Graeter’s Ice Cream Gets Big by Staying Small

graeters ice cream

As a strategy consultant, I get to know companies for a living, and I meet all kinds: Many try to coast along without much difference or distinction. Some companies had a product advantage in their heyday but lost it a long time ago. A few companies offer some kind of product advantage and they tend to make great efforts to maintain it. But only once in a very long while do I come across a company that has held and maintained a tangible product advantage over the long haul. Meet the folks at Graeter’s Ice Cream. For the past 140 years this Cincinnati company has made ice cream basically the same way – and their production methods, which can be fairly described as archaic, are the key to what makes their product so exceptional.

Graeter’s still uses a French pot freezer, a 2-gallon metal bowl that looks like a cylinder and is surrounded by chilled bre. The French pot is filled with cream, sugar, eggs and flavor ingredients. Spinning the pot forces the product to the sides and it freezes, The frozen parts are scraped off the walls of the French pot with a mechanical corkscrew blade and by hand, with a paddle until it all comes together into a frozen mass.

How frozen? We’re talking 13 degrees, so cold that the ice cream is the consistency of peanut butter and stays in the pint-size packaging even when turned upside down. Other superpremium brands like Häagen Dazs or Unilever-owned Ben & Jerry’s have to be deep-frozen after production.

“The result of all this density”, as CEO Richard Graeter puts it, “is that you’re freezing a much greater portion of the moisture and much less air gets into the product, so you get a denser size crystal which makes for a much creamier mouth feel.”

You don’t have to be an ice cream connoisseur to taste the difference: vanilla that’s anything but plain, and creamy as can be; huge chocolate chips that don’t crumble in your mouth but melt; a blueberry pie flavor that tastes like someone literally mashed up a blueberry pie with ice cream; a mint chocolate chip flavor that actually tastes like mint oil, not like flavoring for toothpaste.

Graeter’s has become an institution in and around Cincinnati, but was known only to ice cream buffs anywhere else. More recently, word has gotten out, and in a big way: Graeter’s fan club includes celebrities such as Oprah, and Harry Connick Jr, and influential food writers such as David Rosengarten of Rosengarten Report.

Soon, ice cream lovers nationwide will know what Cinncinnatians already do: Graeter’s is about to increase production fivefold and gain national distribution. By the end of the year, Graeter’s will be sold in almost four thousand retail outlets, of which 2,000 will Krogers-owned stores.

There are five factors to Graeter’s lasting success. I’d argue these same factors will also decide if the company will be around 140 years from now:

Grow big without growing bad. Typically, big leaps in production translate into declines in quality. Graeter’s is determined to avoid this trap. Their new factory has been designed to create efficiencies before and after the making of the ice cream – but the archaic ice cream making process itself will remain unchanged. Says Graeter: “If you have a niche product, you have to passionate about it, you have to put the product first.”

There is no marketing advantage like a product advantage. Graeter is the first to admit there’s nothing secret about making ice cream – the key is being willing to make it as good as it can me made: “Our success is based in the fact that no one else is crazy enough to make ice cream as laboriously as we make it. And even if they wanted to, their production is not set up to do it.”

Details can be defining. Graeter’s’ chocolate chips are as delectably old-fashioned as the ice cream itself. They are made from superpremium Peter’s brand chocolate (owned by Cargill) that is mixed with pure soy oil to achieve a super-smooth consistency. The chocolate is mixed into the ice cream. When the freezing ice-cream and chocolate are scraped off the sides of the French pot, you get chips of varying sizes that look – and taste – like something out of a high-end chocolate shop.

Stay true to your identity. Graeter’s prides itself on producing some of the finest ice cream out there – but they’re also proudly a Midwestern family company and don’t claim to be fancy. Haute cuisine flavors like melon and prosciuttuo are not in Graeter’s DNA.

If your product is worth talking about, let it speak for itself. Graeter’s made do without a professional brand design for 130 years, until 2004. Even today they take pride in the fact that they lack the marketing communications and branding savvy of a Ben & Jerry’s, or the budgets of a Häagen Dazs. When you’ve got a highly differentiated product in a high-interest category such as ice cream, you start to make fans in all the right places. Celebrity and influencer endorsements do their share. And once you have more than 100,000 friends on Facebook, social media can become a big means to marketing success.

Expansion and growing popularity have had a big impact, but Rich Graeter is keeping a level head: “We’ll always be the little guy, just a bigger little guy than we were before.” Graeter’s won’t be outselling Ben & Jerry’s or Hägen Dazs any time soon, but if the company manages to continue to grow without growing bad, it stands to give the big boys a run for their money.

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