BLUE MOUNDS, Wis. — Lactoprot USA probably is best known for what it has done the longest — cheese for gift baskets.

Lactoprot USA is a manufacturer of shelf-stable cheeses, cheeses which find their way into gift baskets made by virtually all of the major gift packers as well as gift baskets made by smaller, less well-known companies. Lactoprot USA also offers multiple catalogs featuring a wide array of gift basket items ranging from various cheese selections to coffee to salsa to bath and body products. However, during the last few years, Lactoprot’s institutional division has started to soar, thanks in large part to several new single serving items for various markets.

Lactoprot USA’s institutional division, which also includes a strong presence in the private label retail sector, now accounts for about 60 percent of Lactoprot USA’s business. But the best part of the shift in Lactoprot’s business is that it hasn’t meant lost sales.

“We haven’t lost gift basket business, it’s all additional business,” says Dan Culligan, president, Lactoprot USA. “It’s been by design. Over the years, we’ve shifted from a seasonal business to a year-round one.”

The gift basket business traditionally is a seasonal one, with summer the busiest time of the year for Lactoprot USA as it prepares its wares for the holidays. This time of year, post-holidays, typically has been the slowest. But over the last couple of years the company has been able to avoid layoffs of employees during the slow season because other aspects of the business, including R&D and the institutional division, are so busy, Culligan says.

This is the time of year when the company is busy working with customers making big plans for 2006’s holiday gift baskets. Lactoprot USA has an extensive R&D department that always is working on developing new products and flavors, a necessity for the ever-competitive gift basket business but also important to the institutional and retail businesses in general, according to Brett Thompson, sales and marketing manager, Lactoprot USA.

As a larger mid-size company with a strong investment in R&D, Lactoprot USA has the ability to develop custom programs and new products quickly in conjunction with its customers. The company also can provide the quantities larger accounts demand. Lactoprot USA offers shelf-stable cups and foil-wrapped wedges, rounds, squares and rectangles. It also offers its products in clear multi-vac and Cryovac wrapping.

But these days, it’s not just R&D keeping Lactaprot USA busy during the early part of the year. The company’s production still is going strong even if gift basket season is a while off. New items that the company has developed recently include 3/4-ounce hex cups featuring new flavors and 2/3-ounce foil wedges in traditional flavors and designs. Working with a dairy industry co-packer, Lactoprot USA also offers 1/2-ounce to 1-ounce cheese sticks and bars. In general, Thompson reports that “hot” flavors such as habanero, chipotle, fire roasted jalapeño, Buffalo Cheddar and bacon and horseradish are popular right now.

Lactoprot USA’s gift pack division also is doing a great deal more business with accounts that call for high-end gourmet products and flavor profiles, and Lactoprot USA executives say they see great potential as existing approved items continue to grow in both variety and quantity.

On the retail side of the business, Lactoprot USA’s private label business for shelf-stable process cheese and cheese spreads continues to grow. The company’s executives are particularly excited about a new flowable cheese spread. Made possible by new cookers installed in the plant, the product is a consistently smooth cheese spread with superior creaminess and spreadability, the executives say. Several large customers, including the major mass merchandisers, have chosen a variety of flavor profiles to feature in their private label lines. Portion-control sizes of many Lactoprot USA products are proving popular with convenience stores, too, Thompson adds.

The company’s retail business also is growing via its imports of natural cheese. Lactoprot USA, which is owned by Lactoprot International, a division of Artax, an Austrian firm, has come to own a substantial cheese import license portfolio.

Lactoprot USA brings in product primarily from the European Union, with imports such as Swiss, Fontina, Tilsit and a full line of Danish cheeses including Blue and Havarti. When not sold for industrial use or for private label, the Danish products are sold at retail under the Royal Viking brand and the Austrian products are sold under the Mont Austria name.

While a weak U.S. dollar has made battling domestically-produced cheeses a bit more challenging, Danyel Gunnelson, retail/import manager, Lactoprot USA, says that the retail/import business is experiencing steady growth in part because “every grocer is trying to do something different.”

To balance the company’s import offerings and to give customers the selection they desire in an ever-changing market, two recent additions to the company’s import line-up are an Austrian Gruyere and a Swedish Swiss.

Historically, Lactoprot USA’s import business has been strongest on the East Coast, but recently the company also has pushed more into the Midwest by appointing new brokers, Gunnelson says. To cap off the current Midwest growth, Lactoprot has pressed into the Minneapolis market through a high-end grocer’s private label program that features imported cheeses as well as four specialty cheese spreads.

Lactoprot USA continues to expand its market presence via trade shows, advertising and word-of-mouth. The company also has been doing more business through its website, Gunnelson says.

Culligan adds that demand is growing to such an extent that the company, which already continually is investing in improvements, has significant capital expenditures scheduled for this year to keep up with the growth. A new cup filling machine, which will allow Lactoprot to fill circular, rectangular and oval cups through its interchangeable tooling, recently was purchased. A new auto-stick cutter, designed to increase efficiency on the production line in addition to decreasing the amount of cheese trim, also has been added.

Culligan says he is pleased with the growth Lactoprot has experienced over the past few years, and takes pride in the company’s ability to serve a wide array of customers.

“We’re the No. 1 player in a lot of areas,” Culligan says.

CMN