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Historic Montana Company Sprouts More Sales and Markets
Key Points
-Gaining new customers is more effective at growing sales than building customer loyalty.
-Manufacturing adds jobs, especially important for rural communities.
-Thinking outside the box opens doors that lead to sales you might never expect.
~by Deborah Nash, MMEC staff writer
New business has sprouted for Cream of the West in Harlowton, Mont., as a result of more deliberate growth planning through a pilot program with the Montana Manufacturing Extension Center (MMEC) and Montana Department of Agriculture. The strategy is opening unexpected doors and helping the company increase sales and develop new markets.
Alicia Moe, owner & General Manager, and husband Richard.
Research shows that gaining new customers is 2.8 times more effective at growing sales than building current customer loyalty. For that reason, MMEC now offers growth services -- Eureka! Winning Ways-- as a framework to help companies tap into the profit of new customers and markets. The service guides development of measurably smarter choices for growth and provides action planning to help put the concepts into place. Last summer, matching funds from the Department of Ag cut the training costs in half for Cream of the West.
"The MMEC growth services have opened many doors for us and really helped us focus on 'dramatic difference' in what we do," said Alicia Moe, who became the principal owner and general manager of Cream of the West in May 2008.
Customer loyalty is a natural for the 95-year-old company that got its start in Billings, Mont., milling, blending and roasting whole-grain hot breakfast cereals using Montana grains -- the highest quality grown anywhere in the world. Brand loyalty is best exemplified in a typical phone inquiry to the company like the one overheard during the interview for this story. A woman caller from Everett, Wash., who was looking for a retail outlet that sold Cream of the West cereals, said: "...It is the best cereal I've ever had. Where can I find it here?"
However, finding ideas for new products and reaching new markets poses a challenge, especially for a company with only two full-time and three part-time employees. After attending a preview presentation about profitable growth for small companies using MMEC's Eureka! Winning Ways program, Alicia said, "I saw a real opportunity in that. We put together our leadership team and attended the Eureka! ideation session last June." There the company came up with 70 ideas for growth. The team spent time during the session defining the ideas more fully, and came away with two that they felt would leverage company assets and help meet the owner's desire to remain committed to sustainable agriculture as well as providing job opportunities for the local community. MMEC growth coach Dale Detrick worked with the company's team over several months in a "Trailblazer" process to gather data and develop the action items to get growing.
Top Two Ideas Get Attention
The top idea selected during the idea generation session was to target a new customer group with an existing product while incurring little additional expense. That idea, selling Montana Crunch -- the company's healthy snack mix -- as private label crunch, is already bearing fruit. In fact, it helped to add $3,000 to the holiday season bottom line, Moe said.
The second top idea, an evolving concept called the "Grain Bin [registered trademark]," will soon be launched as part of the company's upgraded Web site. The Grain Bin will offer wholesome bulk grains and flours that appeal to a niche market. "Because we are small, this has taken longer than we thought," Moe said, but added that even more doors are opening that will enrich the concept. The company is now considering a more specialized niche for the Grain Bin that promises to be even more profitable. Once in place, it is expected to result in a 100% increase in current Internet sales, the addition of new employees and an investment in new equipment.
Cream of the West products are sold on store shelves in most Montana communities as well as in Washington, Oregon, Idaho, Utah, California and Wyoming. The company produces about 75,000 boxes of 7-Grain and Wheat cereal each year. Richard Moe, Alicia's husband and local rancher, estimates that 10 semi loads of grain went through the plant last year, and that supply is expected to grow as their new initiatives take shape. The company processes its Crunch mix in 60-pound batches in a recently purchased food mixer and bakes it in a special oven.
The company also has a significant Internet following where customers can purchase all Cream of the West's products in a variety of sizes and packaging as well as complementary products like honey, "Montana Morning" coffee and an array of gift baskets.
An Eye-Opener
Alicia said a special face-to-face meeting last fall with the developer of the Eureka! Winning Ways process, Doug Hall, was a high-value eye-opener. Hall is considered the top growth expert in the United States by several national business magazines. He is known for "telling like it is" and met several MMEC clients at the Center's Compete Smart conference in October 2008.
During the meeting with Alicia and Richard, Doug held up a clear bag of the company's 4-oz snack and asked, "What is this? Is it granola? It is packaged to look like cereal." He noted that the perception is confusing, and confusion does not sell product well. Still grappling with a solution to more snack-like packaging, Alicia said she now proactively visits retail outlets to be sure Montana Crunch is positioned in the snack aisle and not the cereal aisle.
Since promoting Crunch as a healthy snack over the past year, sales have doubled, Alicia said. Alicia attributes Hall's candor to really making the team realize the need to do something different -- dramatically different.
"Once we started looking for new customers for the Montana Crunch snack, more doors opened," she said. But the biggest door was connecting with Mary Stein at Montana State University to use Montana Crunch in fund raisers. "We would not have pursued this avenue as much without her assistance." Stein was seeking healthy Montana products for a special project, and Cream of the West was looking for new customers. "When we joined forces, it was a win-win for both of us."
Farms to Schools
Stein is a Nutrition Education Specialist in the MSU Department of Health and Human Development. She and Katie Bark, Team Nutrition Project Director, led a pilot USDA grant project for a "Montana Farms to Schools" School Fundraising Program, which was a joint project of Montana Team Nutrition and the Office of Public Instruction School Nutrition Programs. Two Gallatin Valley schools, Irving School in Bozeman and Gallatin Gateway School, were involved along with five Montana food producers: Yellowstone Distribution, On Thyme Gourmet, Cream of the West, Timeless Seeds/Timeless Natural Foods, Gallatin Valley Botanicals.
The draft "From Farms to Schools" final project report states that it enabled schools to raise money while supporting local food producers whose products were deemed to be healthy. It met the criteria of being good for local economies -- "by supporting local farmers/food companies, more money is kept circulating in the local economy." The select products aligned well with mandated school wellness policies and represented a variety of food groups. They also helped connect kids/families to the local sources of their food. This is considered an important connection to make as "recent research has shown that programs that help to connect children to the source of their food can result in positive changes in eating behavior."
Favorable Outcomes
Between the two participating schools, a total of $18,000 worth of product was sold with producers keeping 60 percent and the schools 40 percent. The two top sellers from participating producers, based on number of items sold, were Montana Crunch and Fresh Basil Garlic Olive Oil.
Among notable quotes in the project report were praises for supporting locally grown products, "We definitely benefited and felt supported in our efforts. When one considers the economic factor of Grow/Buy Local, a program such as this is a win-win for producers, packagers, manufacturers, schools and consumers to name just a few."
Alicia concurs, saying, "It makes good sense. Buying local and eating local is a homegrown Montana Stimulus Package."
The healthy foods fundraiser program is expanding this year to include six or seven schools, tripling the size and distribution, Stein said. Gallatin Valley Farm to Schools will be taking over administration of the events. Many schools around state are interested, she added, but a lead organization in each area is needed for handling order forms and logistics with food businesses. "We're ready now to gear up to triple." More information about the entire Farms to Schools program is available through the Montana Office of Public Instruction at [see below].
The project feedback indicated producers wanted to know how many schools will participate [this year] to adjust plantings accordingly. "The program's impacts to agricultural production, that's what I'm really excited to see," Stein said.
More Doors Open
Another direct outcome of Cream of the West working through the Eureka! Winning Ways project was connecting with Bill Jimmerson, Director of the state FFA (Future Farmers of America). He encouraged Montana FFA Chapters to use Montana products including Cream of the West for their seasonal fundraisers. "They even took Montana Crunch to the National FFA Convention to represent Montana," Alicia said. "It is a great fit; a Montana product sold by Montana Ag kids instead of out-of-state fruit sales." A special FFA label was created so FFA members could promote the organization during the fund raiser.
"In a tough economy, we have expanded our sales by pursuing the marketing of Montana Crunch through special branding, our #1 idea, and fund raisers," she said. For example, Torgersons, a well regarded equipment dealer in Montana, put their label on crunch for its customers and one Close-Up participant sold a special label crunch to help pay for her trip to Washington D.C. The owner of the local grocery store in Harlowton planted the seed for another possible crunch market to pursue as well. She buys the product in bulk and adds it to yogurt parfaits for a grab and go lunch selection.
The new ideas are bearing fruit, even though they may not be working exactly like the growth team had initially thought. "But, we are actively working to increase sales and are now selling Montana Crunch in Yellowstone Park this summer," Alicia announced.
Jobs in the Community
Cream of the West relocated to Harlowton in 2001, moving from its Billings origins after being purchased by a group of Montana farmers and ranchers who were members of an area Economic Growth Council.
"We were looking for a way to keep the community alive and thriving and first considered bio-oils, but some of the research and development was too far down the road to be profitable. It just wasn't there yet and still isn't," Alicia said. When a feasibility study showed that bio-oil was not the way to go, a nucleus of eight investors decided to purchase Cream of the West.
When the business opportunity to purchase Cream of the West came up, it appeared to be a real possibility for the small rural setting in Montana's heartland. And now the business is providing vitality for the area and jobs for its young people.
Bobby Lewis, Production Manager
Bobby Lewis, who moved to Harlowton as a young teen, earned a degree in Manufacturing Engineering Technology from MSU Northern in Havre. He is now Production Manager at Cream of the West and has been with the company for six years. He is looking forward to the growth challenges that will come with introduction of the Grain Bin sales and to working with MMEC Field Engineer Dale Detrick to fine tune layout and flow for new equipment.
Shandy Eikenhorst is a local who was hired just three months ago to assist with packaging, while Paige Cavanaugh and Konnor Scally worked in the company throughout the school year on a part-time basis. Stacy Lindsley started three years ago helping out part-time to box cereal. Now, the mother of three is the full-time Assistant Production Manager and Chief Gift Designer. Asked what it's like working for a local food processing business, she captured a vital essence in supporting sustainable, local enterprise, with the comment, "Very, very hometown proud."
Montana's Office of Public Instruction/Farms to Schools Program |
