Back in the mid-19th century, a young Louis C. Graeter said goodbye to small-town Indiana and moved to the big city, Cincinnati, to seek his fortune. It was there that the teenager decided to try his hand at crafting a sweet treat — ice cream — in an open-air market.
Ice cream was a novelty at the time because modern freezing technology was not yet available, so he relied on a wooden bucket containing a mixture of ice, salt and water, explained Richard Graeter, president and CEO of regional ice producer Graeter’s Ice Cream Co. and Louis Graeter’s great-grandson. He then placed a metal pail containing cream, milk and sugar into that wooden bucket, and hand-stirred those ingredients with a wooden paddle until they were transformed into rich, creamy ice cream.
A hundred and forty-nine years later, the company that Louis Graeter started in a street market is still based in the Queen City, albeit in a brick-and-mortar space. And as it looks forward to its 150th anniversary in 2020, the company is still making ice cream by hand via the traditional French Pot method used by its founder.
Built to last
A lot of growth occurred during that century and a half between then and now, of course. In 1900, Louis Graeter got married, and he and his wife — Regina — bought a house in Cincinnati’s Walnut Hills neighborhood. While the upstairs of the home was reserved for living space, the downstairs was dedicated to making and selling ice cream, Richard Graeter noted.
Following Louis Graeter’s death, Regina Graeter took the company into a period of rapid growth. She opened approximately 20 retail ice cream stores bearing the Graeter’s name, expanding even during the Great Depression, Richard Graeter said.
Regina Graeter — along with the second generation, sons Wilmer and Paul — opened Graeter’s first manufacturing facility in a former printing plant in 1934. (Manufacturing operations remained at this location until 2010.)
“She’s probably one of the first people to have done that,” Richard Graeter said.
By that time, modern refrigeration had made it possible to commercialize ice cream at scale — via technology that was much faster, much cheaper and much less labor-intensive, Richard Graeter noted. But Regina Graeter stuck with the French Pot method, which produces a creaminess that mass production cannot replicate.
The third generation — including the fathers and aunt of the current managing fourth generation — eventually took over the company, expanding the number of ice cream stores and even adding a bakery. And they continued to improve the design of the French Pots.
Fast-forward to 2019. Today, Graeter’s is using the fifth or so iteration of those French Pots.
“We have them custom-manufactured here in Cincinnati,” Richard Graeter noted.
Despite its commitment to tradition when it comes to the manufacturing method, Graeter’s has modernized wherever possible. In 2010, it moved into a new combination headquarters and manufacturing facility with plenty of state-of-the-art touches. (See the Inside the Plant article) It also boasts a very rigid food safety program. That marriage of traditional and modern might be one of the secrets of the company’s longevity.
“Companies that are built to last, that have been around 100 years, do two things; They preserve the core and stimulate progress,” Richard Graeter said, quoting author Jim Collins. “The core is the French Pot process, which yields a product that’s differentiated from everything else on the market. … What we’ve wrapped around it is very modern — the automatic lidder, the sealer, the X-ray technology, the robots in the freezer that build pallets.”
Another big change unique to the fourth generation is the addition of non-family expertise. Although brothers Robert Graeter and Chip Graeter — chief of quality assurance and chief of retail operations, respectively — work alongside cousin Richard Graeter as part of the management team, the rest of the team doesn’t share any family blood. Those executives include Tom Kunzelman, vice president of manufacturing; George Denman, vice president of sales; Tim Philpott, vice president of marketing; and Steve Hellmich, head of confection and bakery operations (yes, Graeter’s also makes handmade confectionary items).
Graeter’s is known not only for its small-batch manufacturing and longevity, but also for its decadent ice cream flavors. And no other flavor garners more attention — or sales — than the company’s signature Black Raspberry Chocolate Chip.
The flavor was the brainchild of the late Dick Graeter, Richard Graeter’s father and one of the third-generation company owners. The ice cream made its debut, sans chocolate chips, about 40 years ago, Richard Graeter noted.
“A customer from P&G said, ‘You know, you should put chocolate chips in that,’” he said. “So he did.”
But they’re not your run-of-the-mill chocolate chips. Made from high-quality confectionary-grade chocolate, the “chips” are formed over the ice cream in the French Pots, and then are broken up by a blade and mixed into the ice cream. They vary in shape, according to the operator running the particular pot, and really “melt in your mouth,” explained Robert Graeter.
As for the raspberry portion of that flavor, Graeter’s works directly with fruit growers, buying all of the puree at harvest, he added. (The company does the same thing on the strawberry side.) It’s that attention to detail that ensures the highest quality product.
Black Raspberry Chocolate Chip might be Graeter’s signature flavor, but the company also has plenty of other flavors to tempt the taste buds. At any given time, Robert Graeter explained, approximately 20 core flavors are offered in bulk containers for its ice cream shops and in pints (as well as 56-ounce containers for certain flavors) for retail grocery stores.
“Then we’ve got limited-edition flavors, which run two to three months,” he added. “We’ve got seasonal flavors, which might run a month. And we have three sorbets.”
Graeter’s also offers “bonus” flavors, which are available only in Graeter’s stores.
“They’ll last maybe two to three weeks, and when they’re gone, they’re gone,” Richard Graeter said. “But if we get a lot of love from customers, then a flavor might come back.”
As the person responsible for most of the flavor development, Robert Graeter said he keeps an eye on trends, reads the trade press and pays attention to “what other people are doing.” The company engages with its vendors, too, to learn about new inclusions and bases and get a pulse on trending flavor combinations.
“We also listen to our customers,” he pointed out.
Much of that listening occurs within Graeter’s ice cream stores, which Robert Graeter likens to test markets for new flavors.
“We have 55 test markets where we can engage a customer and get really quick feedback,” he said. “That’s part of the reason we developed the bonus flavor program — to test ideas, get immediate feedback and [decide whether] this is something we want to do in a bigger way.”
All of the new flavors, from core and seasonal to limited-edition and bonus, tend to have one thing in common: decadence.
“We tend to focus on indulgent flavors,” Robert Graeter noted. “The exotic, edgy stuff doesn’t really resonate with our customers at this point in time.”
All about the experience
Approximately two-thirds of the ice cream Graeter’s produces makes its way to the company’s neighborhood retail stores. Operating in cities within five states — Ohio, Kentucky, Indiana, Illinois and Pennsylvania — those 55 stores are critical to Graeter’s continuing success.
One recent improvement on this side of the business was exiting the franchise business. As Richard Graeter explained, the company bought out its last franchisee in 2018, so all of its stores are now company owned.
“We used to have a reputation for having mean old ladies [staffing some of the bakery stores],” he joked. “You had to fight to get the ice cream. We knew we needed to change that.”
The company also added a handful of stores in the last few years, noted Chip Graeter. And it continues to look at growing its retail store base within a 10 to 15 mile radius of its core Cincinnati area. But additional expansion outside of that area isn’t out of the question, either.
“Indianapolis is a market that we’re kind of keen on,” he said. “We have three stores there now, but we feel that’s very similar to Cincinnati in terms of the population.”
Locations a bit farther south also boast appeal, Richard Graeter suggested.
“Our Kroger sales in Nashville are fairly strong, and that would be a great city if we could find the right spot,” he said.
Graeter’s inviting stores — with warm wood accents, ample and comfortable seating and colorful merchandise on display — represent more than a place to get decadent ice cream to many of the consumers who frequent them, Chip Graeter pointed out.
“I think what we’re really known for is a place for families to come: moms, dads, children,” he said.
The flavors are varied enough, too, to appeal to different family members.
“There’s Cotton Candy for the four-year-old who wants blue, and there’s Cookies & Cream for the eight-year-old,” Richard Graeter said. “Mom and dad might want the sophisticated flavors like Brown Butter Bourbon Pecan or Black Raspberry Chocolate Chip. And for grandma and grandpa, there are things like Butter Pecan.”
And because many of Graeter’s fans grew up with fond memories of the stores, the stores are destinations for family-related special occasions — from post-school-play celebrations to the wakes of loved ones, Chip Graeter noted.
“And I can’t tell you how many marriage proposals we’ve had at our stores,” he added.
Graeter’s is always looking for ways to improve the guest experiences in its stores, too. For example, it just added a smartphone app for its Sweet Rewards loyalty program, Chip Graeter said.
Getting the message out
Despite its strong name recognition among local consumers, Graeter’s does engage in some targeted marketing efforts to spur more frequent purchases. For example, participants in the Sweet Rewards loyalty program are very engaged, so the company creates a lot of messaging aimed at them, Philpott explained.
“We have a very engaged social network,” he added. “So whether it’s Facebook ads, Twitter ads or Google ads — it’s being where those fans and potential fans are online to either drive them into our sweet shops or online.”
Why online? Well, Graeter’s actually sells a lot of ice cream via its website, Philpott explained.
The company looks to radio, too, when it wants to communicate what’s going on in its stores, or when it has notable flavors coming into the market, he said. It also works with its grocery retail partners for efforts such as couponing and mailbox offers to stimulate pint trial.
That being said, “flavors rule the day,” so most marketing is targeted specifically toward communicating the availability of flavors, Philpott said.
“That brings people in,” he noted. “We’re not an offer brand; we’re not a $5-off brand; we’re not a free scoop brand. We’re unapologetically affordable on an everyday basis. We’re not the cheapest ice cream out there, but everybody can afford our ice cream.”
The question, of course, is how often consumers choose to afford that ice cream. So Graeter’s also tries to give fans reasons to come back, Philpott said. That’s why guest service — the store teams charged with providing guests a fantastic experience in Graeter’s stores — is part of the company’s marketing strategy.
Local partnerships are important, too, in keeping the Graeter’s name front and center. The company partnered with the Cincinnati Zoo & Botanical Garden, for example, when it introduced its Chunky Chunky Hippo flavor, Robert Graeter noted. Named in honor of Fiona, the famous hippo born as a preemie at the zoo in 2017, the ice cream features a toffee base, salted roasted peanuts and milk chocolate caramel truffles. A portion of proceeds benefit the zoo.
Other recent partnerships include one with the University of Cincinnati for the school’s bicentennial celebration and one with Ohio State for its sequicentennial.
“They come to us because what makes a celebration better than Graeter’s ice cream?” Philpott said.
As a longtime part of the Cincinnati community, Graeter’s also tries to be a good corporate citizen by giving back, Chip Graeter noted.
“We have a lot of partnerships with local institutions and nonprofits,” Robert Graeter added. “Rather than buy a lot of media, we do sponsorships.”
Careful growth ahead
As Graeter’s gets ready to celebrate its milestone birthday next year, the company also is planning for “careful growth” in the years to come. Five years down the line, Richard Graeter doesn’t expect the company to look dramatically different than it does today.
“I’d love to open stores in southwest Florida, which is a Midwest state six months of the year,” he said. “But we’re not going to go from being in 4,000 or 5,000 grocery stores to being in 20,000. We’re not going to open 100 retail stores. We’re not going to franchise. Those things would change the character of our business.”
Essentially, Graeter’s want to remain strong regionally and grow within that region, Robert Graeter added.
“I think there’s plenty of opportunity,” he said. “We don’t need to have stores in California to be successful.”