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Under the Radar Success

By Stan Simpson

September 03, 2012

Nearly 30 years ago, the new owners of Severance Foods Inc. mixed corn flower and water, cooked it into a dough, fried it in vegetable oil and manufactured one of the first tortillas in Connecticut's capital city.

But that was easy part. "Selling it was the hard part'' recalls Richard A. Stevens, the Hartford-based company's president and one of its founding partners. "We thought we knew what we were doing and packed up our cars and knocked on the back doors to talk to the chefs (at local restaurants.)"

First, the chefs said the tortillas needed to be bigger in size — about 6.5 inches, they suggested. Then, the distributors said they really didn't want to talk business until the partners — Stevens, John Grikis and the late Richard Dana — lined up more restaurant support.

An unlikely partnership surfaced in 1986. Weight Watchers (located in Wethersfield on the Silas Deane Highway) took a fancy to the health-conscience nature of tortilla chips — lower in fat and higher in fiber than potato chips. The tortillas would become a mainstay for Weight Watchers' enchilada dinners. The company needed a fresh supply of 20,000 tortillas daily. Severance Foods was more than willing to oblige.

"We were on the brink of non-existence,'' Stevens said. "It was a shot in the arm. Things took off from there." With Weight Watchers on board, Severance went from running the factory once a week to five days a week and new employees were hired.

The Severance partners had worked for Heublein, in the Ortega Mexican Foods divisions in the 1980s. Stevens had worked at Heublein for eight years, and was manager of quality assurance for Ortega. In 1984, R.J. Reynolds took over Heublein. Soon, the three amigos — Stevens, Grikis and Dana — found themselves studying buyout packages. They took the money and along with their experience — and a sense of humor — started 'Severance' Foods.

These days, the 27-year-old company is recognized as the largest manufacturer of tortillas in the Northeast. Though, truth be told, few realize the manufacturer exists in Hartford, even though it encompassing four buildings and 80,000 square feet on Main Street, about a half-mile from I-91.

Severance evolved from its inception in 1984 from a three-person company in a 7,500-square-foot building in the North Meadow section into an 80-employee tortilla manufacturing and packaging business that generates $17 million a year in revenue.

That severance dough from Heublein was quite an investment. In the past four years, Stevens said Severance's business has increased 80 percent.

"You couldn't find nachos on the menus back then,'' said Stevens, 60, recalling the mid-1980s. "We saw that all the tortillas and tortillas chips were being imported from down south — Texas, Arkansas, factories down there. So, we thought if we could have a product made fresh here and shipped local, it would be more economical… And there was no one else in the northeast doing it."

Companies in Pennsylvania and Virginia were the closest competitors.

Severance manufactures its signature brand Pan De Oro and 14 other brands for different companies. But business from Pan De Oro (Spanish for 'bread of gold') only comprises about 5 percent of its business. The bulk of the business is the making and packaging of chips for entities such as Trader Joes, Late July Organic, Way Better Snacks and Green Mountain Gringos. The products are sold in about 60 stores in Connecticut and shipped nationally, including Illinois, Florida, Colorado, Oregon and New Mexico. Some are even shipped to Canada.

There were two seminal moments in Severance's history that spurred its success. One was the partnership with Weight Watchers in '86. The other was installing a bagging machine in 1989. Previously, the manufactured chips were put into — and shipped in — boxes. With the new bagging machines, other companies wanted Severance to not only make their brands, but put then in logo-appointed plastic bags as well. Business exploded.

"There's been some trials and tribulations here and there, but overall it's been a great experience,'' Stevens said. "It's been nice not to have a boss the last 28 years. And it's been pretty good job security.''

Stevens' son, Richard P. Stevens, joined the company a couple years ago and now serves as the operations manager. The 28-year-old Stevens oversees marketing, business development and compliance. Rick Stevens was working in public affairs in Washington, D.C. and found himself regularly talking to his dad about business. When he was younger, Stevens would work his dad's plant, stacking and boxing the product, learning the fundamentals of the business.

He recently attended a Connecticut Vegetarian Festival at the Connecticut Convention Center, where about 12,000 people attended. The tortilla brands, Rick Stevens said, were a hit with the conventioneers, many of whom are acutely health conscience and avid readers of nutritional labels. Most were surprised that a chip manufacturer was located in their backyard.

"Really, all of New England didn't know it had one of the largest snack food manufacturers right nearby," Stevens said. "And it was primarily because we were co-packing for other companies."

High-fiber, low-fat, low-cholesterol delicacies with no trans fat are still popular, the younger Stevens said. Many customers also seek gluten-free treats. And a new trend finds those buyers seeking chips that are "non-GMO." Genetically modified organisms appear as a result of genetic engineers working on corns and grains to make them resistant to disease, drought and insects.

Staying on top of the trends is good for the company's bottom line. It plans to expand its own brands, while still growing its base of contracted work.

The irony of Severance Foods is that it started out wanting to carve a niche by manufacturing its own signature style of tortillas. But it is making its name manufacturing and packaging snacks for other companies.

A venture formed by partners adjusting to the reality of being downsized almost three decades ago is emerging as a recession-proof business. All it took was some corn flour, a little water — and a big break from a company that encourages its clients to watch what they eat.

Stan Simpson is host of "The Stan Simpson Show'' (www.ctnow.com/stan and Saturdays, 6:30 a.m., on FoxCT) and senior executive adviser at the Hartford Journalism & Media Academy. His 'Faces of business' column appears monthly. Know someone who'd make a good subject for 'Faces of business'? Contact Simpson at Faces@stansimpson@comcast.net.

Reprinted with permission of the Hartford Business Journal. To view other stories on this topic, search the Hartford Business Journal Archives at http://www.hartfordbusiness.com/archives.php.
| Last update: September 25, 2012 |
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