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Thursday, December 14, 2017
 Commericial Creamery Mixes It Up To Freshen Business  

Commercial Creamery Co. hopes to take advantage of a stagnant economy that it believes will cause people to stay home and snack rather than dine out.

The 100-year-old Spokane-based producer of largely cheese-based dried sauces and seasonings has in recent years weathered a tough market climate, including food fads that put the squeeze on many of its clients and U.S. military actions that effectively dried up its Middle Eastern markets. The company sells its products to food manufacturers for use in such packaged items as macaroni and cheese mixes and in snack foods such as cheese puffs and potato chips.

Now, says company President Michael Gilmartin, Commercial Creamery’s line of powdered products stands to benefit from the slumping U.S. economy.

“Historically, our business does well when the economy gets bad,” Gilmartin says. He says business usually picks up in the snack arena when people eat out at restaurants less often.

“They might save $90 a month by not eating out, instead splurging on the occasional $3 bag of nacho chips or cheese puffs,” he says.

The slowing economy already has produced a surge at Commercial Creamery’s Jerome, Idaho, production facility, Gilmartin says. About 70 of the company’s 81 employees work at that 150,000-square-foot plant, where the company melts and dehydrates huge blocks of cheddar cheese and other pasteurized ingredients in 400-degree dryers to make the powdered flavorings. In addition to cheese, it combines a variety of sauces and seasonings it formulates into liquid form before drying them in the same fashion.

The factory is busy, but so far the uptick has meant only a gradual increase in revenues, Gilmartin says, adding that he expects to see a 10 percent increase in sales this year. Some of that increase is due to the rising price of dairy products that, in turn, boost the prices Commercial Creamery charges its customers, he says.

With the unemployment rate in that part of Idaho currently at about 3.3 percent, hiring enough people to staff the plant is one of the company’s challenges. Currently, it’s looking to hire four or five additional employees in Jerome, and perhaps a few more next year.

The company has held its ground over the last 10 years through ups and downs in the food markets, he says. It expanded its Idaho plant in 2002, but doesn’t expect to add any additional space there.

Commercial Creamery, which has been owned by Gilmartin’s family since the 1940s, at one time had four plants: in Spokane; Jerome; Afton, Wyo.; and Louisville, Ky. In 1985, a fire destroyed about 10,000 square feet of the Spokane plant, including the entire production area. The company then focused on research and development and administration at its Spokane location, Gilmartin says. In the early 1990s, when the food processing industry was in a recession, the company closed its Wyoming plant and sold most of its interest in the Kentucky plant. The Gilmartin family remains a minority shareholder in a New Jersey flavor company that operates that plant, he says.

Commercial Creamery has considered opening another plant in the Spokane area, but that would mean it likely would have to move its headquarters from its long-time building at 159 S. Cedar, Gilmartin says. It wouldn’t be feasible to try to reconfigure that building for production now, he says.

One sector where Commercial Creamery is seeking to grow is in the foreign markets it has been cultivating since Gilmartin and his brothers, Peter and Earl, assumed responsibility for running the company from their father, Bud, when he retired in 1994.

Demand for the company’s snack seasonings in the Middle East was on the rise when the U.S. military invaded Iraq five years ago, costing the company about 2 percent of its export sales to Middle Eastern countries such as Syria, Yemen, and Jordan. Gilmartin says its customers in those countries were concerned that shoppers there wouldn’t buy their products if it became known that they used U.S.-made ingredients. That caused many of them to switch to European suppliers.

Recapturing that business has been difficult, in part because U.S. policies have made it more difficult to ship products to countries such as Syria, Gilmartin says.

One good thing is that the company is fairly diverse in its client base, he says.

“We don’t have a ‘Kraft’ (label) that represents 30 percent of our business,” he says. Some large food producers, such as Land O’Lakes and Nabisco, have their own powdered flavoring divisions, and compete with Commercial Creamery to supply flavoring to other food manufacturers, so the Spokane company focuses more on smaller companies, or what Gilmartin calls the second-tier producers.

Commercial Creamery currently has some 200 customers, about 30 of which Gilmartin considers to be major buyers. He declines to name them, adding that the company’s customers are very proprietary about where they get the flavors for their sauces and seasonings.

Gilmartin says the company also is seeking to expand more into Asian markets. Peter Gilmartin is planning a sales trip to Thailand and the Philippines in September. People in the Philippines already have very American tastes, Gilmartin says. Although the weak U.S. dollar should help make it easier to break into such markets, the company faces stiff competition from competitors in Australia and New Zealand, he says.

In addition to cheese puffs and spicy barbecue flavors, both of which are popular in Asia, the Asian markets seek more eclectic seasonings, including fish flavors, green tea flavors, and sweet corn flavors.

Commercial Creamery makes a wide variety of seasonings, from its mainstay cheese-based powders to more esoteric flavors, such as avocado powder.

Gilmartin says most of its flavorings are developed at a customer’s request. He says a company will tell Commercial Creamery it wants, for example, a cheddar and bacon sauce. The Spokane company’s research and development department then will come up with five or six different options for the customer to try, and the recipe gets refined from there. For future reference, the company keeps log books filled with the formulas of all of the different mixes it tests, Gilmartin says.

For a while, Gilmartin says, so-called neutraceuticals, nutritional additives that have pharmaceutical qualities, were a growing part of the company’s product line. For example, he says, Commercial Creamery for a time dried a lot of echinacea. The food industry, however, is driven by fickle consumer tastes, and echinacea fell out of favor after studies were published debunking its perceived cold-fighting benefits, he says.

“Whatever we do is always customer-driven,” Gilmartin says.

A product area that Gilmartin says he expects will grow is organic seasonings and sauces. He says Commercial Cream­ery now is producing a number of products similar in nature to old favorites, such as powders for macaroni and cheese, but with an organic ingredient list and without the orange coloring, making a white cheddar sauce.

Gilmartin says he’s glad to see that trend.

“That’s a fun turn of events,” he says. Moving in new directions, however, doesn’t mean orange coloring has gone out of style, Gilmartin says. He says that marketing reps for the companies the creamery supplies say that the “the more orange the product is, the faster it sells.”

Commercial Creamery has hundreds of different products in different shades of orange, he says.

Gilmartin says it works out well for the company to have a plant in southern Idaho. Idaho is the fourth largest milk-producing state in the country, and the second largest producer of cheddar cheese, Gilmartin says. He says that since there are a number of cheese producers in Jerome, nobody seems to notice the sometimes powerful aromas the factory there emits, which sometimes drew complaints from neighbors of the Spokane plant while it was still in operation.

Gilmartin says the company has talked about using some of the unused space in its 20,000-square-foot headquarters here, perhaps by opening a retail outlet in the building, but currently doesn’t have plans for such an endeavor.

“Doing retail we would consider a big jump,” Gilmartin says. For now, the company will continue to focus on broadening its wholesale reach, he says.

Contact Jeanne Gustafson at (509) 344-1264 or via e-mail at jeanneg@spokanejournal.com.

Source: The Journal of Business (WA)

Posted on Thursday, July 31, 2008 (Archive on Thursday, August 07, 2008)
Posted by bsutton@adpi.org  Contributed by bsutton@adpi.org
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