Sargento Enters Direct Gift Foods Business

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Cheese marketer Sargento Foods Inc. has entered the $1.5 billion direct-to-consumer foods business through a new Sargento Reserve line of premium products sold online and by mail order.


The move will pit Sargento against rivals like Swiss Colony, Hickory Farms and Wisconsin Cheese Man already entrenched in the gift foods business.


"What we intend to do is compete in the gift industry as opposed to in the grocery store or daily consumption replenishment [business]," said Kevin G. Delahunt, senior vice president of e-commerce at Sargento, Plymouth, WI.


Sargento Reserve, on the other hand, is an upscale line of 1-pound to 5-pound cheeses for $8.95 to $89.95. The specialty cheeses are bundled with items like crackers, olives, utensils and lasagna noodles. Stores, on the other hand, typically sell pre-shredded and pre-sliced Sargento cheese for $1.99 to $2.59.


"We see an opportunity to grow our brand, grow the meaning of our brand and grow our bottom line profits by expanding and competing in the food gift industry," Delahunt said. "We wouldn't be doing this if we didn't think we could make money out of it and compete effectively against other food gift marketers."


Consumers can order at sargentoreserve.com, by mail or through a toll-free number.


At its core, this is the $425 million Sargento's attempt to better know its end-customer.


"They have a direct contact with their buyer to gather information, potentially to sell them products," said Mike Grandchamp, vice president of marketing at Sargento e-commerce provider Digital River Inc., Eden Prairie, WI.


"But they're using it also to potentially influence the kinds of products they may develop," Grandchamp said.


Marketing will play a key role here. E-mails will go out to 15,000 consumers that receive the Sargento Savings & Cravings monthly online newsletter for recipes and special offers. These newsletters also will regularly plug the online store.


In outside efforts, banners will run on epicurious.com, catalogcity.com and Yahoo Shopping, and affiliates will support with links. Retailers that stock Sargento products will carry links to sargentoreserve.com and get paid for sales through their sites.


In addition, the flagship sargento.com's homepage will feature the online store.


Offline, the 48-year-old marketer will mail its holiday catalogs, one for consumers and another for corporate orders, to 500,000 prospects.


The first drop took place earlier this month, another is scheduled for Oct. 15 and a third the second week of November. All three drops will be of equal size.


The catalog itself was the product of a test conducted two years ago.


The 16-page catalog's 60 SKUs mirror the line sold online at sargentoreserve.com. Key features for corporate customers, online or catalog, are the ability to attach logos, include a business card, letter or corporate report on orders of 50 units or more.


Responsibilities for the Sargento's marketing and e-commerce activities are split between Ovation Marketing, La Crosse, WI, and Digital River. Ovation designed the online store, the sargento.com site and created the catalog. It also handles the planning and execution of programs like e-mail marketing, search engine optimization and affiliate marketing.


"We chose to take a very aggressive approach in developing the marketing plan for Sargento," said Steve Zinda, senior account manager at Ovation. "We feel the steps we're taking in marketing the Sargento Reserve online store will help us rapidly acquire names of Sargento and non-Sargento customers through email marketing and other online efforts.


"The catalog," Zinda said, "will enhance our visibility and help customers connect the new Sargento Reserve line with the Sargento brand."


For its part, Digital River is handling the backend, hosting and site maintenance of sargentoreserve.com, among other duties.


Acknowledging last month's terrorist attacks, Sargento will donate 10 percent of sales on two products, the New York Sharp Cheddar Cheese and the Big Apple Gift Basket, to The September 11th Fund. The offer runs through Nov. 4.


Sargento is aware that selling online or by mail a product line not known to consumers carries its own risks.


"When you think of Sargento, you don't necessarily think of gifts online or higher end kind of products online, so it's part of extending the perception of their brand into that area," Grandchamp said.


The choice of the Sargento Reserve name is partly meant to address that issue.


"It conjures up an image of being particularly special and limited in quantity and so good that it needs to be set aside," Delahunt said.


Still, Leslie Gibson, program development manager at Digital River, said the challenge is "probably to get people to think of their super-large gift products. Their brand is so strong at retail for shredded cheese and sliced cheese, and the products they're offering online are very artisan-like."


Indeed, some of the Sargento products are award winners in the U.S. Cheese Championship and the International Cheese Championship.


Sargento, however, is confident of its dual product strategy for different channels.


Besides the obvious aim of not antagonizing retailers, it does not make financial sense to sell low-priced items online or by mail.


And then there is company-conducted research, which backs up Sargento's retail strategy and tackles the brand recognition issue.


"We see a great deal of overlap between consumers who buy our products in grocery stores and direct purchasers," Delahunt said.


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