Blue cheese and salad dressing producer Litehouse shines with opportunities
Idaho-based Litehouse Inc. makes award-winning blue cheeses, yogurt and buttermilk. The employee-owned dairy processor uses these ingredients in its top-selling line of refrigerated salad dressings.
The city of Sandpoint (population 7,500) is in the skinny part of Idaho, wedged between Washington and Montana, and about an hour south of the Canadian border. Sandpoint is the seat of Bonner County which, at 1,920 square miles, is larger than the entire state of Rhode Island. When the Dixie Chicks sing of “Wide Open Spaces,” they could be referring to this part of Idaho.
Far from the foodie capitals of the United States, Litehouse Inc. makes some of the best blue-veined cheese in America. At this year’s American Cheese Society contest, Litehouse won first place for its Simply Artisan Reserve Double Crème Gorgonzola, second place for its Simply Artisan Reserve True Gorgonzola and third place for its Simply Artisan Reserve True Blue. Last year, Litehouse took first place for its Simply Artisan Reserve Blue Cheese.
Litehouse also makes or sells refrigerated salad dressings, Greek yogurt dips, cold-pressed apple cider; caramel, fruit and vegetable dips. It imports dried herbs from Germany that are packaged under the Litehouse name. The company has manufacturing plants in Idaho, Utah and Michigan. Read the Litehouse Plant feature.
Company revenue grew more than 10% in 2015 to $215 million, placing it at No. 79 on the Dairy 100, this magazine’s ranking of the largest dairy processors in North America. The company is unique among the Dairy 100. It is neither a cooperative nor a publicly held company. Rather, it is 100% owned by the 700 employees, organized as an Employee Stock Ownership Plan (or ESOP).
Beginning in 2006, the Hawkins family, which founded the company more than 50 years ago, began selling shares to employees. By 2014, the conversion to an ESOP was complete. President and CEO Jim Frank said the ownership structure fosters a team-oriented approach to doing business.
As companies become larger, they can evolve into silos where managers defend their turf and their own interests. But Litehouse aims for collaboration among the various departments.
“We try every day to make it stay that way,” Frank said. “We call it hooked at the hip,” he said.
Executive Vice President and Chief Financial Officer Kelly Prior put it this way: “In order for us to be successful, we feel we have to be nimble. And the only way to really be nimble with innovation in an organization like this is to be cross-functional, team-oriented. As the company evolves over time, you go through periods where maybe you feel a little more siloed. You can see the impact that has on innovation. So we have to bring it back together where we’re collaborating as a team.”
The management team talks to fellow owners about what employee ownership means.
“It means having the responsibility to [do] your job well to make sure that the company thrives,” said Dan Hoffman, the senior vice president of operations. “But it’s also a responsibility to stand up and say when you’re not sure that things are being done right. So you should be able to talk to the guys in finance and say, ‘I think we’re wasting some money over here.’ And while it’s not their job to fix it, it’s okay to say so. You should be accountable for pointing out inefficiencies.”
Frank described the balancing act of making decisions when all the employees are owners.
“If we all own it, then who do you leave out of the conversation?” Frank asked. “The pendulum can go too far the other way. So it’s unrealistic to think that so many people can be involved in every decision. There’s a balance. Groups have to be responsible and make decisions to be accountable and empowered for their own role. And everybody can’t come in to make that decision by committee either. It’s a balance to make sure that responsibilities are really articulated well. It’s easier said than done. But we’re doing really well at it.”
Litehouse Inc. also addresses issues from its stance as a faith-based company. Five “guiding principles” are printed on a laminated business card. These are faith, stewardship, integrity, commitment to excellence and accountability. On the other side of the card is a declaration of faith written by the company founders. It states, in part: “Our belief and devotion to Christ gave us the strength to persevere, the knowledge to lead and the humility to serve. While we recognize that our relationship with our Lord is personal, the virtues that guided us in the beginning forged the foundation of this company.”
“We had an example recently where we were talking about the ingredient cheese in our products,” Hoffman said. “Our brand managers were asking: Does this maintain the integrity of our promises to our consumers? We had a broad discussion about it, and so everybody holds each other accountable to those principles.”
Stewardship is also woven into the company’s principles. Litehouse is active in the three communities where it has plants. It supports them through donations and volunteering. Last year, Litehouse supported the Convoy of Hope which stopped in Sandpoint. Convoy of Hope, which itself is a faith-based organization, describes itself has having “a driving passion to feed the world through children’s feeding initiatives, community outreaches and disaster response.”
“Taking care of our communities and taking care of the people that work here just creates a better life and a better community to live in, for everyone,” Hoffman said.
The roots of community involvement run to the founding of the company. Sandpoint’s economy was tied to the logging industry, and if that was down, then “people really suffered in the community,” Frank said.
The owners wanted to build a company that created jobs in the community.
“That stewardship of the community was always in the DNA of our founders. So it was a really easy transition for them to say: Why don’t we turn the company over to our employees?,” Frank said.
Prior stated that Litehouse is still a family-owned company, but now it is owned by 700 different families. When employees eventually leave the company, they will sell their shares back to the company for cash.
Litehouse places its cheeses and refrigerated dressings in the deli and produce departments of grocery stores. These are the places to be, as consumers migrate from the center of the store where shelf-stable bottled salad dressings are merchandised, to the perimeter, where fresh fruits and vegetables can be found.
To distinguish its retail products from one another, Litehouse markets cheeses under the Simply Artisan Reserve brand and dressings under the Litehouse label.
Brand managers say they are out to re-invent and re-invigorate the blue cheese category. One way they do that is by packaging the Simply Artisan Reserve cheese in easy-to-use formats. Shakable Parmesan cheese has long been a staple on the checkered tablecloths of Italian restaurants. Litehouse took that idea and launched shakable blue cheese and feta versions called Simple Seasons. Serving suggestions include shaking the cheese over salads, burgers and pasta.
How Litehouse brought Simple Seasons to market is a good lesson in inter-department teamwork. Retired cheesemaker Ralph Stuart had been experimenting at home with a shakable blue cheese product. Litehouse needed to find a use for the fines left over from cheesemaking, as there were more than could be used in salad dressing alone.
The marketing team picked up the idea and asked consumers about the concept of a shakable blue cheese. Quality Assurance Technical Manager Elizabeth Hawkins-Williams performed shelf-life and organoleptic tests to see how the shakable cheese performed in glass jars. She said there was no degradation in color. The cheese remained blue. Then the product was introduced to the market.
Another innovation is the company’s Simply Artisan Reserve “center-cut” blue cheese, marketed as a time-saver. These are cut by a wire harp from the center of a cheese wheel. The 5-ounce center cut slice saves time for a party host who needs only to arrange the octagonal slice on a cheeseboard with crackers, fruits and other garnishes.
Pourable Greek yogurt dressing sold under the OPA by Litehouse brand is another new product. The five flavors are Tzatziki Ranch, Avocado Cilantro, Strawberry Poppyseed, Roasted Garlic and Curry.
The company also supplies the foodservice channel with branded and private-label dressings in single-serve pouches. These items are added to prepared salad kits. This segment is “growing leaps and bounds,” Frank said.
But the company has its sights set on dressings.
“We really want to grow that channel,” Frank said. “We want to grow the Litehouse brand. We’re proud of who we are, we’re proud of the products we make.”
To grow, Litehouse is looking East. This summer it launched a campaign called “See the Lite” to build awareness for the dressings in Philadelphia, Baltimore, and Jacksonville, Fla. The integrated marketing campaign incorporated radio, television, billboards, buses and in-store merchandising.
“We’re trying to get people to see us differently,” said Brent Carr, senior vice president of sales and marketing. “See the Lite is all about recognizing the quality of the product, the freshness of the product, no preservatives. That message is really true on our dressings as well as on our cheese.”
Brand Manager Margi Gunter said “We’re essentially encouraging the ‘great migration’ from the interior of the store to the produce department and showing them that you don’t want to put some of these items on your nice salad that you just bought, or organic greens. Use what’s fresh out in the perimeter of the store. So it’s actually going to boost up the entire produce department. So it’s helping a lot of people, but we will definitely hope to gain in that as brand awareness.”
Humorous ads (viewable on YouTube) drive home the message of Litehouse’s clean-label, artificial preservative-free dressings.
Armed with market research information, the Litehouse sales team knows that consumers who buy refrigerated dressing spend more in their total basket. Litehouse uses such insights to help produce and deli department buyers manage their departments.
“They’re trying to bring people to the perimeter of the store. And so our categories help to do that and our customers see us as being a leader in category development,” Carr said.
Grocers see Litehouse as the “category captain,” Carr said because of the strength of the brand. As the captain, Litehouse wants to grow the entire refrigerated salad dressing segment rather than take market share points away from its competitors.
“We provide a lot of data and support for their entire category, not just for our own brand,” he said. “They look to us as a category advisor role. And then we leverage that strength to help us in the deli side of our business and in the value-added side of our business. So it all kind of comes to play.”
Shoppers who are buying more fresh produce are more likely to buy cheese and other items from the deli, Carr said. “And so we use that as a way to say this is the kind of customer you want coming into your store as a retailer.”
Other product lines
Litehouse also sells cold-pressed apple cider, dips and dried herbs, but these products are not necessarily cross-promoted with the cheeses and dressings.
“Each product line is individually more stand-alone and is targeted for consumer use,” Frank said. “The use for the herbs is going to be different than the use for the dips, than the use for the dressing.”
Offering deli cheese, dressings and the other products does allow Litehouse to become a one-stop shop for retailers. That “gives us some leverage through our distribution channel,” Frank said because a customer can buy everything on one purchase order.
Staying on top of food trends
Like any food manufacturer, Litehouse stays on top of flavor and food trends. Teams travel to Seattle and Portland, Ore., to check out food trucks and restaurants.
“Seattle’s a great foodie town. We go there for just perspective,” Frank said. “Many, many food trends start in Seattle. We consider it (the Pacific Northwest) a foodie part of the world.”
After all, the company’s roots are in the restaurant industry.
According to company lore, Ed Hawkins Sr. was working in a restaurant in Spokane, Wash., where his boss challenged him to find a better kind of dressing. Hawkins went home and prayed. He woke up in the middle of the night with the answer: a dressing made with blue cheese, buttermilk, mayonnaise and seasonings.
He later opened his own steakhouse in Hope, Idaho, where he served that salad dressing. It was such a hit that customers asked to buy the dressing to take home. Ed’s sons Doug and Edward founded Litehouse to make and sell the dressings to grocery stores. In 1963, the family sold the first case of Litehouse Bleu Cheese dressing to Roger’s Thrift Market in Sandpoint.
Creating a salad dressing company had impact far beyond the product. Litehouse provided steady, year-round jobs, unlike the steakhouse, which was a seasonal business.
In 1998, Litehouse merged with Chadalee Farms, of Lowell, Mich., a maker of dressings and mayonnaise sold to foodservice accounts. In addition to the Hawkins family, Frank said Wendell Christoff is considered one of the company founders because his family had started and owned the Chadalee Farms since 1898.
Chadalee Farms gave Idaho-based Litehouse a foot in the door for East Coast distribution. Frank called the Michigan plant, “the busiest by far. It turns out more volume, has more equipment, more manufacturing folks than our other two.”
“The beautiful thing about the categories that we operate in, those are growing categories,” Carr said.
Although it has achieved record sales, Litehouse (along with its competitors in the refrigerated salad dressing space) has plenty of work to do. Carr noted that 84% of consumers still buy their dressing in the center grocery aisle. Converting buyers of shelf-stable dressings to fresh represents a huge opportunity.
Milk supply isn’t a problem. Litehouse has sufficient sources in Idaho’s so-called Magic Valley in the south and a second supplier in Washington. The company also benefits from Idaho’s pro-dairy and pro-business positions. Various arms of government provide a lot of incentives, Frank said.
“Idaho, in general, when it comes to the food business, is very progressive,” he said. “Chobani’s a big player down in the Magic Valley. We’re one of the bigger players up here.”
The company’s biggest challenge is supporting its growth and customer service, Frank said.
“Our company is growing rapidly. We’re doing a great job on the selling and marketing side in cheese, deli, produce, dressings throughout the nation. We’re expanding our footprint. We’ve got great distribution (in the East). So our biggest challenge, as a company, is to support that growth and continue to grow forward with it and serve our customers without interruption. But we’re on top of it and we’re ready for that challenge.”
Litehouse needs to hire as it grows larger. Sandpoint’s remote location can hinder recruitment, Frank admitted, but it also attracts those who love the outdoors.
Hoffman noted that “once you find people who do want to live in the Northwest, where everything’s pristine, there’s lots of fishing, and hunting, and water sports, those kinds of people come here on purpose. And so when you get them up here, they’re really unlikely to leave because that’s why they’re here.”
The Litehouse beacon is shining its light on award-winning cheeses and dressings.
“We just feel we make a great, great blue cheese,” Frank said. “We want to get that great experience into more people’s mouths. That’s a big part of our plan: to grow retail and to continue growing it with our brand of cheese.”
New formats and flavors
In the last 24 months, Litehouse has launched:
- Simple Seasons finely crumbled blue or feta cheese shaken from a glass jar
- Sriracha Lime and Mango Habanero flavors in the Litehouse salad dressing line
- Rosemary Balsamic and Ginger with Honey flavors in the Litehouse Organics salad dressing line
- Spicy Asiago Artichoke, Greek Olive and Cinnamon Swirl flavors in the Opadipity by Litehouse Greek Yogurt Dip line
- Avocado Ranch with Bacon, Bacon Vinaigrette and Bacon Blue Cheese flavors in the Litehouse line of salad dressings and marinades
- OPA by Litehouse Pourable Salad Dressings in five flavors: Tzatziki Ranch, Avocado Cilantro, Strawberry Poppyseed, Roasted Garlic and Curry
- Litehouse and Chef Ann Greek yogurt ranch dressing for schools. Litehouse donates 1% of product sales to the Chef Ann Foundation, which promotes healthier school lunches.
- Litehouse Guacamole Herb Blend, a combination of dried and freeze-dried cilantro, red onion, tomato, lemon, cumin, red pepper and garlic.