Milwaukee goes FaB: Regional cluster has recipe for growth

Bob Wills wanted to make a difference in his community, so he opened Clock Shadow Creamery, Milwaukee’s first cheese factory, in Walker’s Point last year.

“If you value the small businesses and the uniqueness of communities, the only way to change things is to do it,” Wills said.

Wills is part of an ever-expanding cluster of food and beverage manufacturers — from entrepreneurs to major corporations — that base their operations in southeastern Wisconsin.

There are almost 15,000 employees in the regional food and beverage cluster, which includes manufacturing companies as well as retail food operations. That’s the highest regional concentration of food industry workforce in the nation and adds up to about $580 million in annual payroll. It’s an impactful group.

Many of the producers in Milwaukee are already collaborating with each other, creating hybrids such as Great Lakes Distillery’s Pumpkin Seasonal Spirit using Lakefront Brewery Pumpkin Lager. Becky’s Blissful Bakery in Pewaukee also partnered with Lakefront to create beer and pretzel caramels, and Clock Shadow plans to work with Great Lakes Distillery to create a whey vodka.

Curds and whey
Clock Shadow is still a small operation, with about eight employees, but Wills has been busy developing new cheeses and partnerships. The company is one of 48 new dairy plants that have opened in Wisconsin over the past five years, Wills said.

The company has worked with the Wisconsin Artisan Food Producers Association, formed last year, and FaB Milwaukee to connect with other food producers.

The creamery currently shares its manufacturing and storefront space at 138 W. Bruce St. with Purple Door Ice Cream, but Purple Door will soon move to 205 S. 2nd St. Yogurt producer Sugar River Dairy will move into the vacant space at the creamery. The equipment is also shared with Martha’s Pimiento Cheese, another local dairy startup.

Clock Shadow recently began expanding into more Hispanic-style cheeses to add to its popular queso blanco product. It began producing ricotta cheese solely for a five-star Chicago restaurant this month.

“They’re talking about 350 portions per week,” Wills said. “There’s enough margin on it that it’s a nice project.”

It’s the kind of project a small operation can accomplish, but a larger cheese manufacturer wouldn’t have the patience for, he said. Wills wants to remain small to keep the local flavor and uniqueness that independent food retailers bring to the community.

“Milwaukee is really, I think, one of the classiest cities, in that respect, that I’ve been in,” Wills said. “There are relatively few chain restaurants.”
The company supplies dairy products for a variety of local restaurants, from La Merenda and INdustri Café in its neighborhood to Potawatomi Bingo Casino and the Iron Horse Hotel.

“Most of the outlets in the neighborhood are buying from us. It’s a reputation based on quality, but I think it’s because we have the flexibility to really target what the neighborhood’s really looking for,” Wills said.
Over the next year, Wills plans to add at least two more cheesemaker employees and double production.

The creamery recently contracted with a larger milk supplier and is planning to begin receiving goat’s milk in the spring.

Large impact
As small artisan producers like Clock Shadow plan incremental growth, more established local food companies are planning dramatic expansions in 2014.

The Coca-Cola Co. recently announced it will make a $30 million investment and expansion of its bottling plant at 11800 W. Brown Deer Road in Milwaukee. Milwaukee is one of five North American locations that are being modified to produce the company’s Smartwater, a premium bottled water.

“The bulk of the investment is going toward the installation of a new Smartwater filling line as well as the blow mold equipment to actually make the Smartwater bottles right here in the facility,” said Kevin Morris, a spokesperson for Coca-Cola in Wisconsin.

The Milwaukee facility has 400 employees, and another 16 will be added when the expansion is completed in April. Coca-Cola has more than 1,000 employees at 14 facilities across the state of Wisconsin.

Every Coca-Cola Freestyle drink dispensing unit across the globe is assembled by Plexus Corp. in Appleton, Morris said. Franklin-based bottling equipment manufacturer Krones Inc. also has assisted Coca-Cola with its local plant expansion.

“Wisconsin has become a very important state for Coca-Cola’s business,” he said. “Certainly the added capability, production volume, certainly reinforces the region’s importance to food and beverage producers in the region.”

MillerCoors LLC recently purchased the shuttered Sara Lee facility next door to its Tenth and Blake Beer Co. facility in Milwaukee. The location brews craft segment products such as Leinenkugel’s. The company paid $650,000 to Securant Bank & Trust for the 110,000-square-foot industrial facility at 918 W. Somers St.

The Tenth & Blake segment has been growing at a steady pace and driving MillerCoors’ growth. The company has been working to adjust its portfolio to take advantage of the rising popularity of craft beer among consumers.

“It’s a great time to be a beer drinker and a great time to be a brewer,” said Tom Cardella, president and chief executive officer of Tenth & Blake. “There’s a lot of excitement in the industry, and more people are beginning to understand the beauty of beer. The craft segment has certainly been the shining star of the beer industry. That presents both challenges and opportunities to MillerCoors and Tenth and Blake. We’re working on evolving more of our business to the high end. I’m proud that MillerCoors really was ahead of the curve, saw this trend coming and moved ahead with the creation of Tenth and Blake three years ago.”
Through the third quarter, Tenth and Blake represented 23 percent of the volume growth in the entire craft beer market, according to Nielsen data.
“Our mission at Tenth and Blake moving forward is simple,” Cardella said. “We will focus on Blue Moon Brewing Company and Jacob Leinenkugel Brewing Company – the #2 and #5 craft brewing companies in the U.S. – while establishing a craft cider company, Crispin, in the high end space of the exploding cider segment.”

Multiple expansions
Several other local food and beverage manufacturers have recently announced plans to expand.

Ingredients manufacturer Kerry Inc. is in the process of expanding two of its Wisconsin plants, in Sturtevant and Jackson. The company, which has its North American Headquarters in Beloit, will add 76,000 square feet at its facility at 1751 Enterprise Drive in Sturtevant to accommodate spice storage and future growth of its spice lines. There are currently 78 employees at that facility, and the expansion will add another 25.
Meat seasonings, particularly in the poultry category and the quick service restaurant industry, have driven growth for the Sturtevant operation.
“We’re just constantly having to add volume to meet demand,” said Andy Royston, chief marketing officer.

Another plant in the Washington County village of Jackson will add 119,000 square feet to the existing 165,000-square-foot facility at N168 W21455 Main St. The facility is at capacity, which led to the expansion. There are currently 125 employees in Jackson, with another 60 to be created by the growth.

“(Jackson is) one of our heritage facilities and it has both spray grind and dry blending,” he said.

Some work will be moved from other sites to Jackson to increase the vertical integration of its operations, Royston said.

Black Bear Bottling Group LLC in Oak Creek also plans two expansions in the near future. The company makes and bottles beverages under the Black Bear, Clare Bay, Target, Goose Island, Green River, Stevens Point and Lakefront soft drink brands.

Black Bear plans to expand the 31,000-square-foot building at 9770 S. 20th St. by 15,000 square feet and the building at 2025 W. Southbranch Blvd., across the street, by 18,000 square feet to bring it to about 100,000 square feet.

Over the past five years, Black Bear president and CEO Pete Caruso Sr. has worked to diversify the customer base and products manufactured to create a more well-rounded business model. He has also invested more than $1 million in infrastructure like bottling and packaging equipment over the last two years.

“Because of growth in our business, we actually just need more production and warehouse space,” Caruso said. “In our industry, you’re seeing a big separation from small bottling companies and the mega giants in the bottling industry. There’s still a niche for medium size bottlers like ourselves to fit the want and need in the consumers’ eyes that the big guys might not be doing.”

Black Bear has added 10 full-time employees in 2013 and has gone to two full shifts of production. It currently has 28 full-time employees and about 10 to 15 temporary employees that flex daily as demand changes. Caruso plans to add another 10 employees after the expansions are complete.

Growth expected
Since food is a staple, the food and beverage industry was not heavily impacted by the Great Recession, which could be contributing to its current growth streak, according to FaB (Food and Beverage) Milwaukee executive director Shelley Jurewicz.

“As the economy comes back, it’s not surprising that some of the earlier adopters are upscaling their operations,” she said.

Milwaukee has an especially strong food heritage because it has access to a large amount of fresh water, which is used in grain production, brewing and the dairy industry. Many other food and beverage companies, including a strong ingredients segment, were spurred from those beginnings, Jurewicz said.

Milwaukee’s food and beverage cluster should rally around the example of the Milwaukee Water Council’s Global Water Center, said Giacomo Fallucca, president and CEO of Palermo Villa Inc. Fallucca, a member of the FaB advisory council, says Milwaukee is the Silicon Valley of food manufacturing.

“They are leveraging the water supply,” he said. “Think of how they’re leveraging that as it relates to innovation and jobs and careers and all sorts of things. The same thing can occur with food.”

The FaB peer group can help sharpen one another and drive innovation among existing companies, which will ideally attract the attention of other food and beverage manufacturers outside the region, Fallucca said. “The idea of food and beverage manufacturers getting together, it just says that ‘Hey, we want to be the best that we can.’ What we’re saying is, ‘we’ve got something good going here. Let’s unite. Let’s figure out a way to become better manufacturers.’

Individually, Palermo’s added four new products in 2013 and saw a 7-percent sales increase and a 12-percent market share increase, Fallucca said. Fallucca expects the expansions to continue.

Food and beverage companies are feeling more confident about the coming year’s performance, according to the Grant Thornton 2013 Global Food and Beverage study.

More than 75 percent of survey respondents expect to spend more on equipment, new product development and IT in the coming year.
Exports will likely be higher over the next year, and food and beverage manufacturers consider plant expansion a top growth strategy.
Milwaukee-area companies are sticking to the national trend, said Joe Toonen, consumer and industrial products practice leader for Wisconsin at Grant Thorton LLP.

“If you’re investing in new equipment to automate, it might require that you do some plant expansion to house that equipment, and we’re seeing some of that,” Toonen said. “As you’re automating, you’re probably looking for a different skillset of employee to automate some of the equipment.”

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Molly Dill, former BizTimes Milwaukee managing editor.

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