August 6, 2008 - Twenty years ago, Bob Rich Jr. asked William G. Gisel Jr. to get Rich Products Corp. into international markets, outside its traditional base in the United States and Canada.

Today, the Buffalo-based food products firm gets about a quarter of its business from outside its long-time North American markets--and its international division, now spanning more than 70 countries, is expected to be the source for much of Rich's growth in the coming years.

"It's a very healthy business, experiencing double-digit growth," said Kevin R. Malchoff, the president of Rich's international business.

To meet that growth, Rich this year has opened or started construction on three new plants in the Far East and added a new refrigerated food warehouse in China for its rapidly expanding logistics business there.

The company opened a new non-dairy toppings and icing plant in Vietnam to serve its markets in Southeast Asia. Rich's started construction in May on a plant to make toppings and icing in Tianjin, China, and opened a fourth refrigerated food warehouse, in Beijing, for KX Logistics, its third-party logistics business in China. And it expanded a dessert products plant in Mexico to include an additional non-dairy toppings and icing plant in June.

"We've had constant progress to the point where it's become a very meaningful part of the business," said Gisel, now Rich's president and chief executive officer.

All this for a company that, in the 1990s, followed what Gisel calls a "shoe leather strategy" that focused on gauging local markets and getting a feel for what products local consumers were demanding. That build-from-the-ground-up approach also meant that Rich's largely built its international business steadily, as opposed to "splashy acquisitions and joint ventures," Gisel said.

By now, though, Rich, with $2.6 billion in annual sales worldwide, has a global distribution network, regional offices in China, Mexico, Great Britain and South Africa, and 14 plants in eight different countries.

Those global operations are taking on an even more important role as consumption of Rich's products in its traditional North American market is flattening, leaving its international business as the company's fastest-growing segment, Gisel said.

Much of Rich's international business is localized. Roughly 98 percent of the products that are made at the company's international plants are consumed in the country where they're made, especially now that rising energy prices are driving up the cost of transporting frozen food products over long distances.

For Rich, those products include icing used on cakes, typically sold at bakeries and supermarkets; whipped toppings for restaurants and hotels; as well as bakery products, such as muffins, cookies and sweet rolls.

The sweet spot in Rich's international push has been in emerging markets, from China and Mexico to Brazil, where the baked goods and food retailers aren't dominated by big grocery chains, Malchoff said.

"It tends to be a market where it's a business-to-business sale," Malchoff said.

In China, for instance, one of Rich's best customers is Holiland, a bakery that was a Rich Products customer from the start and now has grown into a chain of more than 800 shops.

That relationship got off to a rocky start, though, when Holiland wasn't paying Rich for the products it used at its first store, instead funneling its money into opening a second, Gisel said. Yet Rich kept working with Holi

land, even offering some help on the business side--a patient approach that helped develop a significant customer.

"In all of these different countries, you've got to be able to understand the local customs. You've got to be able to listen and learn," Gisel said. Even Rich's signature products are altered slightly from market to market to match local tastes.

The food distribution networks in emerging countries tend to be limited, which gives non-dairy products, like those Rich makes, an advantage over the shorter shelf life of similar dairy products, Gisel said.

That limited network is a main reason why Rich branched out in 2003, by acquiring a majority stake in KX Logistics, which now runs four refrigerated food warehouses in China and also operates a fleet of 100 refrigerated trucks. Its customers include companies like Nestle, McCain and Walmart. Within a couple of years, Malchoff can foresee KX adding three more warehouses.

"This is an extremely rapidly growing business for us," Gisel said.

e-mail: drobinson@buffnews.com