Beaten to a Pulp

Ironbeer entrepreneur Pedro Blanco thought he had a fruitful contract to can Tropicana juice. Now all he's got is a bankrupt business.

Pedro Blanco can relate to Anthony T. Rossi, the founder of the Tropicana orange juice company. Rossi immigrated to Florida from Italy, penniless, with a burning desire to succeed in business. Through hard work, his original fruit packing and gift box company grew into the world's largest producer of fresh orange juice. When Rossi died in 1993, Tropicana's sales topped a billion dollars per year.

Blanco, age 59, claims his own American success story. The former Cuban cattle rancher fled to Miami in 1961 after Fidel Castro seized his property. He spoke no English and had only $47 in his pocket. Desperate for work, he began driving a truck for the Ironbeer Soda Co., makers of the sweet citrus cream soda popular in Cuba since 1915 and produced exclusively in Miami after Castro took power. Within five years Blanco rose to general manager. Two years later he bought the Ironbeer company outright.

For 30 years, Ironbeer has held steady as a favorite, if regional, soft drink. Sedano's, Winn-Dixie, and Publix supermarkets stock the distinctive red-and-yellow Ironbeer cans alongside Materva, Jupina, and other sodas favored by the Hispanic community. Revenues leveled at close to $3.5 million per year. It was a comfortable family business for Blanco -- his wife Myra kept the books, while his two sons, Carlos and Pedro Jr., handled sales and internal operations.

But like Rossi at Tropicana, Blanco wanted to expand his business. He had always contracted the canning of his sodas to private companies, but in the early 1990s he decided to build his own plant next to his northwest Miami warehouse. With two partners, he founded the Sunshine Bottling Co. and invested in monstrous bottling and canning machines. To further increase his profits, he decided to brew and sell his own version of the Cuban soft drink known as malta. Blanco hammered out contracts with the supermarkets to sell his syrupy barley beverage under the stores' private labels.

The canning factory was less than two months from startup when Blanco crossed paths with Tropicana, the company that flourished under Rossi's guidance. The result, for Blanco, was disastrous.

Tropicana wanted Blanco to be its only juice canner for the entire East Coast, a dream opportunity for a small business. Yet, soon after the contracts were signed, Tropicana dropped out of the deal because of an extremely technical (and, Blanco insists, specious) detail. Before Tropicana reneged, though, Blanco incurred debts so severe that Sunshine Bottling Co. eventually declared bankruptcy. While the company remains open for business, struggling to regain its financial footing, Blanco heads to Dade County Circuit Court next week to accuse Tropicana of breach of contract and to seek $4.5 million in damages.

"Tropicana, that is one of the more important companies in the whole U.S.," Blanco relays in his still-uncomfortable English. "They came to me as I was mounting a juice plant. They said we want you to pack for us orange juice. Fine, good, I said. We are a family business. We feel really very proud of Tropicana coming to us.

"In reality," he continues, "they push us against the wall and one day, at a turning point, I sit down at home and gathered my family together. I said I think we have a pretty bad hit. We probably need to look for other jobs."

Blanco wrings his thick hands. He is seated at a conference table in his office overlooking the bottling plant. A map of Cuba and an old-time bottle of Ironbeer are displayed on a wall behind him. "It is a shame that a family business that has made money every year for three decades can go down because a giant wants to scratch its head."

Since 1988 Tropicana has been owned by Seagrams Inc., a mammoth entertainment and liquor conglomerate based in Montreal. Seagrams is so big and so diverse -- producing liquors, movies like Jurassic Park, CDs by Beck, and operating the Universal Studios theme parks -- that Tropicana's huge returns compose only a quarter of Seagrams's six billion dollars in annual revenues.

Tropicana has prospered under Seagrams' stewardship. Whereas the company used to sell one primary product, 64-ounce cartons of not-from-concentrate orange juice, Tropicana now cranks out several different varieties of juice, including Season's Best apple juice and Tropicana Twisters strawberry-banana beverage.

These new products created a need for new packaging facilities. Although all of Tropicana's orange juice cartons are filled at the company's main headquarters in Bradenton, there's no machinery at the plant capable of putting the new juice products into cans. The search went out for subcontractors. "Your company has been brought to our attention as a high-quality packaging facility by others in the industry, and we hope you will be interested in exploring the possible copacking needs we have with us," wrote Tropicana senior buyer Pat Boling in a November 1993 letter to Sunshine Bottling.

"Interested" is an understatement. Blanco was ecstatic at the opportunity to work with such a major player in the juice industry. As a demonstration of his commitment to a Tropicana partnership, he put aside his plans to brew malta. "Pat Boling said we need you to put us in the front of the bus," Blanco recalls. "We want you to put all of your research in the back of the bus. Put all your money into the new plant for Tropicana. I got together with my family and made a business decision: Let's bring those big guys with us. We'll be very happy."

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