Canada's top dairy celebrating anniversary

Founded in 1954, Saputo Inc., (No. 4 in this year's Dairy 100) is celebrating its 50th anniversary in 2004. There was a corporate gathering the first week of June in Montreal, other special events are taking place at the company's locations across the Americas, and a celebratory logo will appear on products, and in promotional material.

"Throughout the summer there will be picnics and other events at each of our plant sites with support from the corporation," says Lino Saputo, Jr., president and CEO. "In June we invited all the managers from our Canadian, U.S., and Argentinean locations for our sales convention here and we held a big gala to celebrate the 50th anniversary."

The Saputo Company was founded in Montreal by Lino Saputo, Sr. and his parents, master cheesemaker Giuseppe and his wife Maria. Initially the company produced about 25 lbs of mozzarella per day. The first production facility was completed in 1957.

In the 1970s Saputo acquired several manufacturing facilities and developed a national distribution network as it became Canada's leading producer of mozzarella. A decade later, the company began a strategy of growth through acquisition by acquiring plants in Canada and by 1988 in the United States as well.

But Saputo didn't just buy plants; in 1989 it also completed a new facility and headquarters in Saint Leonard outside of Montreal. Acquisitions continued in the 1990s and Saputo became a publicly-traded corporation in 1997.

In 2001 the company made its largest acquisition with the purchase of Dairyworld Foods, giving the company a much larger presence in fluid milk and catapulting it to the top of the Canadian and North American dairy industries.

Like any good business leader, Lino Saputo gives credit to the people who work for him. But there is an unusual sincerity and believability when he tells you that those people have made the company what it is.

"For us the 50-year anniversary is really a testament to the quality of the people we have in the organization," he says. "We call our people entrepreneurs, and we are proud, not so much of our success, as we are of the fact that we are able to maintain the kind of environment where those people are supported in their efforts to improve the company."

Saputo's activities this year have not been strictly ceremonial. On the business front it has been a busy year as well. This is a company that works as hard as it celebrates.

In November of 2003, on the eve of the golden anniversary, Saputo went south of a couple borders to purchase Argentina's third largest dairy company Molfino Hermanos. In March Lino Saputo, Jr. officially took over the management of the business from his father. The elder Saputo continues to serve as chairman.

In June, the company released its financial report for its 2004 fiscal year, indicating earnings growth of 22.3%.

The move to acquire an international property was bold, but somewhat of a necessity. Because of Canadian trade laws, Saputo Inc. needed a location outside the U.S. and Canada in order to enter world export markets.

The Molfino properties include two production facilities, a headquarters in Buenos Aires, and a distribution network. Originally a family-owned enterprise, Molfino was sold a few years ago to a multinational corporation whose food interests were limited to wine and liquor.

Lino Saputo says it is likely a better fit for a company with a dairy focus like Saputo.

"When we were first looking at this, Argentina was going through some real difficulties," he says. "But what impressed us most about the company was the quality of the people, and that their sense of pride was not touched but what was happening. The passion for what they were doing was as good as in Canada and the U.S.

"What we look at when we look at a company is the human resources, and we were very impressed by what we saw at Molfino Hermanos."

The younger Saputo has grown up with the Saputo company, but he says that's not as unique an experience as one might think.

"I'm not the only individual in the organization that is among the second or third generation," Lino Saputo says. "There are lots of people in the company whose mothers and fathers have started with the company, and they are now part of our extended family. So I grew up knowing those parents and now I am working with their kids."

It's been an exciting and innovative 50 years for the Saputo family and its company. With the Argentinean holdings providing a broader market for Saputo Inc., and a new generation of leadership, it will be interesting to see what the next half-century will bring.

Sidebar: Saputo's History

1954 Lino Saputo, with help from his parents starts the Saputo Co. in Montreal. Legend has it that its original assets were $500 and a bicycle.

1957 Saputo Co. builds its first major production facility in the Saint-Michel district of Montréal. This event coincides with a significant increase in popularity of pizza among North American consumers.

1970 During the 1970s, Saputo acquires several operations and develops a national distribution network, becoming Canada's leading producer of mozzarella, primarily for the foodservice segment.

1984 Saputo acquires a plant in Saint-Hyacinthe, Québec, which processes liquid whey resulting from its cheese production into value-added products such as lactose and whey protein.

1988 The company establishes its first manufacturing presence in the United States by acquiring two cheese plants.

1996 Saputo acquires Fromages Caron Inc., an importer and distributor of fine cheeses in Québec.

1997 The company completes its initial public offering in Canada. It triples in size and positions itself as one of the leading natural cheese producers in the United States by acquiring Stella Foods.

2001 Saputo becomes the leader in the Canadian dairy industry by acquiring Dairyworld Foods, a major Canadian producer of cheese, fluid milk and other dairy products.

2003 The company forms a partnership agreement as the majority stakeholder in California-based Gallo Protein for the production and marketing of specialty whey products. Saputo also positions itself as the leader in the blue cheese category in the U.S. by acquiring the activities related to the Treasure Cave and Nauvoo blue cheese brands. Saputo acquires Molfino Hermanos S.A., the third largest dairy processor in Argentina.

2004 Lino Saputo Jr. succeeds his father as president and CEO as the company celebrates its golden anniversary.

Methodology

For the 10th annual Dairy 100, Dairy Foods solicited the top companies in the industry through emails, faxes, and phone calls. In cases where the company did not wish to divulge dairy-specific sales figures, estimates were made using financial report information, and industry experts. The sales figures are for dairy products or products dairies could make. That means juice and non-dairy creamers are counted, but pizzas, pickles and coffee are not.

Sales represent company revenues and are expressed in million of dollars, US. For Canadian companies, conversions were made at the time the information was reported in June or July of this year, for both '03 and '02 sales. Company descriptions reflect or note recent changes, including acquisitions, plant closures and personnel changes, but sales figures are for the most recently completed fiscal year available. The Dairy 100 is archived on our Website at www.dairyfoods.com.