July 26, 2016 Spreading Goodness

Volume 4 | Issue 3

Vermont cream cheese maker Franklin Foods provides the first-ever yogurt and cream cheese with a patented process that promises to bring healthier life to an established dairy category. David Soyka reports on how this company plans to be the next Ben and Jerry’s of cream cheese.

Franklin Foods has stood the test of time. In business for over 100 years, from the same location where, in 1899, it was founded by partners Frank Hahn and Russ Rustelhulse, in Enosburg Falls, in the heart of Vermont dairy land. Over the years, it has produced various cheese products (a subsidiary, Via Cheese, continues to produce Italian-style cheeses).
Today, Franklin Foods is the fifth-largest cream cheese manufacturer in the United States and leading innovator in cultured dairy products technology. Franklin Foods produces a full-line of award winning cream cheese based products that are distributed to industrial, institutional, foodservice, supermarket, and club store accounts across the United States and select international markets. In addition to the company’s own brand portfolio – Hahn’s, All Season’s Kitchen, Vermont Gourmet and Lombardi’s – production capabilities have been expanded and now include co-pack and private label for national accounts. In addition, it is on a self-proclaimed mission to re-invent cream cheese. This time, the test for Franklin Foods is to “re-culture” a time-tested food category with a combination yogurt and cream cheese that has 60 percent less fat, 30 percent less sodium, 55 percent less cholesterol, and 33 percent fewer calories than regular cream cheese, plus the added health benefits of live yogurt cultures.

“It’s our patented process,” explains Rocco Cardinale, director of marketing, “and while conceptually the idea of combining yogurt & cream cheese together is seemingly straightforward, it’s a complex production and dairy science achievement. There are a lot of variables that need to be taken into account when combining 100 percent real cream cheese and real non-fat yogurt with the end result being a delicious and “better-for-you” spread for the consumer and as a functional bakery ingredient, and we are the only company that has perfected the technology.” He adds, “Cream cheese is approximately a $1 billion a year retail business that is dominated by Kraft. We believe our yogurt and cream cheese product has the potential to do for the cream cheese category what Ben and Jerry’s did for ice cream. Twenty-five years ago, ice cream was a commodity that came in three basic flavors of chocolate, strawberry and vanilla. Then along came this idea of doing something radically different to a food everyone loved, but never thought twice about in terms of brand or variety. That’s what we intend to do in the cream cheese segment: create a new category by establishing a global brand that offers both unique health benefits and intriguing flavorings.”

A YOGURT BONANZA

As a small, privately owned company (it was purchased by Bruegger’s Bagel Bakeries founders Nordahl Bruce and Michael Dressell in 1989) employing 100, Franklin Foods devised a four-

part strategy to introduce the product that leverages its existing brand and distribution strengths. The first phase rolled out the yogurt and cream cheese combination under the company owned Hahn’s brand, marketed it through its existing foodservice sales and broker network across diverse channels.

Termed the “Spreading the Goodness of Hahn’s Across America” strategy, the company has had particular success with a segment that has lately been under scrutiny because of a concern of rising youthful obesity: school meal programs.

“We’ve had phenomenal success in the New York City public schools, which is the largest schools system in the United States,” Cardinale points out. What’s of particular note is that the New York City schools system is widely known for its strict nutritional standards, which have butted against the dairy industry regarding the sale of flavored milk. That this very same system welcomes the yogurt and cream cheese blend in both plain and strawberry varieties represents a high endorsement of the product’s healthy nutritional claims. Hahn’s was also recently included in the Hillsborough, Fla. school menus; the country’s eighth largest school system, and is also currently in school lunchrooms in Maine, New Hampshire, Massachusetts, New Jersey, Connecticut, and Vermont. Beginning in the fall of 2009, two of the largest school systems in the U.S. will begin serving Hahn’s: Palm Beach County, Fla., the 12th largest in U.S, and Orange County, Fla., the 11th largest.

“We’re looking to partner with schools to help them re-engineer their menus with portion-controlled Hahn’s Yogurt & Cream Cheese,” Cardinale says. “The fact that our product has been so readily accepted by school children amply demonstrates that you can provide alternatives that are both healthier and great tasting. Simply switching from regular cream cheese to our yogurt blend can save students an estimated 17,100 calories a year. Most kids probably don’t value the calorie savings, they just enjoy the taste. And what brand wouldn’t want to be popular with children, first. But, also, in a society that’s very concerned about rising obesity rates among youth, and its long-term health implications, we provide a good alternative to help offset this alarming trend.”

Promoting healthier eating doesn’t stop in the school cafeteria. Franklin Foods has also launched a marketing campaign utilizing the Internet, called “I Want Hahn’s.” Satisfied consumers can fill out a simple form provided through a link on the Franklin Foods Web site indicating a desire to see Hahn’s Yogurt & Cream Cheese included on the menus of their local schools, hospitals, supermarkets or other pertinent institutions. Franklin Foods then forwards the request to the appropriate community decision makers.

Looking forward, Cardinale says the next step in the strategy is to work with an established brand in the dairy category to offer a private labeled yogurt and cream cheese blend. The next step would be to work with national grocery store chains to license the yogurt and cream cheese technology or co-pack it for them as a store brand. Finally, Cardinale says, “We want to engage consumers and build brand advocates for the Hahn’s Yogurt & Cream Cheese brand by introducing a fresh cream cheese experience to the cream cheese category, gain general dairy industry acceptance and finalize patent approvals for our technology.”

CATEGORY GROWTH

The retail yogurt category is an approximately $4 billion category. “We’re seeing growth in leaps and bounds,” Cardinale says. One key factor for acceptance is the interest from institutional food people in Hahn’s Yogurt & Cream Cheese, particularly as a bakery ingredient. That shows the learning curve is beginning to take effect. Here’s a product that is healthier, but, just as importantly, performs as any traditional ingredient in a recipe. That’s the best of both worlds.”

He notes that building this initial strong base is essential to placement on store shelves, which “can be a difficult proposition, very expensive and time consuming. In fact, cream cheese in general has been allotted less shelf space over the years to make room for things like yogurt, which has grown tremendously over the last 10 years, and replacement butter spreads. But if we can show there is a pent up consumer demand for a yogurt and cream cheese blend, I think we’re more likely to win back some of that lost shelf space.”

The recognition that Hahn’s Yogurt & Cream Cheese has received certainly helps towards that end. In 2005 and 2006, Hahn’s Yogurt & Cream Cheese was twice voted a “Consumer-Hit” by supermarket guru and NBC Today Show Food Editor Phil Lempert. Hahn’s Yogurt & Cream Cheese has won seven national and international awards at dairy and cheese competitions over the last three years. In 2007, Hahn’s received three notable awards: a first place by the American Cheese Society in the Cultured Milk category; a second place for Creative and Innovative Technologies at the World Dairy Expo, and a third place at the U.S. Cheese Championships in the Reduced Fat category.

Coinciding with the efforts of Franklin Foods to create demand for a healthier cream cheese is the overall consumer trend for lower fat, lower cholesterol foods. “Even three to four years ago, unlike today, there was limited consumer demand for foods that contribute to digestive wellness,” Cardinale says. “Our goal is to develop a product and brand that can transcend its niche position, and can be marketed both globally through traditional channels and with specialty retailers such as Whole Foods Markets.” He thinks Hahn’s Yogurt & Cream Cheese is competitively priced with the category leader, even for its regular cream cheese products. “We believe consumers are willing to spend a little more for higher quality.”

Some of those consumers may be in South Korea, which form a base for a worldwide presence. “Dairy products with functional benefits are widely accepted and available internationally and part of consumers’ daily lives. The opportunity was presented through a broker relationship with a presence both in the U.S and South Korea. Hahn’s will be available through U.K. retail giant Tesco in approximately 100 stores. The ability to test the Yogurt & Cream Cheese concept in a controlled environment will allow us to gauge product acceptance, flavor profiles, etc. Understanding the needs of consumers in global markets will provide key insights as we opportunistically build our international presence,” Cardinale says.

Franklin Foods maintains two production facilities totaling 200,000 square feet. “We acquired the assets of Lucille Farms in 2006, and we modernized their plant to serve primarily as our Via subsidiary cheese production facility. Via Cheese specializes in mozzarella and provolone. However, the Franklin Foods plant is only 15 miles away, and allows certain synergies between the two facilities,” Cardinale says. Both independent auditors Silliker Laboratories and AIB International recognize Franklin Foods for manufacturing and food safety excellence.

In 2007, Franklin Foods received its sixth gold audit rating from Silliker and its third superior rating from AIB. “Dairy is the second most regulated industry besides beef,” Cardinale notes. “It’s a complex business. There’s a lot of discussion today about ‘farm-to-table,’ and efficiently leveraging one’s supply chain to satisfy consumers demand for world-class dairy products. We’ve had a over a hundred years experience to perfect that process.”

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