WHERE THEIR Heart Is

Dairy Field, Sep 2004 by Dudlicek, James

Management is committed to independence and growth at Old Home Foods.

In the Frogtown neighborhood of St. Paul, Minn., amid a bustling AsianAmerican community, there's a scrappy cultured dairy processor aiming to share with the rest of the country the great products Twin Cities residents have enjoyed for generations.

Actually, it already has been sharing some of them through co-packing arrangements with national brands. But few consumers outside the company's Upper Midwest marketing area are hip to the great taste and quality Minnesotans have come to expect from Old Home Foods. Company leaders are hoping to change that.

The $30 million company shares a hometown with dairy giants Yoplait and Marigold Foods, maker of Kemps products. But that hasn't deterred Old Home from winning the hearts and stomachs of hometown consumers with its 108 SKUs of yogurt, cottage cheese, sour cream, snack dips and smoothies, sold under the Old Home and Gaymont brands.

"We like to think of ourselves as a quick mouse dancing with elephants," quips Dave Holdsworth, vice president of sales and marketing. "You get the big guy stomping around, and we run around their feet and nip at them."

Of course, size does have its advantages. "We have to be smarter than our competitors, and that's probably the toughest thing for us," Holdsworth says. "We don't have the luxury of being able to launch five new products a year and hope they stick. We really have to be selective about making sure we launch something we think is a good product. On one hand we're quicker, because we can make decisions faster, but we have to be a little smarter."

Always On the Grow

Incorporated in 1925, Old Home Creameries sold 11 pounds of cottage cheese on its first day in business. Within five years, the company had 30 employees and 14 trucks and was producing more than a million pounds annually to keep up with demand.

Thus was established the pattern of dramatic growth Old Home Foods has experienced throughout its history, but even more so since its acquisition by the Hanson family in 1960. The company has been privately held since then, except for about a dozen or so years in the 1970s and '80s when it went public.

"What that allowed us to do was raise some capital and go out and venture into other businesses," explains John Bonifaci, executive vice president and chief financial officer. "We actually owned a cold-storage business for 20 or 25 years. We owned a vending business. We owned a meat company. But what we discovered was that wasn't our expertise. Our expertise is cultured dairy products - that's where we do a good job."

So the other interests were sold off, the proceeds invested in developing the cultured business. The cash came in handy in the 1970s and '80s, when Old Home really started to focus on promoting its brand.

"It wasn't until we got more progressive from a management standpoint that we started really investing back in the brand," Bonifaci says, "And it took a lot of cash to do that because we weren't used to marketing behind the brand. We were used to giving the consumer 2 cents off. Now all of a sudden, we're thinking about radio and TV and billboards and bus signs."

The company's overall advertising campaign is "Old Home - for the way you live," Holdsworth explains, aimed at moms age 18 to 49 in Old Home's marketing area including Minnesota and parts of Wisconsin, the Dakotas and Illinois. "We bring products that help moms and families with their lives. They know they can put our product in front of their families and they know they're going to like it," he says. "We're trying to get more convenient products like the smoothies out there so it helps them with their lives."

Old Home's newest product line - Yogurt Smoothies in assorted fruit flavors plus several light varieties - was the focus of a recent advertising campaign including a TV spot that won the company recognition at the International Dairy Foods Association's (IDFA) Achieving Excellence awards this year. IDFA also recognized the smoothies as among the best new products in the contest.

"We have a lot of radio ads, we've pretty consistently been on billboards," Holdsworth says. "We do a lot of instore programs like floor graphics, shelf talkers, things like that, beyond the typical store ads, coupons and discounts."

Beyond beverages, the low-carbohydrate dieting craze has brought renewed interest in cottage cheese, an Old Home mainstay. "Cottage cheese has been on fire. We've always had the number-one market share in this market, but we've really just retaken a dominant position in cottage cheese in the past year," Holdsworth says. "A lot of it is because our product is better than everyone else's, but also we've really been able to get a hold of the low-carb craze."

So far, Old Home has accomplished that without reformulating any of its products. Of course, cottage cheese is already low in carbs.

"Our billboards said, The original low-carb food,'" Holdsworth says. "A really simple message, and consumers got it, and it's been going crazy. We also launched a new flavor of cottage cheese this past year [peach] to bring some variety to the category."