest and want to represent El Paso.
Q: What is it like to have your business on both sides of the border?
It’s a strategic advantage. The ability to have two workforce pools in two different countries is one of the biggest advantages. You can manufacture in Mexico, have Mexican employees develop and manage the business, bring it into the U.S., do all the marketing and distribution. Logistically, it’s probably one of the best things we can do and what has made Mount Franklin Foods so successful.
Q: What are your favorite products from Mount Franklin Foods?
I’m like you, I love candy. I love all candy and all nuts. We make every candy you can think of, except for chocolate. We only make chocolate in organic nuts covered in chocolate, or a butter mint with chocolate. It’s unbelievable. But if I had to choose, I’d pick gummies and the Brewhouse Legends michelada nuts.
Q: What do you do on the Lee & Beulah Moor endowment board?
We manage the funds so we can take care of about 50 kids. We just developed a new foundation where we can take the kids from high school to college. Right now the fund only takes care of babies to when they graduate high school. There are regulations that limit the ability to support them through college, and we’re developing something to accomplish that. I’ve been on that board since 2017.
Q: Whose leadership do you admire?
There’s always a combination in leaders I admire — be entrepreneurial and believe in yourself. I think Steve Jobs is a great example.
Q: What do you like to do in your free time?
I knew that question is coming. I like to read and spend time with family and friends. Right now, I’m spending a lot of time with my new baby. But work is something I love. I think I’m a workaholic. Even when I’m not working, I’m trying to come up with ideas for how to continue driving the business forward. It’s who I am.