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Food company prepares for future.

Food company prepares for future

A Sault Ste. Marie frozen food company is ready to tackle two of the biggest economic changes facing the country: free trade and the Goods and Services Tax.

Fred Dovigi, president of Rico's Frozen Foods, believes in two years under free trade a smaller establishment like his will not be able to survive.

A smaller operation can't compete with larger companies for raw materials, labor, transportation and packaging.

"If I hold to the status quo my efforts here will be sweet memory," Dovigi said. "I will find the appropriate niche."

Dovigi said he is not crying about free trade, but will spend all energies becoming his an innovator instead of a follower.

In addition, he intends to surround himself with people who have been in the business for a number of years, and then he hopes to expand the plant to satisfy the new directions he wants the company to take.

As a businessman with a watchful eye on the market, Dovigi sees an opportunity with the coming Goods and Services Tax.

Since the GST will be charged on restaurant meals, but not on food purchased at supermarkets, he sees a change in the way food will be sold.

Grocery stores will start having in-store take-outs, much like a smorgasbord, he predicted. "They're going to compete head-on with the restaurants."

People will go to a supermarket and select a meal to take home. If the food is sold like that, it would not be subject to GST.

Supermarkets acting as glorified delicatessens already exist in the United States, he noted. Some people even FAX a food order from the office and pick it up on their way home.

Dovigi noted that Canada usually lags two or three years behind the U.S. in such changes, but it is heading that way. In fact, he believes the GST will force Canadians to change a little faster than normal.

As a frozen food producer in a federally inspected plant, he can provide consistency and a better pricing structure to the grocery stores for such a new form of sale. The products would be shelf-stable for a minimum of 30 days.

The food would be nutritionally balanced, low in fat content and high in carbohydrates, among other positive things, he noted.

It would not be the first time Rico's Frozen Foods, which began in business in 1980, has changed with the times.

At the outset, the company's main direction was the production of meats such as sausage and hamburger.

"The margins are very small at the meat end of things, especially working under federal inspection," said Dovigi.

The company therefore began to look at the pasta part of its operation, he said. "We recognized as far back as 1983 that pasta was becoming a very important food commodity."

In the beginning, the company's production was 90 per cent meat and 10 per cent pasta. Now, the ratio is 85 per cent pasta and 15 per cent meat.

"We've been successful in making the transition," said Dovigi.

He said the company must be attuned to everything in the marketplace, since one mistake could be fatal. That means being cautious, going with gut feelings and having accurate market research.

If he deals with a grocery store, for instance, Dovigi will look at the competitor's products and packaging.

"I'm not ashamed to admit I do a great deal of borrowing, instead of re-inventing the wheel," he said.

The company must also deal with the impression created by larger companies that fresh is better.

Dovigi said no one understands the process companies such as his use. "Frozen is a very hard sell."

On the other hand, he noted that fresh food is looked upon as up-scale. "The perception of fresh gives it more of a connotation of home-made."

However, his gut feeling tells him that frozen is better. "We look at it as fresh frozen."

Dovigi said it is impossible to compete with giants pushing the opposite point of view.

Rico's Frozen Foods has had experience for a number of years in supplying a large customer.

It has been providing lasagna for six years to Air Canada's Nutri-Cuisine from its Sault Ste. Marie plant.

"It's rewarding in a sense, knowing you have the capability to supply products for a large employer like Air Canada," Dovigi said.

The company also supplies products to a large company in southern Ontario.

In all, the company makes about 40 varieties of pasta.

It also creates several menu-specific foods for restaurant chains, under signed, confidential agreements which keep ingredients secret.

It also supplies Italian sausage to local retailers, as well as to such customers as the Department of National Defence in Ottawa. About 18 people are involved in the operation.

The company's product is now sold coast to coast in the United States and Canada. Dovigi, however, wants to make the U.S. his primary market.

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Title Annotation:Focus on Sault Ste. Marie; Rico's Frozen Foods
Author:Bickford, Paul
Publication:Northern Ontario Business
Date:May 1, 1990
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