Sargento Thrives on Innovation

SARGENTO FOODS doesn’t literally make much cheese, like in vats — but it does practically everything else with cheese. The $1.8-billion brand has sealed, sliced, shredded and paired cheese in nearly every imaginable way on its journey to become America’s leading cheese-snacking brand, with ambitions to broaden Sargento’s hold on the American dairy case.

And much of the success of the family-owned company based in Plymouth, Wisconsin, has relied on its partnership with retailers that have accommodated Sargento’s innovations in the dairy case. Whether it was the company’s invention of pre-packaged shredded cheese in 1958, its introduction of peg-bar displays in dairy aisles for greater product visibility in the late 1960s, or its debut of Balanced Breaks snack packs in 2015, Sargento has continually come up with ways to expand its own franchise while giving retailers new ways to lure shoppers to the dairy section.

“If we’re not innovating and bringing new things and new items to the consumer, it gives retailers an opportunity to ask, ‘Why do I need Sargento in my dairy case?’” CEO Louie Gentine recently told Food Dive. “And I don’t want that question to ever come up.”

Indeed, Sargento has pursued innovation in real cheese products more effectively over the last quarter-century than traditional giants such as Kraft, bringing a CPG-style flair to what traditionally had been a commoditized part of the supermarket.

After virtually creating the sliced-or-shredded bagged-cheese category, Sargento has continued with wrinkles such as Ultra Thin Slices of sandwich cheese, pivoted to its launch of Balanced Breaks, and most recently introduced a Creamery line with extra cream for better melting properties.

“We can still do lots of new things with natural cheese, changing the texture and flavors, altering melts, increasing its shelf life,” Kristi Jankowski, Sargento’s executive vice president of innovation, told CPGmatters. “Think about the stringiness of string cheese, for instance: Can you make it last longer and alter how it works? But it’s difficult to get incrementality in the dairy case. Can we steal space from yogurt and butter? You’re always going to have to steal from someone, and we don’t want to steal from ourselves.”

At the same time, Sargento has completely shunned any notion of veering into plant-based alternatives to cheese, a nascent category that has been trying fruitlessly to achieve significant gains against real cheese for a half-century.

Essentially, Sargento’s success formula relies on processing cheese — but only in the sense of improving, shaping and displaying raw cheese products that are made basically as they have been for centuries. Sargento makes little of its own cheese, relying instead on tightly monitored suppliers. Its magic touch comes in the manipulation of new formulas for its products, packaging, merchandising and marketing advances.

Balanced Breaks became one of the most successful snack brands in America in any category shortly after it was introduced in 2015, based on the simple concept of packaging together cheese and mixtures of nuts and fruits in dual compartments in a circular container, in portions meant as a light meal or mid-day repast. Balanced Breaks now come in a couple dozen SKUs.

Lately, Sargento has tweaked Balanced Breaks in a number of ways, adding chocolate chunks, banana chips and Greek-yogurt chips, among other elements. Most recently, in a partnership with snack giant Mondelez International, Sargento has introduced Balanced Breaks Cheese & Crackers versions featuring Ritz, Triscuit and Wheat Thin crackers.

Sargento could have introduced cheese-and-crackers versions of Balanced Breaks much earlier, of course, but, Jankowski said, “It wasn’t unique enough. Would we really provide a step forward?” But partnering with Mondelez and then testing combinations with consumers, she said, Sargento found that being able to stack small crackers and cheese portions “created an eating experience that took people by surprise that we couldn’t detect with early consumer testing. It’s not just a good-tasting snack, but an experience.”

Sargento has failed with some Balanced Breaks innovations. For example, a few years ago it introduced a Sunrise sub-brand aimed at breakfast consumption. It included granola. “But you couldn’t stack it like other things, and the eating experience wasn’t what we thought it would be,” Jankowski said. “So, we tried to do larger crumbles of granola.” In the end, Sargento found that “there wasn’t an occasion need” in part because many customers “were eating core Balanced Breaks for breakfast anyway.”

Ultra Thin Slices also have been a success, as has the recent introduction of Creamery products. Creamery “has been a huge differentiator for the sliced area, because of how a melted Creamery slice enhances a sandwich,” Jankowski said.

Creamery shredded cheese didn’t fare as well with consumers, she said, “because consumers don’t use shreds the same as slices” and “with shreds there is so much more commoditization that consumers aren’t interested in differentiation.” So, Sargento discontinued Creamery shreds.

Jankowski believes Sargento still can move into significant white spaces in the U.S. market despite its determination to stick with varieties of real cheese. “We can delight consumers with different day parts and eating experiences,” she said. “We’re not giving up on breakfast or where we could take that. We are also looking at different parts of the store where Balanced Breaks could live.

“Right now, our products are in the dairy case, but that doesn’t restrict our brands. We could put Balanced Breaks in the shelf-stable aisle, for instance, if we had a dried-cheese component. Or we could put them in the deli or the produce section. A lot of research finds that Sargento could live all over the store.” Mondelez has helped by promoting its Balanced Breaks partnered products on the back of its cracker boxes.

Other partnerships such as Sargento’s deal with Mondelez could help extend Balanced Breaks elsewhere in the supermarket. “But we are very particular about partners, and very protective of our brand,” Jankowski said. “Our vision is to be the most innovative real-food company, and we’re finding consumers already believe that for real cheese.”