European Union

Spanish business survival plan: Go abroad

December 30, 2013: 11:22 AM ET

As the Spanish economy has spiraled, local businesses have begun to peg their growth on expanding outside of Spain.

By Ian Mount

Xevi Ramón of Triticum Bakery in Spain

Xevi Ramón of Triticum Bakery in Spain

FORTUNE -- Striding through a room-sized deep freezer in a chef's jacket emblazoned with his own name across the chest and his daughter's on the sleeve, Xevi Ramón is a bit of a rarity among Spanish businessmen. While many firms have been battered by the country's long downturn, revenues for Ramón's high-end bakery, Triticum (the name is Latin for "wheat"), are growing at some 25% annually, and his customer list includes three-star Michelin eateries like El Celler de Can Roca and the now-closed El Bulli.

But in one way, he is very much like his brethren: He is turning his company outward and starting to export. As the Spanish economy has spiraled, an increasing number of local businesses have begun to peg their growth -- and sometimes their survival -- on expanding into markets abroad.

"We're looking internationally because we know that at some point we won't be able to grow 20% or 25% annually in the domestic market," says 39-year-old Ramón. "We think we can for the next few years, but then our domestic growth will slow down."

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According to data from Spain's economy ministry, the number of exporting companies rose from some 101,000 in 2008 (a figure that had been stable for years) to 137,000 in 2012. And the value of exports has been growing as well: At a November event held by ICEX (the Spanish Exterior Commerce Institute) for small businesses interested in exporting, commerce secretary Jaime García-Legaz said that Spanish firms would export a record 350 billion euros worth of goods and services in 2013.

"There has been a remarkable increase in the export of goods: We currently sell almost 20% more than the pre-crisis maximum," says María del Coriseo González-Izquierdo, CEO at ICEX.

In fact, Spanish exports have increased by 6.1% over the last 12 months, while exports of other EU countries have been stagnant or, in the case of the U.K. and France, have fallen.

"Internationalization has become very important in these times of weak domestic demand," says del Coriseo González-Izquierdo.

As for Triticum, which is located in an industrial park just north of Barcelona, Ramón says the seven-year-old company did not need to look abroad for its survival. For many businesses, however, exporting is a necessity caused by a shrinking local market, according to Lluís Torrens, who manages the Public-Private Sector Research Center at the IESE Business School in Barcelona.

"Some of the rise in exports can be explained by competitive devaluation, as salaries have frozen or fallen slightly," says Torrens. "But the most important explanation behind the rise in Spanish exports in recent years is that the local Spanish market is in crisis. The recession, a reduction in public spending, and a drop in public investment of almost 70% have provoked a drop in internal demand."

This has led businesses that were traditionally more focused on the internal market to take their first halting steps into exporting. Half of the Spanish businesses that sell their goods abroad export less than 5,000 euros worth annually, according to data from ICEX. But while these new exporters are selling small amounts, they are planting seeds for future growth.

"There has been an enormous incorporation of businesses that never exported before, which is very good for our future," Torrens says.

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At Triticum, Ramón's export plans began with small sales to customers in France and Belgium, deals made possible by his deep freezers (set at -4°F), which allow his breads and baked goods to be shipped and stored for up to eight months. Ramón's next targets are Switzerland, Austria, Germany, and the Formula I tour, he says. A participant in ICEX Next, an aid program for aspiring small business exporters, Ramón says that the annual growth rate at his company, which will finish 2013 with some 2.3 million euros in revenues, could double to 50% or 60% with foreign sales.

The positive reputation of Spanish gastronomy should help him reach that goal, as will the fame of his customers (El Celler de Can Roca and El Bulli have both won the top spot in Restaurant Magazine's annual list of the World's 50 best restaurants).

"Today, Spanish gastronomy is very prestigious. And we're providers for 40% of the Michelin star restaurants in Spain," Ramón says. "If I can sell here, why not abroad?"

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