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In a $46 billion food services marketplace, Nascent Wine Company
is focused on the two things that will make the company grow: acquisitions and
exclusivities
Consumer Goods
Food Distributor
(NCTW-OTC: BB)
Nascent Wine Company, Inc.
2355-A Paseo De Las Americas
San Diego, CA 92154
Phone: 619-661-0458
Sandro Piancone
Chief Executive Officer
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
January 4, 2007
BIO:
Sandro Piancone, CEO
Sandro Piancone is spearheading Nascent's drive to secure new distributors throughout Mexico
as well as the implementation of marketing programs for those distributors. He began his
career in the food service business since 1986 as the Publisher of a large industry
newspaper. In 1991, he founded Tele-Chef Catering, which grew to one of San Diego's
largest catering companies in just a few years. In 1998 he joined Roma Exporting, a major
food supplier to Mexico, where he was vice president of sales and marketing. Before
launching the Piancone Group in 2003, he was President and Director of E-Food Depot, USA.
Inc. He is fluent in Italian and Spanish and is well acquainted with the food service
industry market in Mexico, Europe and the USA.
Company Profile:
Nascent Wine Company, Inc. is one of Baja Mexico’s largest food distributors,
marketing and distributing over 2,000 national and proprietary brand food and non-food
products to over 1,300 customers. Nascent plans to consolidate many of the smaller
foodservice distributors in the Mexico market through acquisitions. Nascent currently has
an exclusive distribution agreement with Miller Beer for Baja California, Mexico, and
represents other major brands such as General Mills/Pillsbury Products, CORA Products,
Avasoft Ice Cream, Ferrarelle Water, Nestle Candy, Haagen-Dazs and many others.
CEOCFO: Mr. Piancone, what was your
vision when the Nascent Wine Company was started and where are you today?
Mr. Piancone: “Nascent was started when
we acquired the distribution right for Miller Beer for Baja, California. Since then
we’ve made 3 acquisitions and have announced another one that will make us the first
nationwide distributor for imported products through out Mexico.”
CEOCFO: What kind of products are you
providing?
Mr. Piancone: “Nascent provides about
2,000 items to the retail and food service industry, starting with our flagship brand,
which is Miller Beer, Miller Light Genuine Draft. We also supply Italian food products
such as olive oil, tomatoes, balsamic vinegar, Prosciutto hams, frozen pastas and dessert
items. In addition to that, we distribute ice creams such as Haagen-Dazs, frozen products
including Green Giant, a line of bread, and we are the exclusive distributor for
Ferrarelle Water, which is the number one water company in Italy. We have a candy division
where we distribute Nestle candy throughout Baja, California.”
CEOCFO: Can you explain your role as a
distributor?
Mr. Piancone: “Our role is a little
more than that of a middle man, because we are a direct importer and distributor. We
import from around the world including Europe, the United States and China and we take
care of the logistics of getting it on a ship and getting it to one of the ports. We do
what is called a Pedimento to Import products to bring them into Mexico. Then we have
sales people and trucks that are out selling into hotels, restaurants and supermarket
chains. We actually bring the products to our warehouse, then we distribute them by our
trucks and place them on the shelves. In addition, we have merchandisers who go out and
merchandize the products and on top of all of that, we do marketing and promotions for the
brands. Therefore, we have our brands full.”
CEOCFO: What is the key to Nascent’s
success?
Mr. Piancone: “We try to bring in the
right brands that we have an exclusivity on, which is the products that we sell. On the
delivery and sales side, we try to get good customer service, never run out of product,
when they need it we are there and we will deliver it. We are also out making the right
acquisitions and trying to find the right brands to buy and keep the good people that are
on the company.”
CEOCFO: Is consolidating typical in this
industry?
Mr. Piancone: “No, the industry is the
most fragmented industry that we have ever seen. It is a $46 billion market handled by
25,000 small mom and pop distributors and we are out there to try to get some piece of
that consolidated into our public company.”
CEOCFO: Could you tell us about your
acquisitions and what you are looking at now?
Mr. Piancone: “As a private company we
made 3 acquisitions, buying a stand alone new distributor in Cabo San Lucas that took care
of all of the hotels in Cabo San Lucas. We bought a “what we call a fold-in”
candy company and that’s how we became a distributor for Nestle Candy Company and
also an import export company that was bring foods from Italy; now that gentleman is the
president of our company, Victor Petrone. We also acquired the Miller Beer distributor, a
small bakery supply company called, J.M. Distribution, and a company in Miami called Palermo’s
Italian Foods, which takes care of the east coast of Mexico, which is part of where we
ship our products out of. Our next acquisition will make us a nationwide throughout Mexico,
giving us 4 more distribution centers and puts us into 6,300 new accounts making us the
largest importer of Sushi and French products.”
CEOCFO: Please tell us about the market for
different foods in Mexico?
Mr. Piancone: “People think that in Mexico
people just eat Mexican foods, but it’s a country of 110 million people, with a
trillion dollar gross domestic product and the food service industry is a $46 billion. If
you walk into a supermarket in Mexico City, in a Wal-Mart, which has 900 stores throughout
Mexico and they have a French section, a Japanese section, an Italian section and then of
course they have a Mexican section, just as they would in the United States. Therefore, it
is exactly the same. Candy is a big item and they like American products and watch a lot
of American T.V., so they see products like Miller Beer, energy drinks and water. The two
fastest growing markets in Mexico are bottled water and energy drinks.”
CEOCFO: Does the immigration problem and the
tensions between the U.S. and Mexico have any effect on you company?
Mr. Piancone: “It has absolutely
nothing to do with us; NAFTA (North American Free Trade Agreement) was signed back in
1995, and from all accounts it has been a successful program. It has opened the borders to
bring products from Mexico into the United States and products from the U.S. into Mexico.
90% of all tourists that go to Mexico are from the U.S. and the big hot spots are Cabo San
Lucas, Cancun and Puerto Vallarta. We just announced today that we opened a warehouse in
Puerto Penasco, which is an up and coming resort town about an hour from the Arizona
border and that is where all of the people from Phoenix and Tucson go to vacation.”
CEOCFO: How many distribution centers do you
have?
Mr. Piancone: “We currently have 5
distribution centers and when we close our next acquisition that we have announced, we
will have 4 more, giving us 9.”
CEOCFO: You are now a public company; please
tell us about your stock price and how things have fared?
Mr. Piancone: “We started trading on
May 3rd (2006), on the OTC: BB and we came out at about .45 cents. Our stock
today is traded in the $1.00 to $1.15 range. We are actively going out and talking about
our company what we are doing to different investors and investment groups. We are
executing the business plan like we said that we were going to and the market seems to be
enjoying it.”
CEOCFO: What is ahead two or three years
down the line?
Mr. Piancone: “When we close our next
acquisition and we are the first national distributor of imported products; that is when
the fun will begin. We will go out and start talking to all of the U.S. and multinational
companies about giving exclusivities for their products to distribute throughout Mexico.
Fold in acquisitions is what we like to do, where we go out and buy these smaller
companies that might have 1 or 2 trucks and we fold them into an existing facility where
we are at. Therefore, we are just going to tack on revenue and tack on exclusivities and
exclusivities are what our rocket fuel is.”
CEOCFO: What are the challenges going
forward?
Mr. Piancone: “Making the right
acquisition is important and we have to be very careful about that. Another challenge is
taking on products, we like to call them pull-through products where customers are
demanding the products and we pull it in. We are a world economy now and we bring in
products from all over the world, so fluctuation in money, as we have to keep a handle,
because we are buying products from China, Europe and different areas and bringing them
in. The Peso has been very strong, but we have to worry about some of the other
currencies.”
CEOCFO: Is you management team in place to
meet the expected growth?
Mr. Piancone: “We feel that our
management team is in place today to get us to that $100 million mark. It is myself, with
my 20 years of experience in the food service business and 10 of those years in Mexico,
our president, Victor Petrone, who has 20 years of experience in the food service
industry. He worked with me at Roma Exporting, a major food supplier in Mexico, and then
he was at SYSCO Corporation, in charge of their international department. Our CFO, William
Lindberg, also has many years of experience, so the management team that we are putting in
place now and we think that we will get it to that point. We are always looking to higher
bright people, make acquisitions, and keep those people on.”
CEOCFO: Why is the name of your company
Nascent Wine Company, yet you do so much more than wine; do you see a change?
Mr. Piancone: “We actually start off
our interviews by saying that we are the wine company that doesn’t sell wine; we sell
everything but wine. We already have plans of changing the name and we have already
reserved it. We just have to do a proxy; we are doing a DBA (Doing Business As) and after
that, we will be Nascent Food Service. Nascent means to be reborn, which is what we are
doing, so Nascent Food Service will be our new name and it talks about everything that we
do.”
CEOCFO: Address potential investors; why
should they be interested and what might they miss when first looking at the company?
Mr. Piancone: “The first thing when
investors look at Nascent, they see Mexico and there is some negativity towards Mexico.
They need to understand that it is a country just like any other country with 110 million
people and a trillion dollar gross domestic product. Further, there is no national
distributor out there; no SYSCO Corporation or U.S. Foodservice out there, we are the
first one. We are the first publicly traded company, the first to go out and make
acquisitions and we have some exclusivities under our belt. In Mexico, we work on 25 to
40% margins, whereas in the U.S. food services companies work on 15 to 20% margins. We are
not creating anything, we are not testing anything and we don’t need USDA approvals.
We just need to go out and buy these companies and we have been successful at buying these
companies for 2 to 3 times earnings and companies in our market place trade at 23 times
earnings.”
CEOCFO: In closing, what should people
remember about Nascent?
Mr. Piancone: “Remember that Mexico is
a $46 billion marketplace and we are the first ones to the market and an entrepreneurial
company. People should keep looking out for our press releases as we make acquisitions and
sign exclusivities, because those are the two things that are going to make the company
grow.”
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