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Blue Bell: The Complete Executive Interview

Blue Bell Creameries: The Complete Executive Interview
October 24, 2006

Paul Kruse,
president and CEO
Melvin Ziegenbein Jr., VP of sales and marketing
Ricky Dickson,
general sales manager
Gene Supak,
VP of operations
Carl Breed,
director of marketing
Jim Hayhurst,
advertising manager
Jim Dudlicek,
Dairy Field editor

Jim Dudlicek:
Let’s talk about the 100th anniversary celebration. You have a museum inside an 18-wheeler …
Jim Hayhurst: We call it a rolling birthday party. It’s going to be 65 cities in a year, covering virtually all of our markets and branch areas, as well as our production facilities.
Melvin Ziegenbein: It’s going to criss-cross America, starting in Tucson, Arizona, going to Florida and coming back to the Midwest, and finishes in Baton Rouge.
Paul Kruse: It’s just a celebration of ice cream and our unique story, and a chance for us to visit with our consumers and customers.
MZ: In each market, we’ll be setting up in some unique place in that community, or a mall. We’re going to get our local people involved in the exhibit at each of these locations. The proceeds from the sale of our “country store” items will be going to the Boys and Girls Clubs. They’re going to be the key beneficiaries of most of our celebration.
JD: So it gives people a taste of what people would see if they came to Brenham?
MZ: It will have a video of the history of Blue Bell, how ice cream is made, nutrition, DSD. It will show our commercials. We’ll be handing out Homemade Vanilla cups.
Carl Breed: We’ll have a commemorative 3-ounce Homemade Vanilla cup to pass out.
JH: It will demonstrate how we’re still a full half gallon of ice cream versus some of our competitors.
JD: Versus MOST of your competitors, I think.
CB: Almost all of them.
JD: What activities are planned in Brenham?
Ricky Dickson: We have two major events. One will be designated for our customers we’ll bring in for a walking tour and a dinner. Then a three-day celebration, ‘A Day in the Country,’ will open up at the Washington County fairgrounds. Free admission, and you can come in and eat all the ice cream you want — and we’ll have 45 different flavors. And we’ll set up how ice cream is made and our history, and make it just a really fun family-type event.
JH: We’ll also be unveiling the statues at that time. [figures of trademark cow & girl, and founding Kruse family members, in a new sculpture garden]
JD: How has the company evolved and its reach expanded over the years?
PK: Melvin lived through most of it.
MZ: It was a ripple effect. We were in Houston for a long, long time and did well in Houston. There were people in Dallas that said, ‘Why can’t we get Blue Bell ice cream up in Dallas?’ So in 1978, we made the trek to Dallas. It took about three years to come on strong in Dallas. Then we said, ‘Where can we go from here?’ We finally went to Waco — that was kind of the middle of nowhere. We were in Austin, San Antonio, Dallas and Houston, sort of had Waco surrounded. We had our transports going through there going to Dallas, and everybody wanted to know why they couldn’t stop there and sell our product, so they put billboards up …
PK: Actually, I was in law school in Waco from ’78 to ’80, and Ricky was an undergrad there, and we did not have ice cream 100 miles from there while I was going to school.
MZ: We finally went there, and after that Oklahoma made sense, and at the same time we were looking at Louisiana. It was Baton Rouge that really took off for us because we had some grocers out there that really worked with us and gave us some nice ads and helped us get started.
PK: It’s going to take you an hour to go through each market.
MZ: I’m not going to go through each market. [laughter] After that, it was just the ripple effect; wherever the grocer or the consumers wanted us, we went.
JD: So really, for the first two-thirds of the company’s history, you were local. It’s only in the last 25 years or so — is that more to do with modern transportation, improved refrigeration? Or just word of mouth? Consolidation in the grocery industry? Combination of all those things?
MZ: It’s the growth of the major supermarkets that grow out and cover these areas, the Krogers of the world, the Safeways — or Randalls, in our case — Albertson’s. The equipment has definitely gotten better. It allows us to transport ice cream a lot further than we could 25 years ago.
CB: Consumer demand. Word of mouth. Transplanted Texas go from one market to another and say, “I wish I could still have that.”
MZ: If you asked 25 years ago if we’d ever be in Florida, I’d have said no, we’ll probably never be in Florida. It seemed outside the realm of possibility at that time.
PK: It does take time for your sales force to grow and your production capacity to grow. Since we’re in charge of that, it’s really been a very measured and logical growth for us, all the way around. We never had the idea to do it all at once. It’s very difficult to do. Our growth has been, for us, predictable. Year to year, doing a little more in production, doing a little more in sales. Personnel wise, facility wise, all the way around.
CB: [referring to map of market area] There’s a reason why all these colors are touching each other. It’s a contiguous market — with the exception of one big jump here recently — but you can see they’re all pretty much connected, and that ties back into the word of mouth. I think people just think that everybody in the South is generally the same.
Gene Supak: It’s sort of an expanding circle. As you got in a certain market, people related to it. They heard about it, started asking for it, so we weren’t jumping from Texas to Florida — we just worked in that direction.
MZ: And we are still DSD everywhere we go.
JD: What accounted for that one weird jump in territory?
PK: Without making anybody mad — there’s nobody in between. [laughter] There’s just much less population in those areas in between.”
MZ: Phoenix is a big, strong, healthy market.
JD: And people are just more mobile now. You’ve got people who grew up with Blue Bell who are now retiring to some other location and, darn it, they want their ice cream.
RD: I think we ship more to California than anywhere.
PK: The shipments overnight, a lot go there. A lot go to the East Coast. And a lot to Chicago — it seems there’s some real good ice cream eaters up there.
JD: Will any new products be tied in to the anniversary?
CB: We’ve got two brand-new ice cream flavors. In January we’ll start off with a half-gallon flavor, Century Sundae. It’ll be a January through June flavor. It’s very simple — our famous Homemade Vanilla swirled with caramel and chocolate sauces, and it’s got a whipped topping swirl and some maraschino cherries. The carton will tie in to our current line but will be different for some impact. It’ll jump out at you. … That, along with the commemorate 3-ounce cups to hand out not only at the tour stops, but all events that our 46 branches will handle — charitable things, giveaways.
JD: Looking back at the history of company, what are the qualities of Blue Bell that have kept people demanding the product and led to expansion?
MZ: I think it’s a combination of quality products and value. I know everybody says quality. It’s consistent quality. We know what we put into our products. We know the ingredients we put in there and we make it as best we can.
CB: The proof of that, I think, is we sell on an everyday basis. We’re not a deal-oriented company. It’s not ad-driven.
MZ: The other thing is our service. We’re strictly DSD. Everything we handle is company owned and operated. We take it to the store, and until it gets to the store, we have control of the product. We monitor on a random basis the store cabinets to make sure they’re holding it at the right temperature.
PK: Everything we make has our name on it. Nobody else makes our ice cream, and we don’t make anyone else’s. We find that’s a singular kind of focus everyday we have on our brand. Certainly, there are other ways to do it, and other people do a good job of it. We find that when we, as a private company, everyday we’re making and selling ice cream, that’s our only business. That’s what we work at every day, and good things happen. We don’t subscribe it to luck. We’re fortunate and it works for us.
JD: And almost everything, if not everything, is done in-house out of here, from advertising to promotions to making your own cookies for the cookies and cream — it’s all here. Your stamp’s on everything, so you know it’s getting done the way you want it.
PK: That’s the key — you can control the quality. And on the sales side, just as Melvin said, once we’ve made it, a lot of things can happen to ice cream. We’re very, very jealous about how it’s handled. When our people do it, and they’re properly trained and motivated, we’re doing everything we can to deliver that product in the end.
MZ: We’ve got a lot of employees with a lot of longevity who have stayed with it, been here a long time.
RD: There’s an attachment. People attach themselves to our flavors. And then there’s excitement that comes from the uniqueness of the new flavors — kind of like an old friend they can count on.
MZ: We do come out with four to six new flavors practically every year to keep the interest going, to give people looking to buy ice cream a reason to see what Blue Bell’s coming out with next.
PK: Jim, you see how all these people are so humble and soft-spoken. [laughter] They really are. That’s the way they conduct their business.
MZ: Some of the flavors that we come out with, we come back with mixtures. Some of them maybe in two years, some might not come back.
CB: It keeps the consumer coming back to the freezer case not knowing exactly what’s going to be there, but they’ll find something new or find something he or she has relied on for many purchases before then. If it’s not there, then we’ve got something else new that they’ll try.
MZ: The biggest thing is the consistency of the product. It’s consistent, day in and day out.
JD: What are your biggest challenges as a company to maintain consistency, quality and control to ensure customers get what they expect? Taking into account forces from within and outside, cost of ingredients, fuel, etc.
CB: Some of that stuff you can control and some of it you can’t. We can train our people to do things right, do it up to our standards.
GS: A lot of the stuff we do in-house, like ingredients, we may do more than some companies. At the same time, it all helps to keep costs down and keep up competitive at the same time. Most of that value goes to the customers, so if we can reduce cost of inclusions and ingredients, we can put more in the container, which gives value to customers, which drives sales and helps us keep delivering a unique product.
JD: So that internal control helps a lot.
GS: Right.
MZ: That’s the easier part. The more difficult part, the biggest challenge we face, is the market itself and the industry. The players get fewer, and they’re getting bigger.
CB: With deeper pockets. Not only from our competitors’ standpoint but from the grocers’ standpoint, too. They’re consolidating ...
MZ: So that’s our challenge — which way the market’s going to change, the industry’s going to change, to be in stores to foodservice, to dollar stores, to drugstores, to supermarkets, to schools, to mass merchandisers.
JD: The number of players making the products has shrunk, but the number of outlets to carry those products has expanded.
MZ: The number of outlets...
RD: New types of outlets. Maybe you can buy ice cream in a video store when you get a movie...
PK: Through the years, we were very comfortable calling on a lot of independent supermarkets. That’s a thing of the past. That’s been the most dramatic change, the growth of the supermarket chains.
MZ: You go to Florida, you have Publix, Albertsons, Winn-Dixie and Sweetbay, and that’s pretty well it. You go to Louisiana and there’s still a lot of independents — it’s more of an independent market. Take each individual market that we’re in and you count the dominant chains, whether it’s Kroger or Safeway or Wal-Mart or Publix, or H-E-B.
JD: What are the biggest opportunities for Blue Bell and the industry?
MZ: I think people still enjoy eating ice cream. They enjoy eating the real thing. It’s a fun food with nutritional value. It’s not just a junk food.
JH: Also, there are 30-some states that we’re not in yet
JD: I live in one of them.
JH: — who don’t have the opportunity to eat Blue Bell. Our opportunity is tremendous for growth.
JD: You’ve got to move up north. The Wellses are in New York now. [laughter] You’re not going to take that, are you?
MZ: They’re in Utah, too … There are a lot of opportunities out there. We think our product, the quality of it, the value, like Ricky says, sells daily.
PK: We’ve been at it a long time, and we’re in it for the long term. So, I would describe us as being patient. You want to do it right. The business is fun; we’re enjoying what we do. And we’re not going anywhere, except maybe new places.
CB: There’s still a lot of opportunity within our core markets, too. We have shelf space to gain and ads to get, new accounts to sell. There’s still opportunity within the current distribution area.
MZ: We do have a complete line of products — light, no sugar added, yogurts, take-home frozen snacks, sherbet, bulk snacks.
JD: And nothing is co-packed.
MZ: Nothing is co-packed.
JD: How have the NSA’s, the lower-fat and the better-for-you products been doing up against your regular lines?
MZ: They’re holding their own. But that’s such a small segment overall, even nationally. On the numbers I’ve seen from ACNielsen, in a majority of the markets, it’s less than 20 percent of the total ice cream sold.
JH: Those products go in and out of vogue. One day it’s yogurt; years ago, we couldn’t make enough yogurt. Then all the other custom products …
RD: You had your wave of carb-type products …
JH: They came and went.
PK: Melvin, see if this is correct. I would describe that whole area as being responsive to the consumers, but it’s been a very steady part of our business for many, many years. It has been very consistent.
MZ: It has been very consistent.
CB: You don’t see any real peaks or valleys.
MZ: Right now, no sugar added is showing a nice little increase because there’s more people who are diabetics who have to watch their sugar intake. But it’s still a very small percent. But we’ve never really tried to play off that industry. We’ve just been steady with what we’ve had.
CB: We could probably pound away with more advertising on a certain category and move the needle, but it won’t be sustained, I don’t think.
RD: It’s a complementary category. It complements the ice cream that we do, and ice cream is still the bread and butter. When people eat Blue Bell, they want that uniqueness, and they get it.
JD: What does the future hold from here?
PK: There’s no lack of things to work on.
CB: Lean and mean, right?
PK: We don’t have people wandering around saying, ‘What do I need to be doing next?’ It’s already usually found them.
MZ: Look at the map and see what the new potential markets could be for us.
JH: One thing that we do a lot more now than we used to is restaurants. Foodservice is an area that has grown pretty dramatically.
MZ: I already made the statement that everything we make, we deliver ourselves. We have expanded out to foodservice distributors.
PK: In our experience, the handling of three gallons is a bit easier than all the other products we make. We’ve had to reconcile ourselves to the fact that we would turn it loose, and it would travel to where we’re not.
JD: What makes your company unique?
CB: You could start with the product, but I think our people is number one.
MZ: It’s personnel, in my opinion.
JD: You’ve mentioned your low turnover. What kind of tenures are we talking about?
RD: It’s amazing. Some of the people in production have been packaging ice cream for 25 or 30 years.
MZ: I’ve been here 40 years and there are people here with more tenure than I have.
RD: There’s a uniqueness about this company. People, when they come on board, it’s more than just coming to work. They believe in what they’re doing and there’s a lot of pride. It’s evident in the fact that so many people do stay for so long.
MZ: That’s all the way from the shipping department up to the upper management. The one thing unique about this company is that it’s been under the same ownership, the same management basically since the beginning. There’s been no acquisitions and nobody’s bought us out. It’s the same company.
RD: Never having a layoff in the history of the company speaks volumes.
MZ: The product is unique. The consistency. I think our DSD delivery service is unique, even though other people do DSD
PK: Very involved, very intensive, very expensive. But it does what you need it to do.
CB: And I’ll throw advertising in there, because we do have a unique way of advertising our message, that of a small-town creamery in rural Texas, where everything is wholesome and good, country fresh. They think we’re back there hand-cranking it until they come see the plant.
JD: How would you sum up your corporate management philosophy?
RD: Treat people the way you’d want to be treated. Do what we say and say what we do. Fair and consistent.
CB: Keep it simple.
MZ: Encourage new ideas and new thoughts.
PK: No short cuts.
RD: And have fun.
MZ: That’s the biggest one. You’ve got to enjoy what you do.