People, Pride and Progress
by James Dudlicek
“Our family’s passion is cheese” — that’s the bold declaration on every package, press release and business card at Sargento Foods Inc.
And that’s clear, based on the innovative value-added cheese products that have been coming out of the Plymouth, Wis.-based company for the past half century, with annual sales exceeding $550 million.
But even a brief time spent with Sargento’s senior management shows that this company’s equally deep passion is family — not just the founding family that still runs the store, but the entire extended family in whose talents and commitment managers express complete faith.
“The culture of the company is such that we look at family as a broader group,” says Lou Gentine, chairman and chief executive officer. “I think all of our employees feel like they’re a part of that family that is represented by this company.”
Of course, the family of products offered by Sargento is extensive — hundreds of SKUs of sliced, shredded, cubed and shaped cheeses, not to mention the host of shelf-stable snacks, breaded appetizers and other products made by the company’s consumer, foodservice and food ingredient divisions.
Value-Added Virtuosos
It’s not how it makes cheese that gives Sargento its edge; the company works with mostly Wisconsin suppliers to create cheese to its exacting specifications. Rather, it’s what Sargento can do to that cheese once it gets its hands on it that demonstrates the company’s true wizardry.
Last year brought two new formats that added practicality and fun to cheese: Cracker Snacks, pre­sliced cracker-size cheese perfect for portion-controlled snacking; and two shaped varieties, SunBursts and Stars & Moons.
This year, the breakthrough is Bistro Blends, a range of shredded cheeses blended with herbs and seasonings encompassing the varieties Mozzarella & Asiago with Roasted Garlic, Mozzarella with Sun-Dried Tomatoes & Basil and Cheddar Salsa with Tomato & Jalapeño Peppers.
“This new line has done very well,” says Robert Clouston, president and chief customer officer, discussing other recent launches. “Some products are in tests or regional expansion, and some are fully national. We have Thick and Hearty shredded cheese, a much thicker cut. We have Duo-Pack sliced cheese — two flavors of sliced cheese in one package. That’s done very well for us. More recently, in non-refrigerated, we have a product called Cheese Dips. We were very aggressive — those five or six items make up about 18 SKUs that we launched this year. All are meeting our expectations.”
In the foodservice and food ingredients divisions, Clouston explains, Sargento’s innovations tend to come as responses to customer needs. “Over time, we see the industry changing in that regard and we will change and hopefully lead,” he says.
Gentine notes that in both meeting customer and consumer needs, the innovation involved is largely the same. “There might be less of a marketing role for foodservice and food ingredients, but the skill sets involved are the same. The hallmark of our company has been innovation, and particularly in retail, we’ve very proud and comfortable saying we’ve led innovation in natural cheese products for the last 40 years,” he says. “That doesn’t mean someone hasn’t come out ahead of us in a few cases, but for the most part, things that have happened in the dairy case are reflective of us relative to where it began.”
According to Clouston, Sargento’s output breaks down to roughly 50 percent retail, 30 percent foodservice and 20 percent food ingredients. The company has three manufacturing plants and a research facility, all in east-central Wisconsin.
Sargento’s innovation and foresight into the value-added needs of consumers — along with the aforementioned passion — give the company a competitive edge.
“ ‘Our family’s passion is cheese’ — that is based on not just an internally developed belief in the company, but extensive consumer research,” Clouston says. “It’s compelling, it’s unique. We know the consumer plays that back strongly, that we’re focused on cheese. We have a long history of innovation. We are looking constantly at adding value to the cheese industry. In terms of preferred service and responsiveness — and again, this is based on feedback from customers — we are rated consistently high on initiative, cheese expertise and service levels. Those are all leveragable points of difference. Size can often work against a company. The bigger you are, it tends to slow down the development process with inevitable bureaucracy. We don’t have that problem.”
Sargento doesn’t have a problem trumpeting its passion as the backbone of its marketing programs either. That slogan, accompanied often by a line drawing of Gentine’s smiling face, emblazons most every Sargento package that greets supermarket patrons.
“Having Lou as the company spokesperson — the storyteller, not the story — was developed externally, not internally,” Clouston says. “The research was compelling that the message, and therefore the storyteller, conveyed that. So there’s a strong basis upon which we’ve built that campaign.”
Television is Sargento’s primary medium, including ads on the Food Network. “Selectively we use print, outdoor and radio,” Clouston says. “We do have a strong consumer program, mostly through free-standing inserts. We do have three Web sites for the company’s three divisions. Public relations, too, plays a key part, not just the public affairs side but the publicity side of it. We were active in support of the PGA and the USS Ronald Reagan home porting in San Diego, where we served 5,000 cheeseburgers to the families of the crew.”
Gentine adds: “The consumer recognizes Sargento as being a cheese company and only a cheese company. So our expertise plays very well with consumers.”
Nurturing a Culture
Something that plays very well not only with customers but its own employees is Sargento’s rock-solid commitment to doing right by the people who depend on the company.
“Our founder, Leonard Gentine, is often quoted as saying, ‘Surround yourself with good people and treat them like family.’ We do that throughout the entire organization,” says Karri Neils, senior vice president of human resources. “All of our employees are accountable for the results of how we work together to achieve our goals. On the flip side, they get to share in the positive results, so they all are eligible for bonus programs and corporate profit sharing. So we work together to achieve our goals.”
A commitment to the community extends beyond the company’s walls with a highly valued sense of corporate citizenship. “We encourage employees to take time to give their talents, and certainly give treasure as well, to all types of organizations, both within our direct community or within their home communities,” Neils says. “Our employees take time from work to read to second-grade classes in our Cheezy Reader program. More public is the Hunger Task Force work that we do with the Green Bay Packers. It ranges from Junior Achievement to supporting the United Way to local school board representation. We encourage that, even during work time when it needs to be.”
Just recently, Sargento donated more than $50,000 to the Hunger Task Force food banks part of its “Touchdowns for Charity” program, in which the company makes a cash donation for each Packers touchdown. Sargento is the official cheese of Lambeau Field in Green Bay.
Sargento does community outreach through SECAP  — Sargento Employees Caring About People — and its singing group that performs holiday concerts at nursing homes, hospitals and schools. The company is also active with a unit of Habitat for Humanity in the Milwaukee area.
“There are others invested in this company — our customers, our suppliers, our employees and our community,” Gentine says. “When we make decisions, we try to recognize they have an impact on more than just return on investment.”
The Sargento philosophy is clearly outlined in a printed treatise that serves as a reference for the corporate ethos. “I don’t think a time goes by when I’m addressing the employees that I don’t start out with a discussion of that,” Gentine says, quoting from the booklet. “Sargento is a family-owned cheese company dedicated to enhancing long-term stakeholder value, and is sustained by an insatiable winning spirit. We are guided by our faith in God. Our central purpose is to be the best at responding to customer and consumer needs for cheese and cheese-based solutions.”
Gentine says this philosophy creates a spirited work environment not often seen in today’s business world. “It’s because of that I think we’ve had the ability to attract extremely good people to our organization, those looking for something that might be a little different than what’s available at other companies,” he says. “It started back from my father’s views on things and following through our family.”
Louie Gentine — Lou’s son and grandson of Leonard, the late founder — serves as the company’s production manager, and is being groomed for higher management to preserve the company’s family leadership. “We’ll be working to develop his skills throughout the company, through knowledge and experience,” Lou Gentine says.
Other members of the Gentine extended family also are involved with the company, and all must sign on to a family participation agreement, Gentine explains.
“We have high expectations of family members working for the company,” he says. “There are things they need to do to even qualify for a position.”
Playing By the Rules
With a commitment to business growth and family values on such firm bedrock, Sargento appears well equipped to take on today’s industry challenges.
“One of the biggest challenges is this idea of being able to deliver products to customers and consumers that are value-added while working within rather narrow standard-of-identity limitations,” says Mark Rhyan, executive vice president and chief operations officer. “We see our challenge as coming up with proprietary products that meet customer and consumer needs regardless of the rules that are our there. Those limitations, while they’re there for a purpose, really do restrict some innovation.”
It’s innovation that helps offset the universal challenge, cost. “Many of our customers across all three divisions have always had a desire for us to keep our costs down,” Clouston says. “The offset to that has been our strength — innovation. What we’re seeing now is a demand for innovation and cost reduction, not one or the other. In the past, a ‘me too’ product, as long as it was priced lower, had a reason to survive, and an innovative proprietary product, regardless of price, had a reason to survive. Those two trends have clearly come together. That’s going to be a huge, continuing dynamic for all of us in the industry.”
Gentine says the industry is “severely handicapped by archaic rules and regulations” like standards of identity. “I don’t think there’s a necessity for it as there was in the past. But there are segments of the industry that don’t want to get rid of this safety net,” he says. “ A lot of times, because of the restrictive nature of the standard of identity for cheddar cheese or mozzarella, you’re limited on the value to can provide the customer, unless you move away from calling that product cheddar cheese or mozzarella. And that’s really too bad. We have producers who have very significant and important issues, and we respect that. But at the same time, I think sometimes because of their issues, they are in effect hurting themselves by not allowing the processor to take that ingredient further down the road to really respond to the needs of customers.”
The extreme volatility of cheese prices of the past decade continues to present a challenge to the industry’s long-term health, says George Hoff, executive vice president and chief financial officer. “I think the industry needs to confront this because, not that it has to be perfectly stable, but it can’t be moving around — 40 cents up, 50 cents down — and expect the long-term health of the industry’s going to be positive,” he says. “Hopefully the players will get together and make sure there is a better way to discover price.”
Not that Sargento is about to let such obstacles hinder its mission. “We are very bullish on cheese,” Clouston says. “There are tremendous opportunities. I used to work in the chocolate industry. I was pleased to learn that consumers rate cheese higher than chocolate as their most preferred food. Given the wealth of benefits that cheese adds to food, we’re very bullish. We have an extremely active new product development program that’s focused on bringing value-added, proprietary, meaningful points of difference. Some might say ‘cheese is cheese,’ but I would say, just wait and see.”
Gentine adds: “We make a strong argument that our shredded cheese really is fresher and tastes better and is of higher quality than any product offered by our competition. They might argue it’s not, but we feel we’re on very solid ground.”
So much so, Clouston notes, that “our retail sales people have no hesitation in doing blind cuttings with our customers. They go in and say, ‘These three cheeses are Sargento and our competition,’ and let the customer pick which has better quality, look, taste, feel. We’re so confident we’ll win, we do it right on the buyer’s desk.”
Of course, Sargento has benefited of late from cheese’s position as a food that’s naturally low in carbohydrates. “Obviously the low-carb diet concept has peaked and is well on its way out,” Gentine says. “At the same time, I think we have to recognize that the consumer has learned that low-carb is important, and it’s one of the things they should be thinking about in putting their diet plan together.”
As part of its own diet plan of sorts, Sargento is focused very much on the long term, Hoff says, despite market volatility that always keeps an eye on the short run. “We manage our business with a long-term focus — looking more at the three- to five-year time horizon as opposed to the next quarter or calendar year. I think that gives us a significant advantage over our competition,” he says. “We hire people, we invest in plants and we invest aggressively in growing our brand.”
Onward and Upward
Sargento continues to expand and upgrade its manufacturing facilities, mostly in concert with new product development. “We’re consistently investing in new technology to help us from a quality standpoint and a manufacturing efficiency standpoint,” Rhyan says. “We continue to try to develop processes that are proprietary to give us a sustainable competitive advantage.”
According to Hoff, the company’s focus will continue to be in three broad areas — core growth, innovations and acquisitions. “We’re going to continue to grow our core business because we’re bullish on it, and we feel we do provide our customers and consumers a great value,” he says. “You’re going to see new, exciting and different [products] coming out of Sargento. We listen very well to our customers and we react to their needs better than anyone in this industry. We’re very good at anticipating trends. When and if an opportunity presents itself in the cheese sector, I think you’ll see us moving on it if we feel it will add value for our customers and consumers.”
With more than 50 years under its belt, what will the next five bring to Sargento? “I think we definitely expect to continue to be a family-owned business that continues to be successful in all the areas we compete in today, as well as those we may get into, that continues to introduce products that meet consumer and customer needs,” Louie Gentine says. “With all that, you can expect to see Sargento experience top-line growth as well as bottom-line growth.”
And the company should still be on solid ground with its customers. “Everywhere I go, who we are and what we stand for is well understood,” Clouston says. “Our customers know we have a very clear, compelling position with them. We leverage that, we build on it, and we’re proud of it.”
There was little argument over what makes Sargento unique among its peers. “It’s clearly our culture,” Neils says. “We believe it, we breathe it. When you typically see a core strategy like this for most organizations, you find what people are focusing on, what they’re best at and what their economic engine is. But we did not feel comfortable not providing the base, which is really the most important part — the people, pride and progress.”
Rhyan says: “For me, the gem in all of it is this company’s strict adherence to a very high level of ethical behavior and standards. Whether it’s dealing with employees, vendors, suppliers, customers, we will do what’s right. It is refreshing as an employee to know that’s the behavior that’s not only expected but demonstrated, regardless of potential negative ramifications to the company from a cost standpoint. Doing what’s right is not always an easy way to address an issue.”
Clouston agrees. “I spent 25 years with multibillion-dollar consumer packaged-goods companies before coming here five years ago,” he says, “and I can tell you that the ‘what’ we do here is every bit as professional, but the ‘how’ is the difference.”  m
Sargento Foods Inc.Corporate History
1953 — To meet a growing demand for old-world quality cheese, Leonard Gentine teams up with Joseph Sartori to establish the Sargento Cheese Co.
1955 — Sargento introduces a process for vacuum packaging cheese to preserve freshness.
1958 — Sargento becomes the first company to market shredded cheese.
1965 — Sargento becomes a wholly owned family company with the purchase of stock from Sartori.
1969 — Sargento introduces peg-bar merchandising to the supermarket dairy case, placing cheese packages at eye level within easy reach of shoppers.
1979 — The Sargento Food Service Department is formed to provide cheese to the foodservice market, restaurants and food companies.
1985 — Foodservice division expands to develop custom cheese products such as sliced, diced, grated, shredded and breaded cheese.
1986 ­ — Sargento becomes the first cheese marketer to introduce zippered resealable packaging.
1988 — Sargento introduces a snack cheese line aimed at kids.
1991 — Sargento introduces a line of reduced-fat cheeses, with seven varieties geared toward health-conscious consumers seeking better-tasting cheese with less fat.
1994 — Sargento introduces a line of shredded cheese blends.
1996 — The reduced-fat line expands to include Italian and Mexican blends, and sliced provolone; the snack line expands; cool cow character “Mo” introduced.
1999 — Many snack items are available as “calcium enriched,” with each serving containing as much calcium as an 8-ounce glass of milk.
2001 — Sargento introduces the Slide-Rite advanced closure system on its shredded cheese packaging.
2003 — Sargento’s shredded cheese judged to be the Industry’s Best Tasting Cheese by a panel of professional chefs at the American Tasting Institute.