With $1.8 billion in sales, Sargento continues to innovate its top-selling cheddar, mozzarella and string cheeses, all while keeping the company private. And third-generation CEO Louie Gentine has a plan to keep shredding the competition.
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Here's your Forbes Daily Briefing for Monday, September 9th. Today on Forbes, meet the billionaire family producing America's best-selling cheeses. When it's time to introduce a new kind of cheese to grocery stores, many brands spend millions to develop a product without putting much additional money into marketing. But it's Sargento, as its third-generation family CEO, Louis Gentine, explains, "The company spends millions on advertising to make sure a new variety of cheddar or mozzarella is well received." The 49-year-old Sargento Chairman, who succeeded his father in 2013, says, "I don't call them big bets because I don't think they're bets. Our opportunities are well vetted. They're great investments, and we've had more successes than we've had failures." That strategy has helped Wisconsin-based Sargento maintain its position as a cheese powerhouse with $1.8 billion in annual sales. As the company enters its 71st year, Sargento's slice of the $14 billion U.S. cheese industry continues to grow. It is now America's top-selling natural cheese brand, a position it secured, as opposed to processed cheese products like Velveeta. In the past decade under Gentine, as its market share has grown 20% to some 13% of all cheeses sold, Sargento remains 100% family-owned, which is given at an edge as the cheese industry has consolidated amid pricing pressure from private label competitors and large swings in the cost of milk. Including Gentine, there are a total of 60 shareholders, all descendants of Louis' grandparents Dolores and Leonard Gentine. Forbes estimates the descendants' combined stake to be worth $1.1 billion. Lou, Louis' father, and Leonard and Dolores' middle son, became CEO in 1981, as Louis grew up, so did Sargento. His first job at his family's company was at 13 years old washing the trucks that delivered cheese. Louis watched as his dad, along with his uncles, took their family business to new heights. Family ownership is more common in the cheese business than other parts of the food industry, and the Gentines compete against several other family dynasties, including billionaire James Loprino's Denver-based mozzarella maker, Loprino Foods, with $3.5 billion in estimated annual sales. There's also Canada's Saputo, with $12.6 billion in revenues, which is publicly traded, but founded and controlled by billionaire Lino Saputo and his family. At the top of the cheese pyramid is Family-owned Lactalis. The world's largest cheesemaker is based in France, but has a significant U.S. dairy business as the owner of Stonyfield Organic, Seigee's Yogurt, and the Kraft Cheese Brand, which it acquired from Kraft Heinz for $3.2 billion in 2021. Lactalis is owned completely by CEO Emmanuel Beni and his two siblings, whom Forbes estimates are worth a combined $43.2 billion. Compared to those behemoths, Sargento is a smaller, more nimble player, operating four cheese-making and packaging plants in the Midwest, and its own trucking fleet, which delivers 25% of its products. It has been opportunistic. Decades ago, when the Kraft Cheese Brand wasn't getting much love from its then-parent Kraft Heinz, Sargento took advantage of the moment and increased its market share. Richard Gujisburg, the owner of Gujisburg Cheese, a $100 million family-owned Ohio-based business that invented baby Swiss, says, quote, "20 years ago, Kraft was the big name in the business, and they left a lot of opportunities for somebody like Sargento to get out there and grow." What makes Sargento's growth more impressive is that profits in the cheese business are slim. Soputo's net income margin this year is 1.5%, its five-year average is 3.4%. The company won't comment on specific numbers, but says that its profits have grown threefold since Gentine took over. When his father retired as CEO in 2013 after 30 years, it was Louis' turn to be Sargento's big cheese. In his first decade as CEO, Gentine grew Sargento by 4% each year. Ed Zimmerman, the founder of California-based consultancy, the Food Connector, who has worked in the cheese industry for three decades, says that Sargento got there by being, quote, "really sharp on their processes and things like quality control" while leaning on natural formulations that steered clear of a lot of processing agents and additives. Zimmerman says, quote, "What they've done a great job with is making the everyday cheese-eating experience special." For full coverage, check out Chloe Sorvino's piece on Forbes.com. This is Kieran Meadows from Forbes. Thanks for tuning in. [BLANK_AUDIO]
