When the Gardetto family sold its Gardetto’s Snak-Ens snack mix line to General Mills in August of 1999, Nan Gardetto was nowhere near done with the bread product business. The company had a brand-new facility in the Franklin business park, and already had plans to launch an additional product line.
"I absolutely love what I do," Gardetto said in a recent interview with Small Business Times. "I love the food industry. I love creating new food products. When we sold the business, retirement at 41 was not an option. I’d spent 25 years helping to build the family business, which was in its third generation. Through the generations, the business had been through an evolution. My grandfather sold retail baked goods. My father turned the business into a wholesale baked goods company. I turned the company into a manufacturer of snack products."
And now, with her father retired, one brother at General Mills and the other brother with Round House Marketing in Madison, Gardetto is aggressively launching a new product line under an old name.
Gardetto named the new company – and its line of bread sticks, toasts and dipping sauces, after her grandfather.
"My grandfather and father were my first mentors," Gardetto said, "And whatever entrepreneurial spirit I have came from them. This is a significant continuation of my family business, only this time my family is my family of employees. My grandfather sold Italian bread door-to-door and made bread sticks in the early ’30s. I always loved his name – Baptiste – and I don’t think he’d mind that I feminized it for this product line."
Despite her emotional attachment to the name, Gardetto performed research to test the Baptista appeal among consumers, and also conducted research through consumer focus groups and culinary schools on a national level to provide input for taste and appearance of the company’s products.
According to Gardetto and vice president of sales and marketing Mickey Davis, Baptista’s Bakery is aiming for a leading position in the upscale specialty bread product category. The product line, which is now available in Wisconsin and which will be rolled out nationwide in the months ahead, consists of four flavors of bread sticks, two flavors of bread toasts, two flavors of dipping sauce, and an Italian seasoning blend.
While the product line name and focus on old-world flavor remain consistent with the Gardetto’s product line, some things have changed.
"What’s different? I’m older and, hopefully wiser," Gardetto said. "And I think that how we achieve our success is as important as achieving it. If I don’t like walking in the door in the morning, if we’re not having fun at what we’re doing, it’s just not worth it. There’s nothing wrong with corporate America, but I feel it’s time to bring our hearts to work. We are building a team of people who are committed to the highest standards of ethics and integrity, who have a compassion and respect for everyone they impact, and who are dedicated to making Baptista’s a success and having fun while doing it. Our team at Baptista’s really cares."
Another difference since she is sole owner of the company is the absence of her father, John Baptiste, Gardetto said.
"It used to be that I’d start each day with a kiss from my father," she said. "… and a kiss when he left at the end of the day. Dad is enjoying retirement in Florida, but he’s still there if I have questions."
In it for the long term
And while competitive pressures in the channels of distribution led to the sale of the Gardetto’s name and the Snak-Ens product line to General Mills, even in an era where many start-ups are built to flip, the new company is not designed to be sold.
"I have no aspirations to sell," Gardetto said. "Right now, I am concentrating on building a new business and being part of its growth. We do everything with a long-term focus. This building, for instance, is designed to last 100 years. But I feel very blessed that a firm like General Mills was interested in purchasing our product. They share a certain culture with our firm – we both value people. Our family business has always been very paternalistic. We demand performance, but you take care of people who take care of you."
Corporate culture aside, everything about the Baptista’s line is focused on rapid gain of market share. That’s in keeping with the introduction of the Snak-Ens product line in 1981. That product, a snack mix consisting of breadstick ends baked in a special sauce, originated from a recipe Gardetto’s mother made from scrap breadsticks. The product created a new category – the snack mix – and offered retailers and vending machine distributors a new product that generated excitement.
A category buster
The Baptista’s Bakery product line is designed as a category buster as well, by taking the specialty bread products category upscale in quality, packaging and position. The line is intended to appeal to consumers and grocery marketers alike. Development of the bread and dipping sauce line was designed to align with consumers’ expectations while at the same time expanding beyond them with new flavors and textures. The focus is also on offering convenient entertaining solutions.
"For each of our breadstick flavors, we started with a taste that consumers were familiar with, and then added flavor to create a more complex, sophisticated taste." Gardetto said. "Consumers were already familiar with garlic-favored bread sticks, so we created Buttery Garlic breadsticks. We wanted to give our products multi-sense appeal. We took traditional bread products like breadsticks and gave them different colors and different flavors. We twisted them. And we combined them with a line of dipping sauces."
The dipping sauces are extremely thick with chunks of tomato and, like the bread products, offer tastes suited to more complex palates. The Italian Garden is heavy with corn and alive with jalapeño pepper, and the Mediterranean sauce carries the robust, authentic flavor of black olives.
The list of Baptista’s Bakery bread product line currently includes the seasoning mix, bread sticks in traditional, onion poppy, toasted sesame, and buttery garlic; bread toasts in tomato bruschetta and olive oil-garlic; and dipping sauces in Italian Garden and Mediterranean flavors.
The product line is displayed in the deli section of grocery stores in a 3×3-foot point-of-purchase display accessible from all four sides.
Entertainment-oriented
"We’re selling entertainment solutions," Gardetto said. "We’re finding that people are adventurous when it comes to new tastes, but they are pressed for time. By picking up these products in the deli section, they can spend more time with their guests."
According to Davis, the product is designed to solve multiple problems of both consumers and retailers.
"It’s a strategic retail as well as consumer proposition," Davis said. "We are offering an entirely different use for breadstick products. With this high-end approach, we are taking breadsticks out of the lunch box and putting them into an entertainment situation. This is a full line of products that are line-priced. For the retailer, this solves the problem of a number of stock-keeping units (SKUs), and streamlines the marketing process. It is more profitable for the retailer to offer a premium product with a higher price point, and to offer the product line together. With this line of products, we can help them turn around a category that is currently in decline."
The products are designed to work together from a practical standpoint as well.
"The quantity of dip in each of the jars is designed to go with the number of breadsticks or toasts in each of our packages," Gardetto said, implying that it’s designed to avoid the problem characterized by the fact that there are eight hot dogs in a package but six buns in a bag.
Food for the soul, too
Product packaging is also designed to reinforce the high-end image and encourage product crossover. Each package of bread products includes a 3×5-inch card with a recipe on one side and an inspirational message on the other. The packaging, created by Design North, of Racine, is heavy in earth tones and European flair.
The dipping sauces are packaged in actual Mason jars, which Gardetto said are intended to increase the old-world appeal. The sauces are manufactured for Baptista’s by an outside supplier, and make use of hot-pack packaging options that increase shelf life with minimal or no preservatives.
"Our products are designed to have a six-month shelf life," Gardetto said. "We want minimal preservatives, freshness and the longest shelf life possible."
"The cards inside each package offer a recipe for the body and a quote for the soul," Gardetto said. "There is a letter signed by me on the back of each package."
"It is a very homey product," Davis said. "We offer usage hints – the recipes include Baptista’s products – in the packaging, and the flavor borders on the gourmet. People are drawn to the packaging, and when they taste us, quality ends the argument."
Priscilla Donegan, editor of Grocery Headquarters, a national food industry trade publication, is unfamiliar with the specifics of the product, but feels that the line’s premium position and price point may or may not help it penetrate the retail market.
"The price point doesn’t matter that much to a retailer," she said. "What matters is the margin. A high price point doesn’t automatically mean a high margin."
"Margin requirements can vary depending on the marketing support program being offered to the retailer," Davis said. "That is where Baptista’s does an excellent job. We bring a fully-integrated retail program to the retailer, explicitly detailing how we plan to support the product in their outlets. Even if margins remain similar on competing products, our absolute dollar return far outdistances competition. In other words, competition would have to move a lot more product to return the margin dollar Baptista’s does."
Strategic roll-out
Consumers in Wisconsin have been the first to purchase Baptista’s Bakery products. The products were rolled out in the state in 2000. In February, the displays will appear in grocery stores in the rest of the Midwest – an area extending from the Upper Great Lakes states south to Texas – and in the rest of the country in May.
"We’ll be adding some people to our staff to facilitate the launch," Gardetto said. "We currently have 52 people on staff, and are highly automated. We’ll be needing a few more production employees, and will be creating some sales positions. We just hired our first salespeople, and will be hiring sales staff soon for the East and West coasts."
The product roll-out will be supported by store demos, display penetration, coupons, print advertising and company participation in food trade shows for distributors.
Creating a new channel of distribution will be an important task for the company, but one that does not daunt Gardetto.
Familiar territory?
"When you’ve been in the business long enough, you get to know people," she said. "We’ve analyzed the distribution and reach we need for this type of product. A lot of the people we’ll be dealing with know us from our Gardetto days, and that will help us."
But in some cases, such connections will have to be made with a whole new group of people, a local grocery chain sales manager observed.
"The people Baptista’s will be dealing with in the deli section will not be the same individuals who had contact with them during their snack-food days," said Ron Schwenn, Jewel-Osco Dry Goods sales manager. "The experiences I have had dealing with them has been overall very good. But they will have to gain that trust with an entirely new group of people. There are a number of association and trade shows they will have to attend to support the roll-out, but we usually expect a product to be presented to us directly before we see it in a trade show."
Donegan, of the Grocery Headquarters publication, said the events Baptista’s Bakery will have to score points at this year depend on whom they are trying to communicate with.
"If they’re looking for a specialty food distributors, the Fancy Food Shows, run by the National Association for the Specialty Food Trade," Donegan said. "If you want the individual grocery store and chain managers, you’ll need to be at the Food Marketing Institute show in May. This is geared at the retailers. Baptista’s plans to sell through the deli section of supermarkets, but they are planning to use specialty food product distributors. Some of these distributors do offer some items to general grocery stores rather than specialty stores, but they (Baptista’s) will have to make sure each of their distributors have relationships with the people they need to work with."
"Specialty food distributors carry a wide range of products that cover both the commercial aisle and deli/bakery areas," notes Davis, Baptista’s sales and marketing vice president. "Some of our distributors carry bread products, but as long as the distributors meet a detailed criteria composed by Baptista’s, deli relationship as an example, we are satisfied with their potential. We have worked through a number of sources to uncover the best distributors for our business: distributor professional associations, networking, retailers, broker system, etc."
It’s a change from the old days. "For Gardetto’s, we sold direct to retailers through a network of food brokers," Gardetto said. "For the Baptista’s line, we will use distributors to get the product into the stores and keep the display full, and to make sure the marketing programs are acted upon."
Unlike selling direct, using a distributor force requires a manufacturer to compete for the distributor’s discretional selling time. Baptista’s will offer distributors a line of selling materials including fact and data sheets, ad slicks and promotional product folders that explain their strategy. Baptista’s Bakery personnel will also accompany distributors to sales calls on grocery chain buyers.
"We’ll be able to garner more of their time by giving them unique things to sell," Gardetto said. "Anything we can do to make their job easier will also improve our relationship with them."
Schwenn said the Baptista’s Bakery line faces little competition in the category when it comes to getting into stores, but continued in-store demos will be important.
"We have all of the Baptista’s product in all the Jewel stores," Schwenn said. "We rolled it out in the summertime. Actually, in the beginning it was a little bit slower, but we did some demos and it’s doing very well for us now. In-store demos are key for this product. You need to get the product into the consumer’s mouth. Most people don’t have breadsticks on their shopping list when they come to the store. But once they have an experience with it, they are more likely to buy. Once they try it, they are more likely to consider purchasing this product instead of pretzels or chips for an entertainment situation."
Consumers are buying
"We use the display and have the products on the bread ledge, which is a shelf in front of the bakery case. In the summertime, we display a lot more buns for barbecuing, but during this time of year the Baptista’s products are also displayed there. On the bread ledge, the Baptista’s products are replacing things like Hawaiian bread and higher-end buns," Schwenn said. "Each store is using the display differently. In some cases it will be used as a stand-alone display (accessible from all four sides), sometimes as an end-cap (positioned at the end of an aisle and accessible from three sides). It is a nice-looking fixture."
Apart from price and packaging, significant differences in the appearance, taste and consistency of the product line will make it a strong competitor against other bread products in the deli aisle, Schwenn said. "The quality makes it a high-end product. It’s really in a class by itself. There’s not a competitor as a high-end bread product that is similar. The packaging of the bread items with the sauces is a significant development that will help the line compete favorably with other entries in the category, including bagel chips."
Competitors in the specialty bread products category include Melba Toast products, Musso’s breadstick and bread toast products, Rubschlager’s Cocktail Rye and numerous regional players.
An aggressive future
Gardetto said the company is well-prepared to expand beyond its initial product offering in the future – in terms of facilities, staff and strategy. Of primary importance to Gardetto is the quality and depth of her management team.
"I believe in hiring for where I want to go rather than for where I am today," Gardetto said. "My whole management team came here with large-company experience. Most of them were looking for a culture change. Mickey (Davis) came to us from Miller Brewing. CFO Jon Becker was with Johnson Worldwide. Our vice president of operations, Jerry Kozik was with Sta-Rite, a division of Wisconsin Electric Corp. Vice President of Human Resources Tom Mayer had been with Unit Drop Forge, a division of Newell Corp. We have engineering talent from Tombstone Pizza and research and development staff from Nabisco. So we are a start-up company with a lot of experience in management and the food and beverage industry."
The facility is also capable of accommodating growth.
"I’ve toured the plant, and they do have state-of-the-art manufacturing and distribution facilities," Schwenn said. "That will help them remain competitive and produce consistent product."
"We have 135,000 square feet of space and 26 acres of land," Gardetto said of the firm’s facility, which was completed in 1998. "We can add three or more oven lines before we need to expand – a degree of flexibility I’ve never had before."
New products
The addition of product lines is something Gardetto and Davis are already contemplating.
"As you grow any business, to have good growth you will need to stay abreast of changes in the market," Davis said. "Consumer needs will change, and you’ll have to adjust to those. There will be changes in the retail environment, like membership retailing and grocery stores that are increasingly isolating products by ethnicity."
Both Davis and Gardetto implied that apart from adding products that would be sold through departments apart from the deli section, ethnic and regional variations could be key in determining strategy for additional products.
"When we did focus group taste-testing across the country, we didn’t notice a difference with this (the current) product line. But we do feel there are geographic patterns in taste preferences that must be taken advantage of. Regional favorites in flavors will be a way for us to expand," Gardetto said. "Mass customization is a trend we all need to pay attention to."
So, if Baptista’s opts to add specialty flavors to appeal to consumers in different parts of the country, would there be potential to cross-market these items nationally?
"If we decide, for instance, to offer a jalapeño chili flavor for the Southwest, we’d have to conduct some research and perhaps undergo a partial roll-out to determine if it should be offered elsewhere," Davis said. "This would be new territory as I do not believe there is any company, at this point, executing the concept nationally very well. You do have some smaller players, regional players that develop products to the local tastes, but nothing on the mass customization side of the business. That is why we think there is opportunity to grow our business through this strategy."
According to Donegan, regional mass specialization can be a sticky wicket that Baptista’s Bakery management may want to handle with care.
"The success of regional mass specialization depends on the product," Donegan said. "Some do well with regional approaches. It depends on the city, too. You might consider Atlanta the South, but they have a very different demographic make-up than South Carolina. Individual chains can have different consumer bases, as well, which can be as or more important than regional differences. And I don’t know how they’ve looked at the different classes of trade," she said, "but there is a lot of competition between the classes of trade. If they’re going for the super centers, they can have different packaging requirements and slotting allowance requirements. There are any number of different things that can wind up restricting which stores a new product can enter. With the consolidation in the industry, they will be dealing with a lot of very large retailers."
"She is correct," Davis said of Donegan’s characterization of the market. "Right now, however, Baptista’s is pursuing a vertical retail strategy. By that I mean we are staying focused in grocery, specialty and gourmet stores and, within those outlets, the location focus is deli. As other channels are considered in the future, mass customization becomes a key. Product, flavor, shape, packaging, promotion, trade execution, trade promotion, slotting, free goods, marketing support, on and on, must be considered on an account-by-account basis. And then the mass customization strategy must reflect the consumer need/want in that particular geographic area. Obviously, Baptista’s positioning dictates a certain type of channel and may not be appropriate for all other channels as we move forward."
