Sargento Relies on Innovation, Partnerships to Stack Success

Sargento Foods does practically everything in its cheese-manufacturing operations except literally separate curds and whey in the giant vats used by cheesemakers. The $1.8-billion company has risen to become America’s leading cheese-snack maker by sealing, slicing, cubing, shredding and pairing cheese in innovative ways — and by creating and maintaining great partnerships with suppliers, retailers, and others.

Products and production innovations are at the heart of what has made the Plymouth, Wisconsin-based brand increasingly successful, with CEO Louie Gentine hoping even to double revenues in coming years with more diversification in a bid to broaden Sargento’s hold on the American dairy case. Gentine is relying heavily on Kristi Jankowski, Sargento’s executive vice president of innovation, to get the company there.

“It’s difficult to get incrementality in the dairy case,” Jankowski told Chief Executive. “Can we steal space from yogurt and butter? You’re always going to have to steal from someone, and we don’t want to steal from ourselves.”

Sargento has been shouldering its way into more of the dairy case for decades, beginning with its invention of pre-packaged shredded cheese in 1958, continuing with its introduction of peg-bar displays in dairy aisles for greater product visibility in the late 1960s, and its debut in 2015 of Balanced Breaks snack packs.

Here’s how Jankowski approaches the innovation challenge and opportunity:

Value suppliers. Sargento works closely with suppliers in their own cheese plants to experiment with and implement product innovations that Sargento conceives in its R&D lab.

“Not a lot of cheesemakers are actually innovative,” Jankowski said. “They want to get product out the door. For them it’s about yield and the lowest cost; and some of them are more interested in whey than the cheese.” But Sargento has “numerous partners” among suppliers who understand the value of notching business with the fast-growing brand.

For example, Sargento’s recently introduced Creamery sub-brand, imbued with better melting properties, required cooperation in formulation with suppliers, in part because “a cheese with significantly more cream is challenging to do on their conversion lines,” Jankowski explained. “It’s a higher-fat block of cheese, and has to have enough extra cream that the consumer can tell, but you’ve got to be able to slice it, and it can’t fall apart as it moves down the line.”

Keep riffing on what you’ve got. Manipulating and merchandising real-cheese products is Sargento’s specialty, and it has continued lately with wrinkles such as the Creamery line and Ultra Thin Slices of sandwich cheese.

“We can still do lots of new things with natural cheese, changing the texture and flavors, altering melts, increasing its shelf life,” Jankowski said. “Think about the stringiness of string cheese, for instance: Can you make it last longer and alter how it works?”

 Create categories. Balanced Breaks has become one of the most successful snack brands in America, based on the simple concept of packaging together cheese and mixtures of nuts and fruits in dual compartments in a circular container, in portions meant as a light meal or mid-day repast.

Sargento has continued tweaking Balanced Breaks in a number of ways, adding chocolate chunks, banana chips and Greek-yogurt chips, among other elements. Most recently, the company struck a partnership with Mondelez International, the snack giant based in Chicago, for Balanced Breaks Cheese & Crackers versions featuring Ritz, Triscuit and Wheat Thin crackers.

Mind the details. Notching Mondelez as a manufacturing and marketing partner was a big coup for Balanced Breaks, but formulation of key elements in new SKUs were challenging.

“We wanted to make sure consumers experienced the same amount of cheese as crackers,” Jankowski explained. “The density of crackers isn’t the same as cheese, and the density of different kinds of crackers is different too. That was a challenge for our engineers. But it was really important. It was a delighter that would make a huge difference for consumers.”

Similarly, the Creamery sub-brand “has been a huge differentiator for the sliced area, because of how a melted Creamery slice enhances a sandwich,” Jankowski said. Creamery shredded cheese didn’t fare as well with consumers, she said, “because consumers don’t use shreds the same as slices” and “with shreds there is so much more commoditization that consumers aren’t interested in differentiation.” So Sargento discontinued Creamery shreds.

Don’t chase everything. Sargento has completely shunned any notion of veering into plant-based alternatives to cheese, a nascent category that has been trying fruitlessly to achieve significant gains against real cheese for a half-century.

“We really don’t see the nutritional benefit” in plant-based analogs, Jankowski said. “If you look at the plant-based marketplace, a majority of [cheese substitutes] are coconut oil, starches and pea protein. That’s not nutritionally superior to natural dairy cheese products. They are also highly processed, and consumers are trying to move away from processed foods.”