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Last Update: Tuesday December 12, 2017

Key Idea: Serve The Underserved

Paul and Vicki determined before they bought an existing business that they had to change their product to avoid head-to-head competition with the big guys. 

Key Question:

A: 

Study demographics and do consumer research.

Q:  How did Vicki and Paul find out what types of cheese they should make?

A: They looked at national demographics to determine what niche markets were not being served. The largest niche in America today is the Hispanic market. Next, they gathered together people who had lived in Mexico and South America and asked them to talk about cheese. They asked what they liked and didn't like about the cheese they found in American grocery stores.

The Scharfmans learned that cooking with American cheese is very frustrating for Hispanics who are used to the cheeses from their homeland. The biggest difference is that American cheese melts when heated whereas Hispanic cheese holds its shape. So, when you cut into an enchilada made with American cheese, the cheese oozes out. However, if you use Hispanic cheese, the enchilada stays inside the tortilla.

Paul took these ideas to his cheese makers who have decades of experience and they developed what is today the best selling product from Specialty Cheese - Queso Blanco.

Q:  Why is being unique so critical to the success of a small business?

A:  A small business can not compete "toe-to-toe" with a big business because the big company has economy of scale. A big company can buy large amounts of raw materials at a discount, they can afford to have the biggest most efficient equipment for the different manufacturing processes, and they can even ship goods cheaper in large volumn. Being unique is the way a small business is competes.

Think about it

Taping the talent of  your current employees and using your existing equipment, what new product could you roll out?

Clip from: Specialty Cheese

Lowell, Wisconsin:  Visit the oldest continuously-running cheese factory in Wisconsin.  In this episode of the show we meet Vicki & Paul Scharfman of Specialty Cheese. This story is about marketing. It may look like magic, it's not.  It is all about testing, trial and error, and focus groups.

Prepped with their Harvard MBAs and seasoned with big business experience, these two bought a marginal business and turned it around.  They learned how to put diversity into the land of cheddar and attracted a whole new customer base.  This is America!

Go to all the key ideas and video of this episode...
Go tot he hompeage for this episode of the show...

Specialty Cheese, Inc.

Paul Scharfman, Owner

430 North Main Street
Reeseville, WI 53579

Visit our web site: http://specialcheese.com

Toll Free: 800.367.1711

Business Classification:
food

Year Founded: 1839

Serve The Underserved

HATTIE BRYANT: This is SMALL BUSINESS SCHOOL. You might want to grab a pencil if you're interested in growing your business or even starting one. I'm Hattie Bryant.

From Wisconsin come Vickie and Paul Scharfman, who will tell you how they did market research to transform an old business.

Most of our 30 minutes each week is spent in the small-business Master Class. Vickie and Paul Scharfman, the leaders of the class today, could be your university professors because they have plenty of degrees to show they are qualified.

Now you can learn from Vickie and Paul. Step into the Master Class.

It's cheese, one of my favorite foods, and now I get to see how it's made. And where else but in Wisconsin?

PAUL SCHARFMAN: Let me tell you how you make cheese. Cheese is like a chain-link fence. We start by pouring pasteurized milk into a vat and adding some enzymes and cultures. Now those enzymes break down some of the proteins in milk and link them together to make a chain-link fence. And they trap, in the holes in the fence, globules of fat. That's what curd is. It's just like all the tennis balls caught in a chain-link fence.

Then we're gonna have people cut the curd. They'll be cutting the cheese. We push it into a curd elevator, where it's lifted up and then dropped into forms. Then all those forms will be turned period--periodically, covered to keep them the right temperature and then cooled overnight and we then make blocks of cheese.

This is what we call the leader plant. We know it has been making cheese continuously for 160 years. These are three-foot-thick fieldstone walls.

HATTIE: In 1991, Vickie and Paul Scharfman bought the oldest continuously running cheese factory in the state.

PAUL: All right. These are the walls that were--that have been in this building for at least 160 years and have seen that much cheese making, but it was only a few years ago we brought in sandblasters and sandblasted all the walls; had to get them smooth and cleanable so that they could be USDA approved.

I get a great deal of personal satisfaction out of found--having found a way to take this small, inefficient little room--whatever it is, it's inefficient--and turning it into a flexible asset, something which can make a little bit of a lot of different specialty cheeses.

HATTIE: You won't find the basics coming out of this place. You find cheeses made for niche markets: Kosher, Syrian and Arab cheeses shipped to delis in New York. And the biggest seller? Queso Blanco shipped to Miami, Houston and other cities with large Hispanic populations.

How did you land on Hispanic cheeses? PAUL: Certain types of foods can't be made without authenic Hispanic cheeses. Just to give you an example, all the American cheeses melt, but certain Hispanic cheeses don't melt. You know what an enchilada is...

HATTIE: Yes.

PAUL: ...right? There's a tortilla with...

HATTIE: I've eaten tons of enchiladas.

PAUL: There's the tortilla and the cheese inside, but when y--Americans make it, the cheese gets gooey and runs out. The genuine enchilada has the cheese soft, but it stays inside the enchilada. You can't do that with an American cheese. And the consumers were saying, `Would somebody please make me this cheese right?'

How did we decide to make Syrian cheese? We paid someone to spend a few hours in a library going through census data asking, `What are the languages spoken at home in this country?'

VICKI SCHARFMAN: And `Which cultures eat cheese?'

PAUL: Right.

VICKI.: You know? If we could figure out a cheese that Chinese people would eat or Chinese-Americans would eat, boy, would we be out there with a Chinese-American-focused product.

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