In late 2006, two Mexican brothers arrived in my office at USF. These brothers were concerned about their family’s dairy farm in Aguascalientes, Mexico. Unsure that the University could be of any help, since dairy and food businesses were outside of our immediate areas of expertise, I started to probe the reasons for their concern.
As NAFTA (the North American Free Trade Agreement) was fully implemented, 2008 was the year that tariffs for all American-produced dairy products would be eliminated. The brothers feared that the competitive advantage provided by the tariffs had not been wisely used to upgrade the Mexican dairy industry to eventually compete toe-to-toe with its American and Canadian counterparts. The brothers maintained that their family farm faced a serious risk: the imminent elimination of tariffs would enable American and Canadian dairy products to flood the Mexican market and undermine the viability of their business with superior and more affordable dairy products.
These brothers, named Juan Carlos and Antonio Feregrino, were exceptionally motivated to learn everything they could from Silicon Valley. They insisted on USF’s help since they needed the tools to determine how innovation could help their family farm to survive.
Innovation is the cornerstone of young and old industries and essential to their renewal and reinvention. It seemed natural that the brothers would want to apply these concepts to an industry that I had observed from a distance when I was a child growing up in Argentina’s pampas amidst Argentina’s own dairy industry.
By the end of that first meeting, the brothers and I applied innovation principles to their challenge and identified two general paths that could be explored independently or simultaneously: (1) produce more milk at lower costs and hence increase productivity, and (2) produce much more valuable dairy products that command higher market prices. Seeing opportunity along both paths, but also recognizing that they had much more to learn, the brothers enrolled in the USF School of Management Globalization Program, funded by the U.S.-Mexico Foundation for Science through its Silicon Valley Business Accelerator (known as TechBA).
I recently re-connected with the Feregrino brothers and learned of their immense progress since completing their program at USF. Since then, they have continued working along two dimensions: (1) lowering the production cost of milk, and (2) introducing nutraceuticals derived from milk.
Recognizing that about 70% of the cost of milk production comes from feeding cows, the brothers decided to produce new animal feed produced from agro-industrial waste, from various crops (e.g., corn, soy, and wheat), breweries, and other industrial grain treatment plants. By effectively digesting and processing this “waste,” the brothers were able to produce a higher-quality animal feed at an extraordinary lower cost.
The brothers also worked to create new functional food products by using the two most valuable components of the milk: calcium and protein. This led to the creation of a new line of health bars and beverages that have the nutritional benefits of milk, none of the fat or lactose, and a lower caloric content. The brothers also shared that they have developed a probiotics dairy product with functional characteristics and healthy attributes.
The brothers told me that their time at USF had a lasting impact on their venture’s development. Juan Carlos said that “USF’s help is unforgettable” and specifically mentioned three areas where USF played a critical role: (1) USF training, (2) Help from the Working with Entrepreneurs Program, and (3) individual members of the USF family.
First, the brothers enrolled in a USF program that included the identification of competitors, comparable products, business planning and pitching, distribution channels, etc. supported by a USF MBA student acting as a consultant. Juan Carlos commented that, thanks to USF’s training, “We gained invaluable knowledge on how to structure a Business Plan, refine and improve marketing, networking and organizing the presentation… we learned so much.”
Second, as part of the Working with Entrepreneurs Program (MBA 6990), MBA student Louis Tan ‘08 worked as a consultant to the brothers to develop a new, healthy snack food. Louis researched the target market, the proper distribution channels, new nutrition habits, and food and beverage market tendencies. This research was crucial to the brothers’ ability to produce a detailed, and ultimately fundable, business plan and pitch to Angels, Venture Capitalists, and other stakeholders.
Third, the brothers were introduced to multiple members of the USF family as they sought advice, market knowledge, and mentorship. Of note was the relationship they developed with Art Ciocca, a then-USF trustee and benefactor. Since this introduction, Art became a mentor and friend of the brothers. In their own words, “Art kept us on the right track” by introducing them to invaluable contacts within his own network.
This year, the brothers were selected as Endeavor Entrepreneurs and were named by CNN Expansion to its prestigious list of the Top Entrepreneurs. This coming October, the brothers will travel to Turkey to compete for the coveted title of Endeavor Global Entrepreneur.
Through innovation, hard work, and help from USF community members and programs, Antonio and Juan Carlos Feregrino were not only able to help their family’s farm to survive, but thrive. Today, the farm is leading the reinvention of the dairy industry in México.
You can read more about Juan Carlos and Antonio Feregrino in the links below (only available in Spanish):
http://www.cnnexpansion.com/rankings/2012/los-emprendedores-de-expansion-2012
http://www.cnnexpansion.com/especiales/2012/03/30/union-ganadera-delicias
http://www.cnnexpansion.com/videos/2012/07/20/union-ganadera-delicias-emprende-con-caracter
http://www.cnnexpansion.com/emprendedores/2012/06/11/pasion-y-entusiasmo-la-mejor-leccion
To see what Carlos Baradello is up to, visit his blog at:
http://www.carlosbaradello.com/
