AJE

The Will
to Work
THE STORY
OF AJE
2 Ganas de trabajar
AJE
The Will
to Work
THE STORY
OF AJE
The Añaños 12

Can dreams become reality? 17

Committed for Peru 20

Land of opportunities 22
Sharing and thanking 24

Is it possible to conduct business as a family? 27

The family foundations of development 30

The will to work 31
We can do it 32
Teamwork 34
Respect as a fundament 35

Are there keys for competing? 37

An organizational culture 40
The importance of trusting and being trustable 40
Audacity 41
Within the reach of everyone 42
AJE’s offer 43
Made to measure 44
Giving more than one receives 47

2 The will to work

San Miguel, La Mar.
The city of origin of the Añaños family,
in Ayacucho.

3 The will to work

The Añaños family, 1974.
Mirtha, Vicky, Eduardo, Carlos,
Jorge, Arturo, Ángel, Álvaro.

4 The will to work

5 The will to work
The first plant in Ayacucho.
Production using the first machines.

6 The will to work

Kola Real.
The drinks produced by Añaños
Industries arrive to all corners of the
country, always at “the right price.”

7 The will to work

Kola Real in motion.
AJE and its contribution to a parade
in Trujillo in 1997.

8 The will to work

 Roof casting in the new Ayacucho plant.
Ángel placing a floral arrangement during the
blessing ceremony of the plant in year 1996.

A new plant in Ayacucho.

Mirtha and Álvaro in the opening
ceremony in year 1996.

The factory in Huancayo.

Eduardo and Mirtha at the opening
ceremony in year 2000.

9 The will to work

The Añaños.
Arturo, Eduardo, Jorge, Mirtha, Ángel, Álvaro,
Vicky y Jorge en Lima, year 1995.

10 The will to work

11 The will to work
The Añaños
Mario Vargas Llosa
Taken from the Spanish daily El País. Sunday, November 16, 2003.

The name is difficult to memorize and that pair of ñ’s creates serious phonetic
problems for foreigners, but it is worthy to make the effort and remember it
because the extraordinary story of the Añaños family –that seems to have been
lived to illustrate the ideas that us liberals promote– should be spread as an
example of how well it can go for Latin America if the “perfect Latin American
idiots” would imitate it instead of wasting their energies protesting against
globalization or threatening, as does the Bolivian Evo Morales, to annihilate
Western culture, two ways to waste time as good as spitting at the moon or
protesting the law of gravity.

I wanted to write about the deeds of this modest family from Ayacucho a
long time ago, but I had not known enough about the details of their trajectory,
a problem that was attended to thanks to ‘The Economist’, which has dedicated
an article to them, and, above all, thanks to the excellent reporting by David
Luhnow and Chad Terhune in ‘The Wall Street Journal’ (October 27, 2003) from
which I have taken much information.

Eduardo and Mirtha Añaños had a small farmhouse on eastern slopes of

the Andes, in the interior of Ayacucho, the impoverished department where the
Shining Path (Sendero Luminoso) guerilla group was born. Ayacucho is the
Peruvian region that most suffered from deaths, disappearances, and material
damages in the years of terror, that was assaulted and devastated by the
revolutionary movement. The couple and their children escaped unharmed,
but instead of fleeing to the coast as tens of thousands of country farmers and
middle-class families had, they took refuge in their small residence in the city
of Ayacucho, given over to surviving with sweat on their brow.

How was it possible to make a living in this land devastated by terrorism

and counterterrorism when being poor in the eighties then became being
miserable, with thousands without work and marginalized, begging in the streets?
The Añaños studied their surroundings and took note of the fact that, due to
terrorist actions, the people of Ayacucho had been left without soda. The Coca
Cola and Pepsi trucks, coming from Lima, which came up the central highway,

12 The will to work

were constantly attacked by the guerillas, or by common criminals that made
they pass for guerillas. So severe were the losses sustained that the respective
companies stopped their deliveries and spaced them out in such a way that
the drinks that did arrive were not enough to meet local demand. One of the five
children of Eduardo and Mirtha Añaños, Jorge, an agronomy engineer, created
the formula for a new drink. The family mortgaged their house, was lent money
here and there, and got together thirty thousand dollars. With this sum they
founded Kola Real in 1988 and began to manufacture sodas on the patio of
their house, which were bottled in a motley collection of containers and labeled
by them themselves.

Fifteen years later, analysts on Wall Street calculate that the family business,
born in such precarious conditions, has annual income that exceeds 300 million
dollars and that its competitive presence in Peru, Ecuador, Venezuela, and Mexico
is creating serious problems for the North American giants Coca Cola and
Pepsi Cola, for whom the aggressive eruption of the Peruvian soda in these four
countries, and, above all, in Mexico, the second largest consumer of non-alcoholic
soft drinks in the world after the United States, has begun to shrink the markets
dramatically, obliging them to cut prices and ramp up publicity campaigns. In
Peru, Kola Real has almost 20% of the market; in Venezuela, 14%, and in Mexico,
where the Añaños arrived just a year ago, building an ultramodern plant on the
outskirts of Puebla, 4%.

What has been the secret for success of this enterprising family? The quality of
the product above all I imagine. (Personally, I hate the sweetness and bubbliness
of all the world’s sodas, but if Kola Real is put within my reach, I feel it will be my
duty to give it a try.) Also, the sagacity with which the market conditions were
researched and it adapted to them, offering, first to the impoverished residents of
Ayacucho, and later to Peruvians, Ecuadorians, Venezuelans, and Mexicans hit by
the recession, a more affordable soda available in diverse packaging. In order to
be able to offer the product at such attractive prices, Kola Real drastically cuts
general expenses by spending as little as possible on advertising, implementing a
system of extreme austerity at its points of sale –the jewel in the crown that is the
plant at Puebla looks like a Spartan convent– and mounting their own distribution
networks instead of granting them to concessionaires.

The competitive battle between Kola Real and Coca Cola and Pepsi Cola has
its most interesting fronts in Mexico. It is in this country that Coca Cola gets 11%
of its worldwide income. There, Kola Real has launched its big bottle “Big Cola”,
at 2.6 liters, at a price of 0.75 USD, much cheaper than the Coca Cola bottle, at

13 The will to work

2.6 liters, that sells for 1 .30 USD or about half a dollar cheaper. The director of Kola
Real in Mexico, Carlos Añaños Jeri, explained to ‘The Economist’ that the company
uses 600 trucks to supply 24 distribution centers, which in turn supply 100,000
points of sale, which, if everything goes according to the company’s plan, will grow
to 900,000 in the next five years.

It is not going to be easy. The reporters at ‘The Wall Street Journal’ interviewed
people at the stores and supermarkets of the Mexican Capital and saw that
Coca Cola has moved quickly, offering bargains and incentives to many of its
customers so that they would remove Big Cola from their shelves and exclusively
sell their soda, a policy that earned the company a severe reprimand last year
from the Federal Commission of Mexico that regulates fairness of competition. Will
the Peruvian David of sodas end up defeating the American Goliath or will the
latter buy out its insolent competitor by putting a dizzy sum of five hundred million
or one billion dollars on the table?

For the moral of this story, it does not matter how the saga of the Añaños
family ends. The important thing is how it began and where it has gone. A humble
family without many more resources than their ingenuity and a will to work has
found in a market that was already so saturated with sodas a niche from whence
to develop and prosper in the fantastic way that they have, thus serving to
demonstrate us something that many of us already know, but that many ignore
or hide in Latin America, because of ideological prejudices: that in a market open
to competition, there is always room for businesses gifted with a truly enterprising
spirit and a nose for sensing the necessities of the consumers; that, it is thus
a flagrant lie that huge multinationals strangle small businesses and, in the short
and long term, manage to create a monopoly. (This only happens when corrupt
or inept governments allow it to); and, how the success of a businessperson
that scores points on its competitors favors society at large, reducing prices and
obligating them to improve the quality of their product and services in order to
not lose customers or be forced out of the market.

How many jobs has Kola Real created up to this point in the four countries
in which it is present? Several hundreds without doubt, and indirectly many more,
simultaneously creating employment and wealth, injecting a dynamic current
of creativity in a branch of the economy that seemed to be sleeping in the arms
of the giants that shared soda drinkers. What the Añaños represent is a face of
capitalism that in Latin America is practically unknown or otherwise denied: its
popular face, its humble roots, that of country farmers expelled from their lands
by war or drought or bureaucrats, that of the workers that lost their wage because

14 The will to work

factories went broke or burned down or were pillaged, and had to invent work
in order to be able to eat, and just as this family from Ayacucho had done, many
opened workshops, stores, craft businesses, factories, facing the overwhelming
obstacles of bureaucracy, mercantilism, lack of confidence; that is, when it is
not hatred of the State for the private company and the market which threw them
into the path of defenseless Latin Americans without sponsors and they want,
instead of being parasites on the Budget, to work for themselves.

It is true that not many have had the same level of success as the Añaños,
but many more would if in Latin America there had been a policy that, instead
of discouraging and harrying, would encourage individual initiative and celebrate
the success of a business, of a businessperson, as the achievement of society
at large, as a benefit for all citizens, rather than taking it with distrust, rancor, and
envy. It is true that in Latin America, many times business success does not
come from talent or effort, but from privilege, from vice between governments
and businesspeople that the unprotected consumers end up paying for, but this
happens, in large part, because of excessive fear of the market, fear of free
competition, because of the tentacles of the State that weave their way through
the cracks of economic life, asphyxiating it and corrupting it. Now that populism
from ungrateful times past and tragic misrepresentations begin to flare up once
again in Latin American lands –Venezuela leading the mistaken movement–,
it is worth spreading the story of the Añaños family across the continent as a
living testament to what Latin America could be, if, like these valiant people from
Ayacucho, it would only challenge itself.

© EL PAÍS, SL / Mario Vargas Llosa, 2003.

© PRISACOM, SA.

15 The will to work

Kola Real Museum.
First Kola Real in beer bottles.

16 The will to work

Can dreams
become
reality?

17 The will to work

Alwa
“The secret
is making crisis
become opportunity”

18 The will to work

ays. To conduct business, the most important thing is not money. The essential
thing is to dream. And Peru is a place where it is possible to make dreams
become reality because the secret is to transform difficulties into challenges
and obstacles into goals.

And this is how it has been understood by many enterprising Peruvians

whose projects have become examples of innovative businesses that surprise
the world as much as our natural wonders and profound cultural heritage do.
These people dared themselves to dream and by their efforts have molded a
new concept for conducting business.

The Añaños family founded AJE in 1991. This conglomerate of businesses

is part of the group of dreamers that have transformed ideas into a model,
and one made in Peru. Passion for change, audacity, innovation, creativity,
a global vision, and the search for the consumer’s wellbeing are the ingredients
of the brand that identifies them and of the motivation that moves them.

The Añaños did what few do: they had a dream and they began to realize it.
They took immediate decisions and did not doubt about moving ahead because
they believed in the clarity of their dreams.

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Committed for Peru
To risk founding a company in this country, as in any other country, it requires of
the entrepreneur the ability to transform their dream, and their commitment to
the progress of Peru through its products, employment, and satisfied customers.
It is obvious that without knowing about a potential market –its desires, preferences
and consumption necessities –there is little that can be achieved with respect
to sales. The important thing is to launch products that meet the needs of the
consumers and whose prices do not affect quality.

In the case of AJE, the Añaños family love for Peru is reflected in its value
proposition: quality at the right price. To this end, their strategy was centered on
the segments of society that were not reached by “conventional” offerings, first
in the interior of the country, beginning with the region in which nobody would

Ángel Añaños.

20 The will to work

have dared to invest in those years: the Andes, in the family homeland of
Ayacucho. Later, it would come to the coast and the jungle, finally arriving to
Lima, crossing the borders of Peru and out into the world at large.

But pointing to the base of the population pyramid, at which few direct their
efforts and where many demand, did not limit the aspirations of AJE. It also
aimed at segments with greater acquisition power, which were later incorporated
into the plan, without ever forgetting those that were the first to offer their loyalty
as consumers.

AJE’s experience was not an easy one, as the Añaños had to bet it all on
their dream. It is about a trajectory that would yield success for the work, effort,
dedication, and sacrifice that the family put in. It was about focusing on objectives,
assuming risks, and making decisions, which often translated in long journeys
beginning very early in the morning and ending very late at night. It was about
learning from errors, not continuing to commit the same, and transforming
any lesson learned into continued betterment. Maybe without knowing it at the
beginning, the Añaños were becoming a case study for the business schools
that take such entrepreneurship as an example for teaching in their auditoriums.

SL A/B
15%

PERU – Population Pyramid

SL A = Upper/upper middle
SL C/D/E SL B = Middle
85% SL C = Upper lower
SL D = Lower
SL E = Marginal
SL: Socioeconomic Level
Source: Market Research Business Association
(Asociación de Empresas de Investigación de Mercados)

21 The will to work

Land of opportunities
The development of the country is not in foreigner’s hands; rather, it is in Peruvian
hands. It is just a matter of knowing how to look for opportunities among difficulties
and adversity. And Peru is a propitious place to do so.

The experience of the Añaños demonstrates that in spite of adverse

circumstances, effort may lead to a different reality: making the process succeed
in the interior of the country in order to later focus on the capital and on the
socioeconomic sectors that massive consumptions companies had ignored or
had only considered tangentially.

To this end, each of the links on AJE’s value chain, including purchases,
manufacture, distribution, commercialization, marketing, price fixing, and delivery
to consumers, has been treated as a creative focus point based on relevant
market characteristics. And for things to be like this, it was key to identify
opportunities and recognize that the traditional way of starting up businesses
would not work. The challenge was that it had to be done in a new way, without
a better idea than having to do things differently.

Is it possible to do things differently? AJE believed so from the very beginning

because it was not just about offering to market segments that were not reached,
but it was about generating a multiplying effect on the market by extending
their product lines and expanding in the categories they ventured into. First it was
with soft drinks, constantly launching new flavors and packaging, having been the
pioneers in launching non-conventional sizes and products, which meant technical
changes that broke paradigms.

22 The will to work

 Carlos Añaños.

In this way, they did not just progressively achieve a greater market share, but
they were also able to cause the market itself to grow by including new consumer
groups that had not before purchased soft drinks on a regular basis. This is to
say, they were able to achieve that the product stopped being a luxury for millions
of people by reaching the market in a non-traditional way.

Later it came sparkling water, fruit juices, sports drinks, and citrus punches.
As had occurred with the soft drinks, these products were no longer considered
to be exclusive to segments of the population with greater acquisitive power
and became more widely distributed. In this way, AJE was able not just to enter
into these markets, but also contributed to expand them.

23 The will to work

Vicky Añaños.

Sharing and thanking

It is still a surprise for many to remember that AJE began as a grass-roots business.
It was thanks to the initiative and unity of the Añaños family and of executives
and workers that were later hired that the constant growth of the group made
that in less than two decades it would become one of the largest companies in
Peru. AJE does not jealously guard its secrets nor does it consider lessons learned
at the length of its years to be for its exclusive use, but it feels committed and
indebted to the country that has allowed it to innovate and it is open to share its
experiences with all those with initiative.

24 The will to work

 But what is the secret? Firstly, it is worth emphasizing that Peru is a country
of opportunities that are open for those who do not let them pass. Secondly,
it is small and micro businesses that have to assume the challenge of developing
themselves, which will be a benefit to families and the country. There exists
a potential market in wait for being discovered because the advantage in Peru
is that everything is waiting to be accomplished and to this end there is only
required an innovative vision.

The Añaños started from scratch, but they knew how to grow. They dared to
work in the provinces, in the capital, and abroad. The key question that drove
this progress was simple: if many other countries have grown and developed,
why not Peru? Working as AJE works, with a value proposal that involves “that
which is fair,” is a way of paying homage to the country. And in order to share its
experience, AJE has created spaces for interacting with small businesses and
providing its knowledge, yet, more importantly, sharing its motivation, keeping
faithful to its way of realizing business and its decentralized vision that drives it to
share said training not only in Lima, but also in many other cities in the country.

Fruit Pulp for Pulp

In 2004, AJE launched Pulp, a fruit juice

at the right price and just three years
later it had caused the market category
to increase by 300% in size. In order to
sustain this market, the company had to
assure a continuous supply of fruit pulp,
and above all quality fruit pulp. That is
why they began to work with farmers
so that the supply of fruit be guaranteed
internally and would replace importation,
as it was illogical to bring in supplies
that could be produced locally. To this
end, AJE decided to provide the farmer
with training in technical agronomics,
for sewing, cultivation, and harvest,
through the Eduardo and Mirtha Añaños
Foundation.

25 The will to work

Kola Real Museum, Huachipa.
First designs in own bottles, year 1996.

26 The will to work

Is it
possible
to conduct
business
as a
family?
27 The will to work
Without
“Family unity is
built by parents
from childhood”

28 The will to work

doubt.
Family values are the spine of the AJE’s performance, of the growth it has
achieved, and of its future development. And it has been like this the whole time.
From the moment in which the Añaños began to bottle Kola Real on the patio of
their house in Ayacucho, everything has changed, including the size of factories,
the product portfolio, the number of its providers, clients and consumers, and the
countries in which it produces and sells. But what remains are the values that
Eduardo and Mirtha Añaños instilled in their children and that through the years
has been extended to all the workers at AJE.

The will to work, the enthusiasm for starting new projects, for not being
given over to defeat, the conviction that it is possible to dream and make dreams
become reality, the assurance that teamwork yields its fruits because the result
is greater than the sum of its parts, solidarity, gratitude, and respect for all and
among all are the values that identify the organizational culture at AJE.

29 The will to work

The family foundations of development
Ayacucho, 1988. For the majority of people, it would be the least propitious time
and place for starting up a business. The majority of departments in the Peruvian
Andes suffered from a scarcity of mass consumption foodstuffs caused by
deficient distribution. This situation was even serious in Ayacucho, one of the
areas that suffered the most because of the terrorist actions of the Shining Path.

Eduardo Añaños, head of the family, and Jorge, his oldest son, saw the
necessity of searching for an alternative to that of the farm that they owned 100
kilometers away from the city: by way of terrorism, the option of continuing in
agriculture was no longer available. On June 23 of that year Kola Real was founded.

It was in 1990 that Alvaro, Ángel, Arturo, Carlos and Vicky, the other children
of Eduardo and Mirtha, decided to found AJE, a company that would bottle
and distribute Kola Real, first in Huancayo (the central Andes) and later in other
regions in the country that were considered to be strategic. And it was since
the beginning that AJE paid special attention to product quality, which meant
a strict control of ingredients such as water and sugar, which have always been
submitted to rigorous quality control procedures.

First in beer bottles

It customary in the Andes to use beer bottles to

bottle soft drinks because at this time such
bottles were generic. Cognizant of the fact that
consumers were familiarized with this packaging,
the Añaños decided to suit themselves to the
market and entered with the launch of Kola Real,
bottled in 620 ml beer bottles that bore the soft
drink label showing the different flavors in which
it was available. Then in 1996, the first changes
would be introduced and packaging particular to
Kola Real was designed.

30 The will to work

The will to work
The will to work and do things well constitute the basis of an innovative proposal
such as that put forth by AJE. Hence, the enthusiasm with which each project
is launched is vital given that it serves to give feedback to expansion and
development plans for new products.

With the premise of continuing to work with enthusiasm and offering a product
at a just price and with efficient processing and distributions costs, the Añaños
siblings understood that other cities in the Peruvian Andes constituted potential
market opportunities for Kola Real and that it was the right time for launching
a modernization plan and coming out onto other markets. And so it went that in
1991 the siblings founded AJE (Ángel, Alvaro, Arturo, Carlos and Vicky) and
decided to build a plant in Huancayo, capital of the department of Junín, the
largest city of the central Peruvian Andes. It was in this year that AJE created its
first strategic plan, which included a detailed analysis of the tax conditions existent
for the main cities and regions of the country.

Before launching forcefully on the coast, the most populated region of the
country, the Añaños again focused on the border zone given that the warm climate
and the tax benefits offered advantages that could not be overlooked. In 1993,
a plant was built in Bagua, in the Amazonas department in the north of the country.
Because of its being considered a border zone, it enjoyed a special tax regime
that included the exemption from the General Sales Tax, the Income Tax, and the
Selective Consumables Tax that burden products such as soft drinks, beer, liquors,
and cigarettes, among others.

These taxes represented, in total, 45% of the final price of the soft drink, so
the exemption thus could be translated as savings for the customer through
the offering of a larger amount of product, serving 24 hours a day, seven days
a week, and 365 days a year. This benefit for the people meant a significant
growth in sales. The installed plant capacity at Bagua became soon limited due
to the acceptation that the soft drink enjoyed amongst the population at large.

31 The will to work

 The competition reacted by lowering their prices up to 50%, but such reductions
were not applied in the northern areas of the country, which unlike Bagua, were
along the coast. Again the vision of the family entered into play and the Añaños
decided to build in Sullana, the second largest city in the department of Piura, as
much by way of population as per economic importance. This plant, inaugurated in
1994, would supply this city as much as Piura, Chiclayo, Trujillo, and Tumbes as well.

With the broadening of distribution to Chiclayo and Trujillo, AJE had entered
into the second national market, in terms of income, and had begun to directly
compete with the traditional brands, with the big global brands. The facility in Lima
was only a question of time and of waiting for the right moment.

We can do it
AJE’s philosophy includes the conviction that we can do anything and that the
best way of achieving goals is with honesty, transparency, humility, and
simplicity. It is not enough to grow taking as a base existing opportunities, rather
entrepreneurs must create their own. And the expansion of AJE is justly due to the
fact that it possesses a proactive and global vision of growth that has not taken
the borders between countries to be limits so much as hurdles that, with hard
work and effort, can be overcome.

AJE has achieved its goals despite many difficulties and obstacles. Going up
against the competition has not been easy, above all because the traditional
brands tend to react with highly developed strategies and impose great resistance
on the markets. AJE, nevertheless, has been able to overcome them with innovative
proposals that focus more on broadening markets than in disputing them.

A second aspect that must be emphasized is that once levels of consistent

growth have been reached, instead of resting on its laurels, AJE searches
for and identifies new categories in which to continue its growth, as well as new
markets that it can penetrate with products adapted to the specificities of
those markets. Thanks to this strategy, the company effectively exploits these
categories and consequently makes markets grow.

32 The will to work

 This happened with soft drinks, whose market grew from nearly 400 million
liters to more than 1 .4 billion liters annually, approximately. Later, bottled water,
of which five million liters were consumed before the introduction of Cielo, but
now 120 million liters reach consumers annually. Or in the case of sports drinks,
whose rate of growth was around 300% to 400% after the launch of Sporade.
And AJE’s conviction that it is possible to make dreams reality is strengthened
each time consumers react and accept its proposals. This is the motor that
drives the search for new opportunities, for new products, because it has been
proven that we can do it.

Álvaro Añaños.

33 The will to work

Arturo Añaños.

Teamwork
As it has been seen, the first work team that the company had was made up
of the children of Eduardo and Mirtha Añaños, but it also included the commitment
of a group of valuable individuals whose work was vital for its initial development
and its future. The family environment was extended to new members, being called
“the big Kola Real family,” that, without belonging to the same by kinship, took
part in AJE’s first stage of growth in the Andean markets and those in the north of
the country.

Growth in its operations has been dizzy in the last years, but this has not caused
the team to become dispirited, rather it has become enriched with the experience
gained on the new markets. The force created by teamwork is reflected in the
launch of each new product, in the care with which they are designed, created, and
manufactured.

34 The will to work

 Each worker shares AJE’s philosophy and thus accompanies the directors in
expansion projects. In other regards, the fact that the company is always involved
in a search for increased value for consumers means that AJE offers a large
playing field for professional development.

Respect as a fundament
Respect among family members has been cultivated since those initial years and
it has been possible to maintain and share it, even now when we are not just 15
workers, rather thousands of workers. Respect is essential to AJE’s performance
as an organization and it is reflected in the compliance with regulations in each
country where it operates and in the care with which it fulfills legal and tax obligations.

The same occurs with providers and clients, with whom respect takes the
form of delivering what is promised. With the workers, this respect takes the form
of a positive attitude that allows them to give their maximum effort and to search
for professional and personal self-improvement.

And with consumers, respect is based on offering them the products that
they value because they are suited to their needs, their preference reflected
through loyalty and their preference for our products. AJE’s value proposal is not
just business-related, rather it involves a commitment to the achievement of the
wellbeing of the consumer, meeting their highest demands, and adapting in order
to meet changes in their preferences and demands.

35 The will to work

Kola Real Museum, Huachipa.
First glass bottles of Cielo water
for Peru.

36 The will to work

Are there
keys for
competing?

37 The will to work

Defin

38 The will to work

nitely.
“And the first is
daring oneself”
Giving products new and unique characteristics that are, at the same time,
easily noticed by the consumers, is one of these key elements. It is clear that
for AJE, it is not enough to satisfy the market, but it is also necessary to develop
operations with a cost and production structure that guarantee the financial
profitability of the product.

39 The will to work

An organizational culture
Upon transmitting the family values to the company, the Añaños took pains to
assure that the adoption of concepts such as total quality would result in an easily
understandable and adoptable process. To this end, and because it dedicates itself
to the manufacture of foodstuffs, AJE conforms to a very rigorous quality process.
Its quality department realizes constant monitoring and follow-up for all installations
and all production area processes.

Its selection criteria for providers privilege those who apply quality norms to its
ingredients and to the final products that supply AJE plants.

In this way, the organizational culture of AJE has as its fundamental component
the satisfaction of the necessities of consumer: all the improvements that are
implemented in operations and production processes have as their aim offering
well-being to all those that purchase its products, as much having to do with prices
as with quality.

The importance of trusting and being trustable

Trust is also a key element of the organizational culture of AJE and perhaps it is
one that deserves the greatest amount of attention because it is an intangible
value. Trust is built by delivering on what is promised and it is this reason that the
AJE brands have grown by way of consumer preference.

Its image as a serious company has caused that its providers, even before the
banks, were the ones that first bet on supporting its expansion in Peru and abroad,
given that upon directly working with the company they learned of its solidarity
as an organization. It is for this reason that AJE considers its providers to be its
strategic partners and its concern are that they as well grow their operations within
and without the country. Financial institutions took a little longer in being convinced
that it was worthy to bet on a business group that did not fit the mold.

40 The will to work

Audacity
Being audacious is being able to act daringly, to have the determination to do
something risky. But in the case of AJE, audacity would gain new significance
because it has always been accompanied by the particular talent of being able
to identify the needs of consumers and to offer them new products to satisfy
their desires.

The Lima plant was constructed in Huachipa at kilometer 8.5 of the central
highway and began operations in 1997. The ample space available, the low
monetary value of the space, and the availability of water with exceptional qualities
were taken advantage of. The Lima market makes up 40% of the consumption of
soft drinks. But the rest of the country was never ignored; rather, more and more
plants continued being opened. In 1998, a new plant was established in Trujillo due
to the demand that already could not be satisfied by the Sullana and Lima plants.

Over the course of all these years, the growth of the company was financed
with resources generated by its own operations and with the help of its providers,
whose confidence in a few businesspeople that kept their word became more
and more trusted with time. The permanent reinvestment of all its utilities has also
been a constant at AJE since the beginning of its operations.

A citrus with punch

Before the launch of Cifrut at the end of

summer 2007, this beverage market
did not exceed 20 million liters per years.
Seven months after its introduction,
the sales volume totaled 74 million liters,
or more than three times as large as
the market had been before the launch
of AJE’s citrus punch.

41 The will to work

Within the reach of everyone
“The One at the Right Price.” This message quickly made inroads in the minds
of consumers. This was due to the fact that AJE was concerned with a value
proposal consisting in the manufacture of products that would reflect quality
and operational efficiency at affordable prices, which began to shatter the myth
that low-income populations could not consume the same products as those
with greater purchasing power.

Once the presence of Kola Real was consolidated, the time to accomplish
the same with other products had arrived, keeping the same value proposition in
mind: quality at the right price. The diversification of AJE product offerings began
in March 1998 with Cielo, bottled water produced at the Sullana plant. The
launch of the first packaging type, a non-returnable 620 ml plastic bottle, was
also carried out in the same city. Later it would come its expansion to the rest of
the country, including the Lima market.

R+D
Research and development constitutes
one of the key areas of the AJE strategy. It
would not have been possible to expand the
categories in which AJE currently competes
on the market without the prior analysis that all
products were submitted to. It should not be
forgotten that the company produces drinks,
which means paying special attention to the
quality of the main ingredient: water. Another
equally important aspect for R + D is the flavor,
for as much as a product is manufactured
with the highest standards of quality, AJE keeps
in mind that its drinks have to be considered
by consumers the best tasty. In sum, R + D
constitutes the main axis of AJE’s growth; it is
the spine of the audacity with which the group
begins all its projects.

42 The will to work

AJE’s offer
Kola Real, as it is called in Peru, or Big Cola, which is its brand name in other
countries, is the flagship product of AJE and ranks first among its sales.
Nevertheless, over the years the positioning of AJE brands has grown impressively.

Flavored soft drink Bottled water

Peru Costa Rica, Ecuador, Peru,
Venezuela, El Salvador, Honduras

Classic soft drink Flavored soft drink

Costa Rica, Ecuador, Guatemala, Mexico, Peru
Mexico, Nicaragua, Peru,
Venezuela, Thailand, El Salvador,
Honduras, Colombia

Flavored soft drink Fruit juice

Ecuador, Peru Costa Rica, Ecuador, Guatemala,
Nicaragua, Peru, El Salvador,
Honduras

Citrus punch Fruit juice

Peru, Mexico, Ecuador, Mexico
Costa Rica, El Salvador,
Guatemala, Honduras

Flavored soft drink Citrus punch

Guatemala, Mexico, Venezuela Peru

Sport drink Beer

Ecuador, Peru, Venezuela Peru
and others

43 The will to work

Made to measure
The strategies applied by AJE in each market it has penetrated have fulfilled
a basic purpose, that of entering the market following different patterns in
agreement with characteristics of the consumers that are to be reached, and
destroying some paradigms along the way. The case for Mexico is instructive
because a soft drink was developed according to the preferences of the Aztec
consumer by way of flavor and a bottle that is bigger than those in which
traditional beverages were sold (2.6 liters) which would satisfy the requisites
for that of an average population density of five people per family. No other
brands offered something similar. It was a brand that alluded to its packaging
(Big Cola) that was first offered in the interior of the country to be later introduced
in the capital.

Franca: a new strategy

In September 2007, AJE introduced to the Peruvian

market its first beer, Franca. The larger challenge was
to work on a launch that, besides focusing on quality,
concerned with attributes that are gaining attraction
among Peruvians and that constitute the cornerstone
of AJE’s philosophy: that the country’s new promise
is to come out ahead via the initiative of those same
Peruvians. Rapidly, Franca achieved wide acceptance
on the beer market and is in the process of penetrating
markets in other cities in the country. The defining
characteristic of Franca is its flavor, and in a field
that is so competitive, a beer that would become the
beer of reference for Peruvian gastronomy was lacking.
Thus, in the last couple of years, Franca is being
recognized for its variety and exquisiteness. That
is why Franca beer is as good as Peruvian food itself.

44 The will to work

 Jorge Añaños.

Offering a product made to specified measurements caused the annual expenditure

of Mexican families on soft drink to decrease from around 500 USD annually to
120 USD annually. These savings are fundamental because they can then be
used to purchase other basic products –such as foodstuffs– which constitute an
important contribution to the household economy and are easily perceived by the
consumer. It is in this aspect of AJE’s trajectory that its slogan “Making business
by doing good” has become a palpable reality: its products are sold for such a
price that it becomes possible that its consumers can destine part of their budgets
to other goods and services that are also included among their most basic and
necessary expenditures.

This same concept has been applied to the rest of the products and their respective
value proposals, which has caused the consumer to positively identify with them.
If quality and a right price have been the focus of each launch, then not all the
brands have been targeted at the same sectors of the market. This even extends
to include, in 2007, the launch of a completely new product, in a new category
(beers), which is as competitive as that of soft drinks. For this reason, AJE maintains
quality as a signature characteristic, fundamental to its product category.

45 The will to work

Mirtha and Eduardo Añaños.

The philosophy of the right price

Offering quality at the right price allows Its strategy of low costs is, in effect, the
for developing new markets because result of this balance across the entire
the work lies in the process rather chain of value that focuses on efficiency
than the obtaining of results (such as and operational excellence.
obtaining a predetermined market
share). AJE has understood it to be like
this since the very beginning. It is to this
end that it sought a balance across
the entire chain of value: in the
purchase, processing, and in the sale, 1. 2.
without ever looking to make that
balance be accompanied by a search
for profitability. This meant preparing
itself by understanding its target market
3.
in order to realize cost savings and to
lend greater value to its products.
This meant moreover having a flat PROFITABILITY
1 . The Price Volume Quality Offer
and agile organizational structure that 2. Efficient Processes
would maintain the business model. 3. Light Organizational Structure

46 The will to work

Giving more than one receives
AJE began its social responsibility work almost immediately after beginning its
operations. The philosophy adopted by the Añaños, which can be summed
up in the slogan “Making business by doing good,” has taken inspiration from
the values that the family has been able to transmit to the organization: solidarity,
gratitude, and respect for customers, workers and consumers.

Social responsibility actions began to be implemented in a systematic way

beginning from the construction of Sullana plant, with the development of a center
that provided health services to populations with the greatest need and that was
able to attend to more than 30,000 patients per year. In Ayacucho, the awarding
of prizes was organized, with computers and cash prizes for top students in
high schools of the provinces of Huamanga, Huanta and San Miguel, an activity
named “Prizes for Excellence,” which is carried out every year. This has allowed for
supporting and motivating students so that they continue studying and so that
they can become first-rate professionals.

In 2003, it was decided to more formally organize these efforts and direct them
towards a culture of entrepreneurship in the country, which is to say, towards the
propagation of a culture of success. This was how the Eduardo and Mirtha Añaños
Foundation was born, being established with a very clear purpose: working for
the motivation and training of small start-ups and entrepreneurs everywhere in the
country and with the purpose of equipping them with the tools that would allow
them to advance and grow in their businesses and as individuals.

47 The will to work

 AJE’s MISSION
To be the best alternative for products produced
through a service and growth culture that aims
at excellence, helping to develop our collaborators
and contributing to the wellbeing of society.

AJE’s VISION
To be one of the best multinational businesses in
the world within a decade.

48 The will to work

49 The will to work
50 The will to work
 AJE, global production.
Plant in Mexico.

51 The will to work

Peruvian success. The Peruvian Ant.
BUSINESS magazine. GERENTE magazine.

52 The will to work

 A Low-Budget Cola Shakes Up Markets
South of th Border.
The Wall Street Journal.

Cola down Mexico way.

The Economist..

53 The will to work

Añaños phenomenon.
‘America Economia’ magazine.

54 The will to work

 Businessperson of the year, Peru Exporta.
Ángel Añaños with President Alejandro Toldeo, November 2003.

Opening ceremony of the beer factory, 2007.

Ángel and Eduardo Añaños with President Alan García.

55 The will to work

In Thailand, 2007.
The Añaños family in the Big Cola plant.

56 The will to work

Credits
Artist creation, strategic concept and design:
Studioa

General edition:
Cecilia Balcázar Suárez / b+A Comunicación Corporativa

Texts:
Antonio Yonz Martínez

Photograph:
José Carlos Martinat
Eduardo Hirose
Photo stock AJE

Printing:
Gráfica Biblos S.A.