Success Story | Sargento, the billionaire family business that makes the best selling cheeses in the United States – Forbes France

With sales of $1.8 billion, Sargento continues to innovate in its cheddar, mozzarella and filata cheeses, while maintaining company secrecy. And third generation CEO Louie Gentine has a plan to continue squeezing the competition.

Article by Chloe Sorvino for Forbes USA – translated by Flóraid Lucas

When it comes to introducing a new type of cheese to grocery stores, many brands spend millions to develop a product without investing much additional money in marketing. But, at Sargento, as third-generation family CEO Louie Gentine explains, millions are spent on advertising to ensure that a new variety of cheddar or mozzarella is well received.

“I’m not talking about big bets because I don’t think they are bets”says the 49-year-old Sargento president, who succeeded his father in 2013. “Our chances are well assessed. These are excellent investments, and we have had more successes than failures. »

Sargento, a cheese giant in the United States

This strategy has allowed Sargento, headquartered in Wisconsin, to maintain its position as giant cheesewith annual sales reaching $1.8 billion. At the beginning of 71^e year of existence, Sargento’s share of the $14 billion American cheese industry continues to grow. Sargento is today the best-selling natural cheese brand in the United States, a position the company has achieved (compared to processed cheese products like Velveeta) over the past decade under the leadership of Louie Gentine, who market share increased by 20%. to reach about 13% of the total market for cheeses sold.

Sargento remains 100% family owned, which benefited it as the cheese industry consolidated under price pressure from private label competitors and wild swings in the cost of milk. Including Louie Gentine, the company has a total of 60 shareholders, all descendants of Dolores (died 2012) and Leonard Gentine (died 1986). Forbes estimates their total stake at $1.1 billion.

Family ownership is more common in the cheese industry than in other sectors of the food industry, and the Gentinines compete with several other family-owned firms, including billionaire mozzarella maker James Leprino’s Leprino Foods-based in Denver, which has annual sales estimated at $3.5 billion. There is also the Canadian company Saputo, which has a turnover of $ 12.6 billion and is listed on the stock exchange, founded and managed by the billionaire Lino Saputo and his family.

At the top of the cheese pyramid is the Lactalis family business. The world’s largest cheese maker is based in France but has a significant dairy business in the US as the owner of Stonyfield Organic, Siggi yogurt and the Kraft cheese brand, which the company bought from Kraft-Heinz for $3.2 billion in 2021. Lactalis is wholly owned by the Director. Emmanuel Besnier and his two sisters, respectively Forbeswith a total fortune of $43.2 billion.

Compared to those behemoths, Sargento is a smaller, more flexible player, operating four cheese manufacturing and packaging plants in the Midwest and its own fleet of trucks, which deliver 25 percent of its products. The company was able to show opportunities. Decades ago, when the Kraft cheese brand was not well respected by its parent company at the time, Kraft-Heinz, Sargento took advantage of the opportunity to increase its market share.

“Twenty years ago, Kraft was the big name in the business, and that left many opportunities for a company like Sargento to launch and grow.”says Richard Guggisberg, owner of Guggisberg Cheese, a $100 million family business based in Ohio.

Sargento’s growth is more impressive because profits in the cheese division are slim. Saputo’s net income margin this year is 1.5%. Its five-year average is 3.4%. The company does not comment on specific figures, but it says that its profits have tripled since Louie Gentine came to head the company.

To stay competitive and drive sales, Louie Gentine explains that Sargento is one of the companies that spends the most on advertising and logistics support with grocers, compared to other cheese brands. “No one innovates as much as us, which allows us to increase our market share”says Louie Gentine, whose first job in the family business was washing cheese delivery trucks at the age of 13.

Family relationship

In Plymouth, Wisconsin, a small town of just under 9,000 people about an hour north of Milwaukee, Leonard Gentine was an entrepreneur who owned several businesses, including a funeral home. In the late 1940s, when he decided to run a restaurant, he opened the Plymouth Cheese Counter in the carriage house of the Gentin funeral home. In 1948, he established a successful mail order cheese business that shipped products across the country. Leonard Gentine was soon packing cheeses on a large scale when he and his partner Bill Lindstedt found a way to empty sealed cheese into plastic. This business allows Sargento cheese to last longer and gives the company a head start. Within a few years, Sargento began selling packaged cheese in slices, which became a grocery store staple. Prepackaged grated cheeses will follow soon after.

Sargento continued to grow under the leadership of Lou, the youngest son of Leonard, Louie Gentine’s father, who became CEO in 1981. Louie grew at the same time as Sargento. He watches his father, along with his uncles, Lee, Larry and Ed Sturzl, take the family business to new heights. After earning his MBA from the University of Notre Dame and then Loyola, Louie worked outside of Sargento for three years as a commercial banker in Chicago. When he joined Sargento in 2000, Louie Gentine started as an associate marketing director, working on the grated cheese line. It then progressed within the main departments: production, supply and sales. When his father retired as CEO in 2013 after 30 years, it was Louie’s chance to be the big boss.

In his first decade as CEO, Louie Gentine Sargento grew 4% a year. The company achieved its goals by being “very attentive to his processes and aspects such as quality control”while relying on natural formulas that avoid the use of numerous processing agents and additives, said Ed Zimmerman, founder of California consulting firm The Food Connector, who has worked in the cheese industry for three decades. “What they did well was making the daily experience of eating a special cheese. “”

“It’s a bit like champagne cheddar”follows Ed Zimmerman. “Their brand really stands for something. »

However, competition from Kraft under the Lactalis umbrella continues to grow. In March, Kraft Cheese launched its first new product since acquiring Lactalis three years ago. AN “Signature Documents” designed to melt better because the blades are wider.

Sargento continues to innovate, particularly in the field of edible cheeses. Louie Gentine expects the company to grow 5% annually over the next few years. Sargento is also establishing itself as a long-term customer in the cheese industry, having bought in 2022, for an undisclosed amount, one of the main string cheese brands in the United States, Baker Cheese.

Louie Gentine says he wants Sargento to always be a family affair, which extends to the family businesses it acquires, as well as its thousands of employees. In 2006, more than 100 Sargento factory workers shared a Powerball jackpot of $206 million, and despite the leftovers, several of those lottery winners still work for the company. That’s the kind of business Sargento is. Almost 110 employees have worked at Sargento for over 30 years, including one who will turn 60 this year.

“We have always had a long-term view of our operations”explains Louie Gentine, “which allows us to continue to invest and do what is right, not only for the company, but also for the 2,600 members of the Sargento family.”.

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