Pinatarama
by Margaret Heffernan

A screaming band of blindfolded ten year olds bashing a multi-coloured donkey. If you don't recognize what this is - you're part of a large majority. But that's just about to change.

The piñata hails from Mexico where it is a standard feature of children's parties. They're made of papier mache, usually in animal shapes. Blindfolded children take it in turn to whack the creature until it explodes, disgorging sweets or toys. A variant on the piñata, the pullina is the same idea with less violence; its ribbons release a trapdoor. Hitherto unknown in Britain, the piñata is about to go mainstream. It's appearance in The Cat in the Hat means that now there can be few children who won't know one when they see one - and pester their parents for the latest thing.

Which makes for a great business opportunity, doesn't it? If you are Sue Bond, founder and owner of Pinatarama, there's a lot to be said for going mainstream. "It's a long sell. In the past, I could never sell a piñata before I'd answered six questions. Now the landscape is starting to change. Now we are starting to get people who know instantly what they're for."

Sue started selling piñatas last Christmas. Her first consignment (she imports from Mexico) sold out. Her second consignment sold out. Her import order has gone up 1000% in the last nine months. That's a hefty growth rate. So the business is - or should be - poised for explosive growth. It's the kind of scenario entrepreneurs dream about.

But no sooner had Sue started to have some success than the big chains moved in on her act. Sainsbury's and Asda started stocking piñatas. Rumours abounded that M&S would soon follow suit. "When some one first told me they'd seen piñatas in Asda, I felt absolute cold panic. I'm going to be eclipsed!" Sue now faces a quintessential challenge: does she compete with the big guys, try to become their supplier, try to redefine the market - or quit while the going's good?

The entrepreneur and founder of Priceline, Jay Walker, argues that "you have to believe." You have to build the business and the people and the infrastructure for the company you expect to become - because if you wait until you need all those things, you will be too late. Sue agrees. " You do have to keep your own faith. This is a very quirky business but I do believe that there's nothing specific standing in my way."

Nevertheless, her choices are limited. To compete head to head with the big stores, she'd have to corner the market in piñatas but she's not in a position to do that. She could start selling through catalogues - but the outlay is enormous and the rewards aren't certain. "The terms were just untenable and the margins weren't good enough." Nevertheless, she's undaunted. "I am going to compete. I can't compete on price, but I can compete on personal service and I can compete on creativity, hands down."

Supermarket piñatas are made of cardboard, not papier mache (this makes whacking them less satisfying) and they're smaller. What Sue's hoping is that the supermarkets educate consumers for her - to the point where they start wanting a better product. But how big will that more discerning market ever be - and how can she really compete with the supermarkets' ubiquity?

Like all entrepreneurs, Sue improvises, experiments and learns fast. She sold a chicken piñata to celebrate the birthday of a 60 year old chicken-breeder; a pig was bought as a swear box: whoever breaks it open buys drinks with the proceeds. She's set up a website so she can sell nationwide and even, one day, across Europe. She's starting to build a network of independent party shops that will sell her products. And she invented a Valentine's piñata - filled with heart-shaped truffles and rose petals. That didn't sell - until Friday the 13th, when she sold twenty-five to a hotel organizing themed packages. The great Valentine's discovery wasn't the product - it was the marketing channel. Sue is starting to see a market that supermarkets won't invade: the world of festivals and corporate events.

In one scenario, Sue keeps improvising, keeps finding and developing new channels that deliver higher volumes, higher margins and a stable cash flow. She never becomes the piñata queen of Europe but she has a quality reputation and a decent business that might one day be bought as party and event businesses consolidate.

But in another scenario, the piñata is just another fondue dish: hip for a season or two but never an essential constituent of anything. The supermarkets, far from growing the market for her, wreck it by selling inferior products that they don't understand. And Sue's sumptuous creations are tarnished by their association with a fad that never quite took off.

Sue has no illusions about her ability to control the market and she's very smart in the way that she thinks about it. "No business exists in a vacuum. You always have to keep looking at the big picture and then your part of the picture. You are always switching between those two and if you don't - you slip out of gear and go backwards. So I keep looking ahead and fine-tuning the strategy. I have a strong silent faith. And all the signs are good."

Why do I think Pinatarama will survive? Because Sue hasn't lost her nerve, because she's a smart, experienced marketer but most of all because she's thinking so creatively about her product and how it uncovers new distribution channels. And because I think it could do us all good, every once in a while, to beat the living daylights out of a multicoloured frog.

This article was originally published in Real Business magazine

© Margaret Heffernan, 2004

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