Cheese dip purveyor breaks into the big markets
ELK RAPIDS – Super markets are modern-day coliseums where food companies, like gladiators, duke it out for the best shelf space and market share. Competition is fierce. If Sugar Frosted Os doesn't fly off the shelf, it's quickly replaced by another sugary sweet contender, waiting in the shadows of the bottom shelf.
Introducing a new product to the market is no easy task, even for large producers. It takes years of research, testing, red tape, and lots of funding. For a small food processor, the task becomes even more Herculean.
Enter gladiator Scott Zagers to the arena.
For the past six years he's been peddling his homemade feta cheese dip to loyal customers from behind the counter of his Elk Rapids meat market. But with the dip's spreading popularity and ripening receipts, Zagers decided to close the market and concentrate on it full time.
"It got to the point where I would have the buyer of Meijer on the phone, placing a huge order, and a lady at the counter waiting for a half pound of salami," Zagers said. "It just didn't make sense to continue."
What did make sense was less overhead and less dependence on a seasonal business.
"You know, for five months out of the year, you're not making money, but still have to pay your $5,000 electric bill," he said. "It just got to be too much."
To make up for the winter slumps, Zagers began a snow plow business and invested in several rental properties. As the adage goes, it takes two jobs to survive the winters in northern Michigan.
"It's difficult to make a living if you own your own business and rely on tourism. I don't care what the business is," Zagers added.
So after 10 years of serving up choice cuts, Scott hung up his butcher's apron and picked up the phone.
As a former food broker for the Minnesota-based company International Multifoods, Zagers still had connections in the food distribution world.
"I called on some old friends, sent them samples and they liked it," he said.
Pulling a couple favors gave Zagers a start, and a distributor, but that was just the beginning.
Armed with only two full-time employees, he and his mother, and a small kitchen, which also serves as the packaging port, Zagers must now overcome mounting regulations, a tightening market share and growing pains.
He estimated Zagolli's Feta Dip has grown 10 percent each year and expects increased sales again this year. He just picked up another account; This one a 153-chain grocery store in Texas. Zagers said his dips, six flavors in all, are stocked in the bigger Midwest markets, such as Chicago and Detroit, and are slowly making their way south to states like Texas and Florida.
Zagers has managed to do what many others wish they could do, but haven't: break into the large grocery store chains, like Meijer and Super Value. The recipe for his success? Hard work, a little luck and a loyal following.
"It's all been word-of-mouth marketing," he admitted. "People really like it and that's just the way the company grew, out of that."
What started out as a mistake, 35 pounds of extra feta delivered to the market one cold winter day, forced Scott to develop his original recipe, and has become a burgeoning feta cheese spread business.
"In today's market you've got to be creative to get things done," he said. (Zagers has proven he's creative, just try his cheese dip.)
But because the business has taken off like it has, Zagers is now cramped for space and wondering what his next step should be.
"We're growing and we need more space," he said exasperated.
There are plans to expand, but everything comes at a cost.
Remodeling the warehouse space, which houses the kitchen and his office, so it's up to code could cost up to $100,000, Zagers estimated. And is it worth it, he wonders.
With orders picking up down South, is it prudent to invest in a delivery truck now? Another hefty price tag.
Like other small businesses that take off, Zagers has hit a cross-road. Stay the course and he'll have to invest more money in capital improvements to meet higher demands from larger stores; or veer off and keep the small office and orders.
Only time will tell what will become of Zagolli's dip, but one thing is for certain, Zagers has done what most only dream about: break into the market.
"This business gives faith in the American Dream," he said. "Where else could you start a company on minimal amount of money, and the next thing you know, it just keeps growing?" BN