December 18, 2009
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JUST RIGHT FOR RETAIL — Dairyfood USA is moving into the retail market with brands such as Sonoma and Glacier Ridge Farms. The company offers extended shelf life cheeses and dips in a number of flavors and forms that are appropriate for a wide range of venues — traditional supermarkets, club stores, convenience stores and even drug and home improvement stores.

By Kate Sander

BLUE MOUNDS, Wis.— It’s that time of year when you can’t miss them. Walk through almost any mall, and you’ll see kiosks and storefronts alike carrying gift baskets featuring extended shelf life cheeses and other assorted goodies. And odds are good that many of those cheeses and gift basket components are produced by Dairyfood USA, Blue Mounds, Wis., one of the largest producers of extended shelf life cheeses in the country.

Although gift basket components might first come to mind when thinking of Dairyfood USA, the company is working on updating that image. Gift baskets continue to be an important part of the company’s business, but in the past 18 months Dairyfood USA has moved into a new area: retail.

As the gift basket market has matured, Dairyfood USA has actively sought out new business. In the last decade snacking and transportation foods, particularly cheeses for airlines, have become an important business component. However, Dairyfood USA executives saw an unmet need in the retail market — particularly in the cheese wedge category — and believed they had the ability to meet those needs, according to company President Dan Culligan.

Dairyfood USA has long been a market leader in the extended shelf life cheese business. With new equipment in place to broaden its capabilities, the company has been able to parlay that expertise in new market areas.

The company gave its first hints to its upcoming changes in 2007 when it changed its name from Lactoprot USA to Dairyfood USA to better reflect the company’s expanded mission with its focus on consumer products.

Choosing a name wasn’t difficult; for several years, the company had had the rights to the name Dairyfood, Culligan says, and it covers the broad range of services the company provides.

At about the same time, the company also began conducting focus groups to determine consumer preferences for flavors, texture and appearance of gourmet extended shelf life cheese.

While that research was being conducted, the company also was investing in renovations and new equipment. Renovations included adding multiple cookers, which doubled capacity, as well as the addition of new cup-filling equipment so the company could fill cups as small as 0.75 ounces to as large as 2 pounds.

“We’ve made a significant commitment that would enable us to penetrate the retail channel,” Culligan says.

To begin bringing the products to market, Dairyfood USA then entered into a long-term licensing agreement with Monterey Gourmet Foods to use the Sonoma name for extended shelf life gourmet cheese wedges.

The cheeses, introduced last year, come in 4-ounce wheels with six individually-wrapped 0.67-ounce wedges. The flavors currently include regular and light versions of Original, Garlic & Herb, Pepper Jack and Parmesan Peppercorn.

In developing the products, the company focused not only on flavor but on nutritional value.

“We offer a superior nutritional advantage,” Culligan says, noting the products, among other things, contain less sodium than the leading national brand.

The regular flavors feature 63 percent more protein and 83 percent more calcium compared to the leading national brand as well as 17 percent less fat and 9 percent less saturated fat, according to Culligan.

The 50-percent-less-fat versions are only 25 calories per wedge, Culligan adds, and offer 20 percent less calories from fat and 66 percent less cholesterol.

In addition, the company has launched 8-ounce Queso de Sonoma cheese dips in Jalapeno, Chorizo & Jalapeno and Habanero. The dips are made from 100 percent natural Monterey Jack cheese. A Creamy Jack Parmesan Peppercorn dip is being launched as well.

The cheeses are available via a nationwide broker and distribution network, Culligan says. Efforts are continuing to further expand distribution throughout the country.

Dairyfood USA’s retail products aren’t limited to the Sonoma lines either. The company also offers a number of other retail products including Glacier Ridge Farms Cheese Spreads, Maple Street Creamery Gourmet Spreadable Cheeses, Cheese Festival Cheese Spreads, and Dutch’s Choice Cheese Spread. The company also offers Cheddar and Gouda for retail, including smoked varieties. Dairyfood USA is one of the few companies in the country to offer naturally smoked products.

Culligan says most of the products can be merchandised without refrigeration. The products are sold both in the specialty deli case of supermarkets as well as the dairy case and, depending on the product, can be merchandised in different ways, including freestanding floor displays. The addition of new equipment over the past couple of years has given Dairyfood USA the ability to package these products in a wide array of sizes, and the company is adding club store business as well. The company offers products in 24- and 32-ounce cups as well as multiple wedge packs.

With the company’s flexibility in offering an array of premium extended shelf life products, Dairyfood USA also continues to make significant inroads in retail channels that go well beyond supermarkets and club stores. The company is expanding its snack pack offerings to convenience stores, drug stores and alternate channels including home improvement stores and airport shops. Snack products include cheese and cheese dips packaged with whole wheat sesame breadsticks. More products are being rolled out in 2010.

“We’ve expanded our snack pack offerings because the market dictates that there’s room for a hearty, sensible snack that’s easy to consume,” Culligan says.

The retail market isn’t entirely new for Dairyfood USA. Originally founded in 1953 under the name Stauffer Cheese, the Stauffer family sold the company in 1982 to the ALPI Co., an Austrian dairy co-op that eventually changed Stauffer Cheese’s name to Lactoprot. In 1998, the company became part of Artax, headquartered in Linz, Austria. Since that time, Dairyfood USA has been expanding its private label as well as branded cheese sales.

In addition, Dairyfood USA owns a substantial cheese import license portfolio, and can import products such as Swiss, Fontina, Tilsit and Gruyere, Blue and Havarti.

Still, company executives say this recent move into extended shelf life cheeses and cheese spreads for the retail market is a significant move for the business.

“The strategic move of marketing to retail is consistent with the plans we’ve had for the evolution of the company,” Culligan says.

CMN