Joy in the journey
August 5, 2008
Who says you can’t go home again? Last year found Michelina’s - at age 17 no less - changing its name to Bellisio Foods Inc. in recognition of founder Jeno Paulucci’s ancestral home of Bellisio Solfare, Italy. And in keeping with Paulucci’s roots and maverick approach, you could say that Bellisio Foods now is branching out to write the next “entrée-preneurial” chapter in this company’s history.
It’s because what’s ahead is both important and dramatically different that Chairman and Chief Executive Officer Joel Conner let Refrigerated & Frozen Foods meet executives at the private company’s Lakeville, Minn., operation.
“There hasn’t been a transition here. Rather, it’s a continuum,” notes Conner, who’s been with Bellisio Foods since its 1990 start-up (as Luigino’s Inc.). “Jeno is still the face of this company and every aspect of who we are and what we do is directly attributable to his DNA.
“One of the hallmarks of Jeno Paulucci is innovation and [our] working to be at the forefront of market conditions and market trends. What we are doing today is simply leveraging the history, culture and forces of the people we have here and we intend to accelerate the speed at which we have otherwise traveled for a long time.”
What’s happening? Although Bellisio Foods’ management team hasn’t changed, officials decided that it was time to gently separate the company from its namesake brand - so closely associated with single-serve frozen entrées. Truth is, this half-billion-dollar-company now makes more than 400 different frozen entrees, snacks, side dishes, sauces and even desserts.
While it’s best known for Michelina’s, Michelina’s Lean Gourmet and Michelina’s Budget Gourmet, Bellisio Foods actually produces as many as six different retail and foodservice brands (see “At a glance”) and services customers (co-packing included) in nearly every channel of distribution.
Moreover, the company still has a strong appetite for growth.
“Compared to a decade ago, consumers’ expectations are vastly different and retailers’ requirements are dramatically different,” says Conner. “Competition is tougher and that means an entirely different set of speed-to-market initiatives. . . . In these difficult, complicated times, we realize that there are winners and losers and we’re not shy about our commitment to being a winner. It requires a different attitude and a new agenda.”
Establishing that agenda is a relatively lean management team. It includes several leaders working alongside Conner during the past decade (or longer) as well as several veteran alumni who have recently returned to head everything from operations (Bellisio Foods has four plants) to finance and Canadian sales. Conner also has brought in outside talent - such as Jeff Tuttle, vice president and general manager for Bellisio Foods’ Creative Growth Group and the Joy of Cooking brand.
Conner admits, too, that the company has “invested more capital during the last three years than at any other time in the company’s history.” He says Bellisio Foods has added more production in Lakeville, and now has equipped and filled out a third facility at the company’s Jackson, Ohio, production complex. Projects have included a $15 million production line for snacks and more investments for (undisclosed) products that are entirely new to the company.
Discovering "joy"Although many of these new products won’t debut until next year, Conner notes that Bellisio Foods already is branching out in the freezercase.
“From a corporate standpoint, we recognize that we are not going to be competitive in the larger food world by being a one-brand pony,” he says. “One of our biggest objectives in 2008 has been the development of a multi-serve meal solution and our goal has been to do that with a brand that has a visceral connection to the consumer.
“We have flourished by operating under the radar of other major food companies and we still don’t want to wrestle with these giants unnecessarily. Even so, we intend to give our retail customers an alternative to the restaurant industry. We’re talking about something that they might otherwise buy ‘to go’ or at a drive-through window. We believe this will be good for our category, good for the retailer, good for consumers and good for our industry.”
Debuting this fall is Bellisio Foods’ Joy of Cooking, a 22-item line of multi-serve premium frozen entrees, sides, prepared vegetables and breads (in bags and cartoned trays) - all ready to be further customized (if desired) at home. Initial distribution began in mid-July with merchandising scheduled for early September. Prior to a secondary rollout next year, the line will be available in about 4,500 stores in 13 metro markets stretching nationwide from Phoenix to Boston.
“This is a game-changing move. We’re asking retailers to carve out an entire door of freezercase real estate for these premium multi-serve products,” says Charles Pountney, senior executive vice president for sales and marketing. “It’s a bold move in that it can change the way retailers merchandise and how consumers shop our category. We think the freezercase can become a destination category, one where a shopper can get all her needs for one meal at one door. . . . Retailers are very excited. Some considered this type of ‘destination category’ for their own private label products but those initiatives never got off the ground. They say we’re music to their ears.”
For that matter, officials believe the Joy of Cooking name itself will be music to many consumers’ ears. Now in a 75th anniversary edition, this 5,000-recipe cookbook has been a kitchen staple since its 1931 debut from Irma Rombauer.
“This brand has a connection to the consumer, reminding her of a time gone by where families ate together and where that meal was special every day,” says Maris Ehlers, vice president of New Products & Ventures.
Ah, but how to connect such a familiar icon to today’s consumer lifestyle? Ehlers says Bellisio Foods started with women shoppers.“We knew we needed to have honest discussions with consumers,” she says. “We didn’t talk about a brand, price point or product. We simply talked about their needs and said, ‘Tell us about dinner. Tell us what you hate. Tell us what you love. Tell us what you need and tell us who you want to be there.’
“We realized that in today’s world, consumers can customize anything from music to even TV. And they have that power everywhere - except in our category,” Ehlers continues. “We wanted to give a shopper a foundation of products that she can use in a variety of ways and that support all types of eating occasions. The part of cooking that people love involves the aroma and the sense of care-giving, but not the chopping, peeling, prep and clean-up. We’ve taken those elements away and given consumers the joyful part. That’s very compelling.”
Moreover, such a major new launch has compelled Bellisio Foods to invest in the company’s first major promotional campaign. The company plans to support Joy of Cooking this fall through the Web as well as with print and outdoor media and in-store retail activities.
“Joy is a happy emotion. It’s a state of being,” Ehlers notes. “Rather than just show beautiful food, we’ve personified ‘Joy’ so she really comes to life in a way that personalizes and makes this brand more approachable. We want to bridge the gap from the nostalgic past to this [mealtime] problem-solving idea of today.”
Building the core ... and moreTalk about solving consumer problems. Bellisio Foods officials believe the Michelina’s line - including the regular product, Lean Gourmet and Budget Gourmet - hold even greater appeal for time-pressed consumers watching their budgets.
Says Pountney, “Michelina’s is still the core business within our organization. It’s a very important brand that opens the door for us.
“For retailers, Michelina’s is a great value brand that provides excellent quality. It’s a great traffic generator. It’s promoted and merchandised frequently. And now in today’s economy, Michelina’s provides a meal option that many brands may not match for consumers’ budgets.”
Most importantly, Bellisio Foods is determined to deliver even more to consumers opting for their product.
“While we’re immensely proud of Michelina’s success - frankly - during the past five or six years, we have not given that brand the investment or the TLC that it has needed. But we’re tearing it up now,” says Conner. “We have a renewal project that’s front and center on our agenda. . . . We have a core group of consumers that love this brand and we want them to love it even more. We’re revising every aspect of our packaging and product development down to a cleaner ingredient level. We want the food in that box to be even more fulfilling and a better value than ever.”
To Conner’s point, most of the company’s investment in Michelina’s involves behind-the-scenes reformulation and repackaging efforts. Pountney notes, however, that both national brands - Michelina’s and Michelina’s Lean Gourmet - introduced new products this year. These included such offerings as Ravioli Bellisio and Tortellini Alfredo in the “Authentico” line, and Enchilada Bake and Sweet & Sour Chicken in the better-for-you line.
Meanwhile, Ehlers promises still more news across several fronts.
“We’ve added a team of people responsible for Michelina’s brand communications and for enhancing that brand’s relationship to the consumer,” she says. “We will use an online strategy and other media to help create an expectation that this is not just a value-based product. Rather, it’s a really great product that happens to be a great value. . . . We also are working on innovations for Michelina’s that will be exciting.”
Speaking of exciting, officials are no less enthused about BUNdinos, another entirely new brand and product line entering limited distribution this year. The filled, three-quarter-ounce mini buns carry a suggested retail of $2.50 and are merchandised as a quick anytime meal or snack. The 12-item line includes eight savory varieties (including Chicken BBQ, Monterey Turkey and Supreme Pizza) and four fruit varieties.
After some additional tweaks this year, Pountney says BUNdinos are scheduled for a broader rollout in 2009.
Conner uses the example of BUNdinos - created by none other than Paulucci himself - as an opportunity to talk about Bellisio Foods’ business approach.
“We’re taking the basic core of what we’ve been - entrepreneurial and agile - and using it as a springboard now to accelerate growth through more people, more ideas and more creativity,” he says. “Yet, still this all relates to where we’ve been and who we are - who Jeno is and what he’s done.
“We’re moving fast though. The difference between working in our environment and a more structured, large food company is analogous to the difference of riding in a Lincoln Continental four-door sedan versus riding in a sports car with the top down. Here, you’re going fast and feeling the road in the steering wheel when you make a turn.”
Executive insightsMore conversation with Bellisio Foods’ Joel Conner, chairman and CEO, and Charles Pountney, senior executive vice president-Sales & Marketing.
R&FF: Why did Bellisio Foods select the Joy of Cooking for a new product line?
Conner:It is becoming progressively more difficult to build a food brand from scratch unless you have enormous consumer dollars to put behind it. That speaks to our decision to leverage the Joy of Cooking name. Our Joy of Cooking team has been at the forefront of our reinventing what that brand means to the consumer. It’s important to note, however, that Joy of Cooking has core integrity that you just can’t make up. It’s at the heart and soul of the American kitchen. Maris uncovered stories about what this book means to families. One woman told us that her father taught her English by using the “Joy of Cooking” [cookbook]. We also heard about a divorce, where one of the arguments was about who would get the “Joy of Cooking.”
It’s an important part of the family because it has all those notations. Things like, “Use this recipe” for a certain anniversary, a birth or a wedding. It also has notes about adaptations. At the end of the day, it’s simply one of those prized family possessions.
Now, we want to bring the same agility, passion and entrepreneurship associated with Michelina’s and our company and apply it to what is clearly one of the most well-known and beloved cookbooks in American history.
R&FF: Let’s talk about name recognition for a moment. Charles, how are retailers responding to Michelina’s recent name change?
Pountney:From a sales perspective, we’ve found that retailers are more concerned about the person actually calling on them. Honestly, [the name change] hasn’t been a big change for us or for them.
Meanwhile, the Bellisio Foods name gives us more of an umbrella to launch more premium and distinct products, such as Joy of Cooking and BUNdino’s. It opens up the door for lots of different brands and even other possible acquisitions. . . . I’m proud that a small company like Bellisio Food is able to compete in a category of the size and magnitude of frozen meals and entrees. I’m also proud of the relationships that our sales people have with our retailers. They support our brands and we support them. There’s a great bond.
R&FF: Joel, you talked about families and kitchen traditions. What are your thoughts about how today’s consumers eat and prepare food?
Conner: If you look at a multi-generational perspective of food, you can see that it’s changed dramatically. I’m 57 and grew up in an environment where my grandmother was a phenomenal cook. Every holiday meant all of our families getting together and everything was cooked from scratch with homemade ingredients. There were tomatoes and carrots from the garden, corn and peaches, breads and pies and even meats that someone in the family had butchered. We never had store-bought jams or even boxed cake mixes.
When you look at my generation now, you see people like me who are aspirational cooks. We own shelves and shelves of stuff from Williams Sonoma. We watch the Food Network and some have even gone to cooking school. Yet, we still don’t put that oven to good use. We’re really about assembly.
I don’t even know what the next generation is going to do because their idea of meal preparation seems to be assembling Chinese from this restaurant or barbecue from that restaurant. They’re even one step further away from origination. I’m a guy that still remembers that milk comes from cows - and [at one time] there was a chunk of cream at the top of the milk bottle. RFF
R&FF: Maris, how would you say that Joy of Cooking meets consumers’ meal prep demands?
Ehlers: In today’s world, consumers can customize anything. They’re saying, “I want it the way I want to have it and in a way that’s unique to me.” They can customize the way they watch TV – ignoring commercials and just watching what they want, when they want. Music is the same way. [Consumers] have [customization] everywhere, except in our [retail packaged food] industry. We are well behind the curve.
Our Joy of Cooking line provides a consumer with a foundation of products that are fantastic and that she can use a variety of ways. These products support all types of eating occasions and - with a simple twist - she can make [the product] her own. It gives her a sense of accomplishment and the ability to nurture her family in an easy way.
The part of cooking that consumers tell us they really love involves the aroma and the feeling of care-giving through feeding those they love. It’s not the buying, chopping and peeling, the prepping or the clean-up. We’ve taken all of those very time-consuming pieces away and given her the joyful part. That’s very compelling.
R&FF: How do you approach consumer insights research?
Ehlers: It’s been my mission during the past couple of years to bring the consumer to the table with us as we make decisions and talk about ideas. That [approach] has been very evolutionary for us.
As I look at other organizations, I’m shocked to think about how many teams of people are creating, developing, selling and marketing products for women - and they have no idea about what their lives are like. I believe the female head-of-household shopper is the most critical - and sometimes the most under-valued - consumer the grocery store has. A lot of what we do involves our focusing on her. It’s thinking about how we can better understand her and get closer to her. Then we want to create [product] opportunities from those insights. That’s what Joy of Cooking was created to do: create opportunity out of an unmet need.
R&FF: Joel, you talked about how it is difficult to start a brand from scratch. How would you describe Bellisio Foods’ approach to acquisitions?
Conner: Today we have a very well defined, well-articulated corporate strategic plan through 2011 and I’d say that what we anticipate for self-generated, organic growth is clearly adequate to meet our goal. Acquisitions are peripheral and we’re not out there looking for deals that don’t provide a strategic advantage.
We have a strong appetite for acquisitions, but only where they create opportunities that we could not realize on our own. It could be a delicious brand that really has some panache. It could represent a new channel of distribution that we would otherwise struggle to get into. It could be a new technology that we otherwise could not buy or build. Or it could be a new geography - something in China, Mexico or Europe where that strategy would be more feasible than a challenging green-field site.
[Founder] Jeno [Paulucci] and our shareholders would embrace any one of these scenarios and we have the finances to act upon it.
AT A GLANCEBellisio Foods Inc.
Headquarters: Duluth, Minn.
Top executive: Joel Conner, chairman, CEO
Annual sales: Not available. Estimated at more than $500 million
Products: More than 400 different single and multi-serve entrees, snacks, side dishes and specialty sauces. Products made for branded, private label and co-pack retail sales, foodservice customers.
Brands: Michelina’s, Michelina’s Lean Gourmet, Michelina’s Budget Gourmet, Joy of Cooking, BUNdinos, Fusion Culinary, Arden Kitchens, Charrito’s, Howlin’ Coyote
Channels: All retail formats (including grocery, club, dollar and convenience stores), foodservice
Distribution: 12 countries including United States, Canada, Russia, Australia and China