Marigold Foods comes of age: innovative subsidiary key to National Dairy Holdings – Processor of the Year

Marigold Foods comes of age: innovative subsidiary key to National Dairy Holdings – Processor of the Year – mergers and acquisitions in the dairy and ice cream industries

MINNEAPOLIS–For nearly a century, Minnesotans have known that the Kemps name stands for quality dairy products. But over the past two decades, guided by a separate pair of supportive parent companies, Marigold Foods, with its portfolio of Kemps branded products, has blossomed. Like other local dairies, Marigold started out taking baby steps, with a strong in-state brand presence. But starting in the 1980s the company became a daring ingenue blazing new trails of product innovation. Now it is undergoing another transformation into a sagely industry veteran with facilities in several states, and a share in a distribution network spanning much of the country.

The Minnesota Kid has come a long way, and the best may be yet to come!

The 2001 sale of Marigold and its sister company Crowley Foods to Dallas-based National Dairy Holdings (NDH) sparked the latest phase in the 88-year-old company’s maturation. As recently as 1994, Marigold, then owned by Dutch dairy conglomerate Wessanen USA, operated six plants, all of them in the upper Midwest. It now operates ii. Two were added before Wessanen NV sold its U.S. holdings to NDH, three more distant operations came under the Marigold umbrella thanks to the new parent company, a joint venture of the Dairy Farmers of America cooperative and three Texas dairy veterans. The addition of these plants in Cincinnati, Kentucky and Salt Lake City (a result of the Dean-Suiza merger of 2000) and more importantly, the connection with National Dairy Holdings, make it no longer possible to view Marigold as just a regional player.

“There’s no question that being part of National Dairy allows us to follow our customers as they grow, and to expand our distribution channels,” says Jim Green, Marigold’s president and CEO.

“As a $750 million company, we feel confident that we have the resources to do business with anybody’ adds V.P. of Sales Greg Kurr.

With the very recent announcement that National Dairy Holdings itself plans to merge with another overgrown regional player (HP Hood of Chelsea, Mass.) it’s anyone’s guess as to what the future may hold for Marigold. It’s easy, however, to take stock of the company’s accomplishments. A bit of research on Marigold reveals stories of growth and expansion and pictures of product innovation and savvy marketing, and it becomes clear why Marigold is being honored as Dairy Foods’ Processor of the Year.

From the land of lakes and hockey, eh

A few years ago Marigold introduced a special line of rotating ice cream flavors called Land of 10,000 Flavors, a word play on the Minnesota’s official nickname, Land of 10,000 Lakes.

“It was a multi-year program designed to reflect our upper Midwest heritage,” says Rachel Kyllo, Marigold’s v.p. of marketing. “We had flavors like Below Zero and Hockey Puck, some of which have found their way into our permanent lines.”

That heritage goes back to 1914 when the Kemps brand was first created by a small family-owned creamery in Southern Minnesota. In 1961, slightly ahead of the mergers and acquisitions that have reshaped the industry in recent decades, Kemps Ice Cream Co. and two other dairies, one in St. Paul and one in Wisconsin merged to form Marigold Foods.

After six years of growth, Marigold merged with Ward Foods in 1968. Ten years later, Ward Foods sold Marigold to Wessanen. The year was 1978, and Marigold was an $86 million a year company. Over the next 22 years the company grew substantially through acquisition. In 1979 it purchased Clover Leaf Creamery, of Minnesota’s Twin Cities. In 1980 it acquired the eastern dairy division of Fairmont Foods, and entered a joint venture with Associated Milk Producers Inc., a partnership, which stands today. After a 13-year break, Browns Velvet Ice Cream was picked up, and then Wisconsin’s Cedarburg Dairy. Distributor Becker’s Dairy, and Gillette, Nebraska, and Oak Grove dairies followed during the industry-wide consolidation frenzy of the 90s.

As Marigold Foods grew larger under the charge of Wessanen, it also became more sophisticated. While much of the industry was looking for efficiencies of scale, few were willing to reinvest the way Marigold did in capital improvements, but more importantly in marketing and R&D.

“The company has always been committed to investing in marketing,” Kyllo says. “We’ve been using outdoor advertising consistently for more than 15 years. And we’ve got dynamite packaging that just jumps off the shelf.”

During the 22 years under Wessanen, Marigold became a leader in the frozen yogurt segment, it practically invented a new category of yogurt juice blends, (see story below), it invented squeezable sour cream, and introduced some of the liveliest packaging and most clever ice cream flavors in the business. Consider the premium dark chocolate peanut butter flavor, and its fabulous name – Deep Dark Secret. No surprise that Marigold was named Dairy Foods’ New Product Company of the Year in 1999.

Visit one of Marigold’s customers’ stores and take a look at both the

dairy case and the ice cream freezer and you’ll see distinctive packaging and point-of-sale marketing.

Outdoor advertising features an animated cow donning a variety of accessories to suit a particular product and flavor.

The “It’s the Cows” slogan has found its way into a number of marketing efforts. Outdoor advertising features an animated cow donning a variety of accessories to suit a particular product and flavor.

The company co-opted the beanbag toy craze of the 90s with Moo-Babies. Customers saved proof of purchase symbols and redeemed them for the little cows, each with its own look and name keyed to a specific flavor. A current promotion features bobble-head cows.

What Marigold does today with product development, packaging and marketing, makes it look like a company with a 10-year head-start on the competition, which in a way it is.

During the 80s and 90s, as Marigold and Crowley were thriving under Wessanen, the landscape of the North American retail and dairy industries changed dramatically. Large, diversified players with an interest in dairy suddenly pulled out or were broken up and sold off. Before long, an acquisition race began which ultimately resulted in the 2001 merger of Dean Foods and Suiza.

Changing partners

Shortly before that acquisition race reached its conclusion, three Texas dairy veterans, C.O. “Tex” Beshears, Tracy Noll, and Allen Meyer, along with the deal-making cooperative Dairy Farmers of America, formed National Dairy Holdings. The group’s first major acquisition was the dairy division of Wessanen USA. Since then NDH acquired 11 Dean Foods plants divested to satisfy the Securities and Exchange Commission.

Jim Green, Marigold’s CEO has been intimately involved in the evolution of the dairy industry. In fact his career has somewhat mirrored those changes. Green Dairy Inc. was founded in 1927 in York, Pa. Green served as president of his family’s business, following in the footsteps of his father and grandfather. He joined Crowley Foods in 1986 when Crowley purchased Green’s dairy, and has been at the helm of Marigold since 1992. Green says Marigold benefited from the resources and autonomy offered by Wessanen and continues to do so under NDH.

“National Dairy and Wessanen are both exceptional companies so we’ve had a very fortunate situation here,” he says. “Both companies have been committed to growth and have shown a willingness to invest in our business, and help us grow our brands and better serve our customers. Both companies have a belief in running their businesses on a decentralized basis. Each of the regions still have the ability to react to the marketplace but at the same time we benefit from the economies of scale.”

If anything, that may have escalated under National Dairy, where the top brass have years of experience in the U.S. dairy business.

“These three individuals have a tremendous knowledge of the dairy industry and that’s a terrific resource for the guys who run the regions. They understand what the customers are all about.”

With its acquisition by NDH, Marigold has truly come of age. Marigold was emphasizing product and marketing innovations while much of the industry was engaged in seeking efficiencies through acquisition. Marigold is now part of a company that employs a distribution network that is second only to Dean Foods. And the company is about to become even bigger as it merges with Hood, which has a strong brand presence in the Northeast, a growing portfolio of branded extended shelf life products sold nationally, and a stable of seven plants.

It’s sometimes easy to forget that National Dairy is partnered with Dairy Farmers of America. The Kansas City co-op has a 50% stake but is not actively involved in the management of NDH. But Green notes the importance of that partnership.

“DFA is the largest farm cooperative in America, with 25,000 farmer members,” he says. “From an operations perspective that is a plus for our business in that it clearly provides us with a partner for raw milk and access to dairy R&D that heretofore we had no access to. For a Midwest dairy, being involved in a partnership with a farmer cooperative is a real benefit, considering the shrinking regional milk supply.”

Kurr now leads a national sales team of more than 120, which includes a dedicated foodservice division. Kemps products are sold through traditional sales channels, warehouse stores and vending.

“We’ve had great success with convenience stores,” Kurr says. “And one of our most aggressive initiatives in the last couple years has been aimed at expanding our interests in the national restaurant chains.”

While Marigold has grown quickly in the past few years, Green is quick to point Out that much about it has not changed. He still sees the company as an innovator first. And he’s proud of the fact that Marigold maintained a consistent level of customer service’ and employee loyalty during the nearly year-long period when it was being offered for sale.

“Marigold has certainly grown in size and grown in sales and the number of product lines we carry and it’s grown relative to the value added side of the business,” he says. “But we remain true to a culture that says our people are important. And I believe we’ve retained a caring, family-oriented culture through all our growth.”

And while the Kemps brand has become familiar to more and more consumers outside of the Land of 10,000 Lakes, Marigold is still connected to the local community. Recently the company featured two ice cream flavors, Tilt-a-Swirl and Nut Goodie, which are tied to local institutions that, like Marigold, have become part of the Minnesota landscape. The Minnesota Kid has grown up, but it hasn’t forgotten its home.

RELATED ARTICLE: Ten Years of Yo-J

Introduced in 1992, Yo-J, a yogurt and juice drink sold under the kemps brand by Marigold Foods, anticipates sales as a result of recent and projected market expansions to more than quadruple from 2002 to 2012.

However, what’s most impressive about Yo-J is that while other regional and national marketers introduced and then discontinued their version of a yogurt-juice drink. Yo-J held its ground and has only shown positive sales growth in the 101 years since its debut in grocers juice cases.

“During Yo-J’s first year in the marketplace it was sold only in Minnesota,” says Brad Cuthbert, senior product mgr., specialty dairy div. Soon after, we rolled out in Wisconsin then Iowa. In early 2002 we expanded to full distribution (more than 80%) in Chicago, and this past September, Yo-J became available in Boston. New Hampshire. Philadelphia and the Carolinas.

Yo-J also has limited distribution in Kansas City, Kan., the Dakotas Nebraska, Illinois, Michigan and Indiana.

What’s amazing is how “on-target” Yo-J’s original formulators were when they developed the drink.

“In 10 years, Yo-J’s formula has not changed,” adds Cuthbert. “We still market the same great product.”

Flavor selection, though, has changed in the past decade.

“Two years ago, we discontinued three flavors (orange, banana split and a feature flavor line) to refocus on the current four (strawberry, strawberry-banana, wildberry and raspberry orange),” he says.

However, the time is right to once again focus on flavors, and the company plans to reintroduce a fifth flavor in 2003.

So, whey did Yo-J survive and so many others fail?

“Well, Yo-J is a catchy category-defining brand name and the product comes in great-tasting flavors,” Cuthbert says. “The great taste is the No. 1 reason. The other thing is the wonderful health benefit created by combining yogurt and juice. This rings true with consumers.

“What’s great about Yo-J is that it catches the intersection of two fast-growing market segments. Calcium fortified juices and kid s “yogurt,” Cuthbert says.

Indeed, great name and product formulation have key to Yo-J’s longevity, but as marketers know execution and product support are vital to trial, repeat purchase and sales growth.

“We know how to market branded products,” Cuthbert says. “When we enter a new marketplace, we don’t simply throw Yo-J out on the shelf. And in all established markets, we fully support the brand with a range of efforts.”

Marigold Foods is also quite conscious about properly positioning Yo-J, a swell as keeping the package contemporary and competitive.

“Yo-J has always been positioned as a unique a yogurt-juice blend, not a smoothie and not a drinkable yogurt,” Cuthbert says. “In fact, the company currently attracts grocers by asking. Want to increase juice category profits? Dust and yogurt.

“This is because U.S. consumers historically don’t like thick yogurt drinks,” he adds. “Yo-J drinks like a juice, and fits into established usage occasions–those of milk and juice. Thick yogurt drinks don’t.”

Yo-J’s formula may no have changed in 10 years, but packaging has. The original gable-top half-gallon carton began sporting a reclosable freshness spout in 2000, and in the same year, Yo-J joined the single-serve craze when it became available in six-packs of 8-oz reclosable plastic bottles.

Besides being sold at retail, the 8-oz single-serve bottle are available in school a la carte lunch lines, as well as school vending machines.

Yo-J has a refrigerated shelflife of 45 days.

Donna Berry Senior Editor

Marigold Foods’ Mission Statement.

1. We respect and value each other, our customers and our venders.

2. We sweat the small stuff, and take great pride in being really good at the basics of our business.

3. We treat every penny as if it is our own, and use our resources to the fullest, wasting nothing.

4. We are accountable for results, and act as if we are owners of the business.

Marigold’s Objective;

“To be the preferred provider of dairy products and frozen desserts to retail supermarket and food service customers. We will accomplish this through industry leading product innovation, exceptional product quality, and the highest standards of customer service.”

Innovators always.

Marigold foods is responsible for what is now a tradition at Dairy Foods magazine. Back in 1999, when the annual “Top New Dairy Foods” special feature was being put together, Marigold Foods had so many nominations for its numerous innovations that Dairy Foods’ editors thought it best to recognize their team with a special honor. We now issue the annual Best New Products Company of the Year award, with Marigold Food the initial recipient.

It is three years later, and Marigold Foods remains a leader with new product innovation.

In the yogurt department, the company offers YoStix, a spoon-free squeezable yogurt.

“Since its introduction in June 2001, YoStix sales have surpassed expectations and continued to grow,” says Brad Cuthbert, senior product mgr., specialty dairy div. “We plan to expand channels of distribution in existing markets. New channels of interest include vending, school a la carte and lunch/breakfast programs, as well as c-stores.”

Also in yogurt, there’s Spoonz N Yogurt, a product, that to date, nobody has copied. Targeted to kids, Spoonz N Yogurt is a 4-oz cup of yogurt that comes with eight edible cookie spoons.

Since Its introduction a year and a half ago Marigold Foods has modified the Spoonz N Yogurt package from a carton housing a cup of yogurt and a cellophane bas of cookie spoons to a domed lid cup that contains the spoons.

“The original package was designed to give the brand high visibility at retail,” says Cuthbert. We trimmed significant cost off the product by moving to the new pack style,” he adds. “And since changing to the new packaging and hitting the shelves at an everyday price of 79 cents rather than 99 cents, our sales have quadrupled.”

In the freezer, some of Marigold Foods’ recent successes include Scooter Rockets and Scooter Fudge, unique stick novelties with flavored cores.

“Sales for this item continue to grow, with volume up 40% over last year,” says Raquel Melo, senior product mgr., frozen desserts.

“Hot Chocolate is a rotating ice cream flavor, which for us means that it is in market for a total of two months, then replaced by another rotator,” adds Melo. “This allows us to maintain a high level of news and excitement in the frozen dessert category.”

Hot Chocolate was sold in December last year and is slated again for January. The flavor is described as chocolate flakes and mini marshmallows swirled in chocolate ice cream.

Marigold Foods also has aggressively updated its fluid milk packaging.

“We introduced UHT single-serve flavored milks at the beginning of the 2001-2002 school year with vending in mind,” says Carol Seehafer, senior product mgr., cultured and beverage products. “The package graphics look similar to the label designs on our fresh milk plastic pint line which look like our larger milk packages. Other fluid product packages. Like half & half and whipping cream have also been redesigned with this ‘family’ look.”

And just in time for the holiday season, the company updated eggnog packaging to be “more sophisticated than the old design, but still with an element of whimsy in red and green ribbons. The background is a rich marble and we included a photo of a glass mug of eggnog.” Seehafer concludes.

Marigold Foods…innovators always.

Donna Berry

Marigold Foods Plant Locations and Distribution

Duluth, Minn. (fluid products)

Farmington, Minn. (cultured)

Minneapolis (fluid products)

Rochester, Minn. (2) (fluid products, frozen dairy products)

Norwood-Young America, Minn. (fluid products);

Rapid City, S.D. (dairy & cultured products)

Cedarburg, Wis. (fluid products)

Cincinnati, (fluid products)

Salt Lake City, (fluid products)

Madisonville Ky., (fluid products)

States in red represent the area in which Marigold distributes a full line of dairy and frozen dessert products.

Noteworthy Marigold Foods Facts

Founded: 1914

Headquarters: Minneapolis

Management: Jim Green, pres. CEO

Robert Williams, v.p. of operations Greg Kurr, v.p. of sales Rachel Kyllo, v.p. of marketing Cindy Trousdale, v.p. of bus. services Christopher Thorpe, v.p. of Financial services. Chris Coleman, director of human resources Robert Slocumb, director of quality assurance

Plants: 11 (Including a joint venture with AMPI)

Products: Full line of fluid dairy products, frozen desserts novelties cultured products and beverages

Annual Sales: $750 million

Employees: 2000

COPYRIGHT 2002 Business News Publishing Co.

COPYRIGHT 2003 Gale Group