January 1, 2007
by James Dudlicek
Measured growth and tight control deliver a strong first century for Blue Bell.
How does a company stay in business for 100 years? For Blue Bell Creameries, the explanation is simple: Make ice cream people like and put it in a full half-gallon.
Oh, and don’t use a lot of words to explain how you do business.
In Brenham, Blue Bell’s home about 70 miles northeast of Houston, the ice cream business — to steal a quip from Texan Dan Rather — is crackling like a hickory fire. Folksy but to the point, the Kruse family is known to explain how they do business with phrases like, “Our ice cream’s so fresh, it was grass just yesterday.”
“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 every day we have on our brand,” says Blue Bell president and chief executive officer Paul Kruse. “Certainly, there are other ways to do it, and other people do a good job of it. Every day 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.”
How well does it work? Well, the folks at Blue Bell are famously tight-lipped when it comes to the financials of their privately held company. Dairy Field estimated sales in excess of $300 million in its Top 100 processors ranking last June.
With at least 255 SKUs sold at retail in 16 states and select foodservice locations beyond its regular marketing area, Blue Bell is the third-largest brandof ice cream in the United States, as DF noted last August in its annual State of the Industry report. The brand enjoys 60 percent market share in major Texas cities and about 70 percent statewide, 55 percent in Louisiana and 45 percent in Oklahoma.
To celebrate a century of success, Blue Bell is taking its story on the road — literally. A customized 18-wheeler outfitted as a rolling museum documenting the history of the company will visit 65 cities throughout Blue Bell’s marketing area during 2007 — starting in Arizona, moving throughout the southeast and winding up in Louisiana — to give people a glimpse of what they’d see during a visit to Brenham.
“We call it a rolling birthday party,” says advertising manager Jim Hayhurst. “It’s going to cover virtually all of our markets and branch areas, as well as our production facilities.”
Many of the stops will be scheduled during local and regional events to maximize walk-through traffic. Visitors will be treated with Blue Bell’s top-selling Homemade Vanilla in 3-ounce commemorative cups. Proceeds from the sale of Blue Bell souvenirs will go to the Boys & Girls Clubs.
“It’s just a celebration of ice cream and our unique story, and a chance for us to visit with our consumers and customers,” Kruse says.
Meanwhile, at the home base, a new sculpture garden outside the visitor center will depict the Kruse family founders, along with the cow and girl from the Blue Bell logo.
Then, at the Washington County fairgrounds, “A Day in the Country” will give locals some family fun and all the ice cream they can eat — more than 45 flavors — free of charge. And all of the company’s 45 branches — manufacturing and distribution — will be holding some sort of anniversary events for the public.
Further driving home the anniversary message will be new birthday candle graphics on the company’s DSD truck fleet.
And, of course, two new flavors will honor the milestone. “In January, we’ll start off with a half-gallon flavor, Century Sundae. It’ll be a January-through-June flavor,” says Carl Breed, director of marketing. “It’s very simple — our famous Homemade Vanilla containing caramel and chocolate sauces, a whipped topping swirl and dicedmaraschino cherries. The carton tiesin to our current line but will be different enough to make an impact at the point of sale.” Another commemorative flavor, details to be announced, is planned for release in July.
The Ripple Effect
As well-known and as popular as Blue Bell’s ice cream is today, it might be surprising to learn that for the company’s first six decades, you couldn’t get it outside the greater Houston area.
“We were in Houston for a long, long time and did well in Houston,” explains Melvin Ziegenbein Jr., vice president of sales and marketing.
Blue Bell reached Austin in 1965. “There were people in Dallas that said, ‘Why can’t we get Blue Bell ice cream up in Dallas?’” Ziegenbein says. “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?’”
The answer: San Antonio in 1984, then Waco two years later.
“After that, Oklahoma made sense, and at the same time we were looking at Louisiana,” Ziegenbein says. “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. After that, it was just the ripple effect; wherever the grocer or the consumers wanted us, we went.”
This movement in the company’s more recent history is chalked up to a combination of factors familiar to anyone in the food industry: modern transportation, improved refrigeration, consolidation in the grocery industry and, to a certain extent, word of mouth.
“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,” Ziegenbein says. “The equipment has definitely gotten better. It allows us to transport ice cream a lot further than we could 25 years ago.”
Retirees, empty-nesters and other transplanted Texans eventually drove the brand into markets like Arizona and Florida. “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,” Ziegenbein says. “It seemed outside the realm of possibility at that time.”
Kruse elaborates: “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.”
What has been the attraction, for both customers and consumers, that has fueled the demand for a greater availability of Blue Bell products?
“I think it’s a combination of quality products and value,” Ziegenbein says. “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.”
The proof, Breed says, is that “we sell on an everyday basis. We’re not a deal-oriented company. It’s not ad-driven.”
And then there’s the service — strictly DSD throughout the company’s entire territory (with the recent exception of some foodservice distributors to handle demand in that channel).
“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,” Ziegenbein says. “We monitor the store cabinets on a random basis to make sure they’re holding it at the right temperature.”
In fact, just about everything at the company — from marketing to baking the cookies for Cookies ‘n Cream (which Blue Bell invented) to building its own wooden shipping pallets — is done in-house.
“That’s the key — you can control the quality,” Kruse says. “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. Our people do it, and they’re properly trained and motivated.”
They must be, considering the number of Blue Bell employees who can measure their tenure in decades. The same seems to go for fans of the product.
“There’s an attachment,” says general sales manager Ricky Dickson. “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.”
Blue Bell launches up to a half-dozen new flavors annually “to keep the interest going,” Ziegenbein explains, “to give people looking to buy ice cream a reason to see what Blue Bell’s coming out with next.”
Breed adds: “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.”
The Blue Bell team says they face a lot of the challenges common to most businesses: the rising cost of ingredients, energy and human capital; and keeping pace with demand while maintaining quality and consistency.
“A lot of the things we do in-house, like ingredients; we may do more than some companies,” says Gene Supak, vice president of operations. “At the same time, it all helps to keep costs down and keep up competitively at the same time. 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.”
The more difficult challenge lies with the market itself. “The players get fewer, and they’re getting bigger,” Ziegenbein says.
“With deeper pockets,” Breed continues. “Not only from our competitors’ standpoint, but from the grocers’ standpoint, too. They’re all consolidating, making it tougher for all brands.”
And, of course, the landscape has changed with a proliferation of new outlets for ice cream products — dollar stores, drugstores, club stores, mass merchandisers, even schools.
“Through the years, we were very comfortable calling on a lot of independent supermarkets,” Kruse says. “That’s a thing of the past.”
As far as opportunities, a constant craving for ice cream suggests a strong future for the business. “I think people still enjoy eating ice cream. They enjoy eating the real thing,” Ziegenbein says. “It’s a fun food with nutritional value. It’s not just a junk food.”
Hayhurst chimes in: “Also, there are 30-some states that we’re not in yet, that don’t have the opportunity to eat Blue Bell. Our opportunity is tremendous for growth.”
Plus, there’s still a lot of opportunity within the company’s core markets, Breed says. “We have shelf space to gain and ads to get, new accounts to sell,” he says. “There’s still opportunity within the current distribution area.”
Amid the better-for-you trend, Ziegenbein says Blue Bell’s offerings are 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,” he says.
From Blue Bell’s perspective, Kruse describes the better-for-you segment 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.”
Ziegenbein concurs. “Right now, no sugar added is showing a nice little increase because there are more people who are diabetics who have to watch their sugar intake. But it’s still a very small percent,” he says. “But we’ve never really tried to play off that industry. We’ve just been steady with what we’ve had.”
Into Another Century
What does the future hold for Blue Bell?
Characteristically, the folks in Brenham don’t like to reveal too much. But the gleam in their eye and the sly Texas drawl suggest it’s going to be good.
“There’s no lack of things to work on,” Kruse offers. “We don’t have people wandering around saying, ‘What do I need to be doing next?’ It’s already usually found them.”
It’s those people that make the company unique, the team says. “You could start with the product, but I think our people is number one,” Breed says.
“It’s amazing,” Dickson adds. “Some of the people in production have been packaging ice cream for 25 or 30 years. There’s a uniqueness about this company. People, when they start here, 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.”
Ziegenbein continues: “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 have been no acquisitions and nobody’s bought us out. It’s the same company.”
And Dickson notes: “Never having a layoff in the history of the company speaks volumes.”
The company’s message is unique as well, Breed offers. “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,” he says. “They think we’re back there hand-cranking it until they come see the plant.”
In all, Blue Bell’s philosophy is pretty basic: Keep it simple. Encourage new ideas and new thoughts. No short cuts. And have fun.
“We’ve been at it a long time, and we’re in it for the long term,” Kruse says. “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.”
For the complete transcript of our discussion with the Blue Bell management team, visit www.dairyfield.com
BLUE BELL HISTORY
It was a hot day late in August 1907 when the Brenham Creamery Co. opened its doors. In the beginning, the company only made butter, but by 1911 it was making a gallon or two of ice cream a day, packed in a large wooden tub with ice and salt and delivered by horse and wagon to friends and neighbors around Brenham, Texas.
All ingredients — milk, cream, eggs and fruit — came fresh from the farmers around Brenham. By 1930, the company had changed its name to Blue Bell Creameries, named for the blue flowers that grow in the fields throughout Washington County.
The Kruse family’s history with the company dates back to 1919, when schoolteacher E.F. Kruse was recruited to head the creamery. Upon his death in 1951, his son, Ed Kruse, became president and chief executive officer, serving until 1993 when his younger brother, Howard, became CEO. Then in 2004, the top leadership post went to Paul Kruse, Ed’s son and Howard’s nephew; Paul had joined Blue Bell in 1986 as its chief legal counsel. Ed continues as chairman, while Howard is president emeritus.
Blue Bell remained primarily a Houston-area favorite until the 1970s, when demand from other areas and reliable transportation made expansion practical and profitable. The next three decades saw Blue Bell’s marketing area expand in every compass direction. Two new manufacturing facilities and dozens of distribution centers have allowed the company to build into the territory in serves today: 16 states at retail, and beyond through foodservice channels as well as mail order for devotees who’ve moved farther than Blue Bell’s normal reach.
Some of those fans have shared their feelings on Blue Bell’s Web site:
“I grew up in Brooklyn, N.Y., and had never heard of your ice cream. Well, let me tell you, the best thing that ever happened to me was moving to Georgia where they have your ice cream. I think it is the best ice cream I've ever tasted in my life and I'm 40 years old. When I eat your ice cream I enjoy it so much that I feel it in the very core of my soul. My friends laugh at me every time I eat it because I rock back and forth and I have a little tune that I sing. Blue Bell is not just an ice cream to me. It’s a truly wonderful experience.”
“Imagine my squeals of delight when I wheeled my Publix grocery cart down the frozen food aisle and spied Blue Bell ice cream. At last, it has arrived in Florida …”
“Just a note to tell ya’ll that I love your ice cream. I have to exercise a little more to work it off, but it's worth it!”
While a lot has changed at Blue Bell Creameries since 1907, the company says the quality of its ice cream hasn’t changed one bit, claiming that “we eat all we can and sell the rest.”
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