Tom Danneker had barely spent two weeks on the job as chief executive officer of Klement Sausage Co. Inc. when he went to see the Milwaukee Brewers about how the company’s sponsorship of the Famous Racing Sausages could grow.
“Coming in the door, my thought process was, ‘How do we, I guess I would describe it as “double down” on the Brewers relationship, invest more in that relationship to better position the brand for growth?’” Danneker said.[caption id="attachment_368879" align="alignright" width="350"] The ceremonial groundbreaking for Klement’s expansion of its South Chase Avenue plant.[/caption]
The Brewers, it turned out, had other ideas. The team had reached a deal for Johnsonville LLC to become the sausage sponsor. Danneker thought maybe the deal was a negotiating tactic, but it wasn’t. After 25 years sponsoring the sausage race at the Brewers games, Klement was out.
“It was a very short meeting,” Danneker said.
It would be easy to assume that a company with an out-of-state private equity owner might retreat from the spotlight and the money that had gone to the Brewers sponsorship would be turned into profits.
Instead, Klement pledged that it would deepen its ties in the community. In the following months, the company announced sponsorship deals with Summerfest, the Milwaukee Bucks, Milwaukee County Parks and the Wisconsin State Fair. The company even declared itself “the unofficial hometown brat of Milwaukee tailgaters” and gave away free sausages on Opening Day of the baseball season.
“There wasn’t even one second of thought of letting that money just go to the bottom line,” Danneker said.
He pointed out the company had previous relationships with the organizations it invested in, but the size of the Brewers commitment limited how far those partnerships could go.
For pivoting from the loss of the Brewers deal and demonstrating commitment to the Milwaukee community, Klement Sausage Co. is the BizTimes Best in Business 2018 Corporation of the Year.
The company’s commitment included more than investments in sponsorships which, in addition to helping local organizations, also serve to grow the Klement brand. In October, the company announced a $7.5 million investment in expanding and modernizing its South Chase Avenue plant.
The expansion was part of a three-year evaluation of Klement’s facilities. The company considered a number of options, including the possibility of building a new facility or a much larger expansion of the Chase plant. Ultimately, the project will add 5,000 square feet and renovate 50,000 square feet.
“In the end, we came to the conclusion that we have a great plant down on Chase Avenue that with the right investment can become a world-class plant,” Danneker said.
Klement’s local investment has not been confined to this year, either. In 2015, the company inked a deal to move its corporate offices to the Pabst Professional Center in downtown Milwaukee.[caption id="attachment_368878" align="alignright" width="350"] Milwaukee Mayor Tom Barrett, Klement CEO Tom Danneker, Gov. Scott Walker and Milwaukee Alderman Tony Zielinski eat brats to mark the groundbreaking for Klement’s expansion.[/caption]
The decision followed the 2014 acquisition of Klement by Texas-based Tall Tree Foods, a portfolio company of Altamont Capital Partners, a private equity firm with more than $2.5 billion of capital under management.
The transfer of a family-owned company to a private equity firm might have been cause for concern about Klement’s local presence, but Danneker said the strength of the company’s local brand has drawn more investment.
“The ownership group believes in the brand. Frankly, that’s one of the biggest reasons why they bought it, because the Klement’s brand has such a long history here in Wisconsin,” he said. “They truly believe, and we’ve seen it here in the last year, that with some support and really reinvigorating the brand here locally, that consumers would respond and really help us to grow.”
Investing locally also capitalizes on consumers’ increasing preference for locally-sourced food.
“What we decided to do was just expand our existing craft model, rather than saying we’re going to become like a (meat processor Smithfield Foods Inc.),” Danneker said. “There’s plenty of mass-produced sausage. We want to recommit and just expand our craft sausage capabilities.”
He acknowledged the company’s position is a departure from its previously larger ambitions.
“I think there were times along the way that Klement’s had this vision that they were going to be this mass production, national company; the next Johnsonville, so to speak,” Danneker said. “But I don’t want to be the next Johnsonville. I want to be Klement’s, and Klement’s is the best locally produced craft sausage in the country, and we’re just going to get better at doing that.”