Refrigerantes Dore: Soft Drinks Company in Rio Grande do Norte

Interview with Walter Byron Dore Junior, President of Refrigerantes Dore

I would like to start this interview by introducing the company.

Our business began in 1911. We have been in business for about 112 years which is a long time to be here. In Brazil, everybody knows the distributor activity is very difficult but we are still surviving. Actually we are in the state of Rio Grande do Norte and the state of Paraiba but we are maybe finishing our activity in the state of Paraiba. We are trying to go to only one factory because two is too much for two states that are very near to each other. The capital of Paraiba has another factory but it’s only 180 km from here. Actually with the good roads we can make the product in just one factory and send the product to the other state.

We have economy of scale and we can reduce our costs of industry. It is one of our projects to have only one factory. But we have had good results over recent years. We have had growth of around 15% or 20% a year which is more than China’s growth. This is a good thing because our product is very well-accepted and is a very good product. We have the normal soft drink flavors – grape, guaraná, orange and cola. It’s the cola flavor but is not Coca-Cola; we call it ice cola and it is very similar. It is a Brazilian company but we know that the flavors of cola always come from the United States. We are developing quickly and I think that we are doing what is expected.

About the historical moments of this business, there are many interesting facts from the past 100 years because it’s really a very old factory. Coca-Cola started around the 1850s or 1870s and then came Pepsi Cola. We are one of the three oldest firms in Brazil, but I think our firm is the oldest that is still in business today in carbonated drinks. It started with my Grandfather. He came from London, England and he was a mechanical engineer with a degree in chemistry. At that time, England was the top of the world in development, machinery and everything. That was the time of England and the people of England went abroad. My Grandfather came here to work on the railroad installations and he traveled around this region, Ceara to Bahia. At that time he resolved to make a soft drink industry.

This was very interesting because the bottles came in glasses and with a kind of filling. It was something very strange and different. They came in woods of Riga Pines which came from the ships of England. He was a pioneer. Nobody made that except for him. He was an Englishman so he tried that but nobody had these abilities to make this. That’s very curious because only people like him or from other southern regions, mainly from Rio Grande do Sul or Santa Catarina, they also developed activities related to wine or something like that because of the Italians. Some of them also tried to develop soft drinks but not many still remain to the present day except for maybe a few.

About the increase in this activity, it’s very regulated by government. The government in Brazil is always changing laws and creating some difficulties for these activities, such as taxes. What we have to say is with the global condition in the world, we think that if we have a port or more machinery investments, we could have development in this activity because we are having good growth and we can approach a region of about 40 million people. That’s about the population of some states in the northeast region from Ceara to Bahia for example.

Also what is interesting is the diversification and the mix of products that we have now such as energy drinks that are very competitive and have given us opportunities to grow. This includes energy drinks like Red Bull or tetra packs, besides the soft drink. We cannot only supply soft drinks so we have a perspective of putting other kinds of drinks into the market.

Where do you distribute your products? Is it in the whole of the northeast?

We distribute only in the states of Rio Grande do Norte and Paraiba but we can reach the state of Pernambuco which has a population a lot bigger than here and is very close to Rio Grande do Norte. It’s lacking original producers so we think that we can get closer to Pernambuco also.

Do you have any plans to export outside Brazil?

We have in mind plans for development because our brand has more than 100 years so we have a name and we are using that. I think it’s possible but it’s good to have a port. We have had some difficulties in moving through this process in a timely manner. There have been problems with banks and others but if we have a plan, it’s investors that could provide some capital for us and could help us to grow in this area that is about 40 million people.

If the company was looking for any type of partnerships or investments, could you develop a bit more with this investment opportunity?

I think we could. For example, we have about 200 employees here. In the production area we are always trying to be more automatic and have better machinery. Better machinery requires investments. You can make improvements in the cost to benefit ratio with better machines. For example, you can have less people but have a better production output rate. This makes a difference. Better machines and better output require investment. It’s like an equation that needs to be solved. If you don’t have the necessary machinery, you can’t go very far.

Apart from these challenges, are there other challenges your company is facing right now?

The challenge is the time that we take to make changes. For example, if we want a different machine, it takes time for the project. We know that investor support could help us reach these results more quickly.

What is your vision for the future of the company?

I believe that if we continue as we are now we will continue growing about 15% at least. It always depends on machinery. I think that if an investor comes to work with us on a bigger project, we could see a lot more growth quickly.

What is your dream for the company ten years from now?

I would at least like it to reach this whole region of 40 million, if not with soft drinks then with some other products that fit in with this mix such as energy drinks or products of aggregated value. There are many interesting things. For example, I’ve seen people make coconut water mix in tetra packs. This is very interesting because the coconut does not last too well – only about seven days. It’s very fast. But the people mixed it with a tetra pack and it lasts for two or three months. It’s a very fascinating world of liquids. You drink and you eat so the liquid world is very diversified and very big.

What is your message for a foreign investor who will read your interview?

Rio Grande do Norte is a small state in Brazil but it’s an interesting state. It’s very sunny and has a very good climate. It’s one of the best climates in the world. We have been well-established here for over 100 years and I think this could be a point of interest because there are not many factories of this kind in this region. Rio Grande do Norte is in the middle of this northeast region. If you go further north you go to Ceara and if you go further south you go to Bahia. So I think that geographically and logistically speaking, it is interesting.

I’m glad to be here speaking to investors and I hope that some investors listen to what I’m saying and are interested in making an investment in our firm. We see this firm as a business that is trying to grow. We are open to investors and to people who have high expectations for the return on their investment. I think it’s a good bet; it’s good for everybody.