Leprino Foods Company
Leprino Foods Company
Sales :$1.25 billion (1998 est.)
NAIC :311513 Cheese Manufacturing; 311412 Frozen Specialty Food Manufacturing; 311999 All Other Miscellaneous Food Manufacturing; 42241 General Line Grocery Wholesalers
Leprino Foods Company, owned by the Leprino family, is the largest producer of mozzarella cheese in the United States. The company holds more than 20 patents and makes more than 700 pounds of cheese each year in its seven cheesemaking plants, including a mozzarella plant in New Mexico that is the world’s biggest. Leprino supplies cheese to most of the United States’ nationwide pizza chains, including Domino’s, Little Caesars, and Pizza Hut, and uses five to seven percent of the nation’s total milk supply, which it receives from the nation’s largest dairy cooperatives, including the Dairy Farmers of America. Leprino revolutionized cheesemaking with its “continuous extrusion” process. The company also makes sweet whey, whey protein concentrate, and lactose for use in baby formula, as well as ice cream and baked goods.
A Family-Owned, Family-Run Business: Beginnings in 1946
Leprino Foods was founded in 1946 by Michael Leprino, Sr., who had emigrated to Denver, Colorado from his native Italy in the early part of this century. First a truck farmer, then a grocer, Mike Leprino began his career as a cheesemaker when his daughter, Ange, who was building her own business preparing Italian foods, needed a better quality ricotta for the cheese ravioli she and her husband, Frank, were marketing under the label Frangi’s. Inspired by his cheesemaking success, Mike Leprino also started to make scamorze, a form of mozzarella molded into pear-shaped balls, which he sold to local neighborhood grocery stores. Helped by his young son, Jim, the family-owned, family-run business began to operate out of the family’s home on 38th Avenue in Denver, a site it still occupied when Jim took over as chairman and chief executive officer of the company in 1972 upon Mike Leprino’s death.
The newly founded business was a local success, and Mike Leprino, sensing pizza’s potential for growth, prepared his company for expansion. In the 1960s, while mozzarella production paralleled the rise of pizza as the national dish, Leprino went to Wisconsin to learn how to make mozzarella in 20-pound blocks. There, he linked up with Les Kielmeier, a cheesemaker, who joined Leprino Foods and introduced it to many of the technological advances that enabled it to begin production of its value-added items. From 1970 to 1993 domestic production of cheese was on an upswing: cheddar cheese went from about one billion pounds annually to 2.4 billion; mozzarella production increased from 245 million pounds to two billion.
During this time, Leprino Foods became an innovator in the world of cheese production and the company experienced continued growth. Chief among the innovations developed at Leprino was its “continuous extrusion” process. At its highly automated plants, milk was first tested for acidity, butterfat content, and other characteristics, then pasteurized and piped to tanks where some of its fat content was skimmed and shipped to a butter plant for production. Whey protein was sent down a separate track to produce animal feed, additives for food companies, or ingredients used in pharmaceuticals. In enclosed vats, the remaining curd was cooked, mixed, cut, and stretched to a taffy-like consistency, then extruded from the mixer in a continuous ribbon that traveled through an ice-cold brine bath before it was cut into smaller slabs, shredded, and “quick frozen.” The advantage of this process was time saved: conventional mozzarella had to be aged for one to two weeks, but Leprino produced its mozzarella in a matter of hours. In 1988 the company added “quality locked” cheese, a frozen, free-flowing shredded form of mozzarella, which constituted its second major innovation. In 1989 a new line of enhanced cheeses, including varieties of part-skim mozzarella that mimicked the taste, appearance, and melting properties of other cheeses, such as muenster or provolone blends, was added to Leprino Foods’ line of offerings.
Specializing in Foodservice Distribution: Late 1970s Through Early 1990s
Leprino’s manufacturing capacity grew steadily throughout the 1980s. In 1988 it partnered with the Michigan Milk Producers’ Association, which put up 80 percent of the necessary capital to build a cheese manufacturing plant that Leprino then leased and operated. The plant, at an estimated cost of $30-$40 million, was hailed as a boon to Michigan dairy farmers. Leprino, however, was involved in more than just cheese production. In the late 1970s the company became a specialist foodservice distributor, servicing primarily pizza operations. By the mid-1980s it was supplying an average of 700 items, had eight distribution centers, and served an expanded product mix that included tortillas, pinto beans, meat, spices, and paper products shipped to Mexican food restaurants. The company enjoyed approximately $248 million worth of sales as a distributor in 1983, 6.3 percent or $15 million of which came from its new Mexican food business.
By the early 1990s Leprino Foods had nine distribution centers in Colorado, California, Arizona, Texas, Missouri, Florida, and Pennsylvania, carried a mix of 1,800 items, and supported a staff of about 40 district salespeople, four national account representatives, and 27 customer service people. The company served 4,850 different drop locations. Its sales totaled $379 million in 1989, with about half that amount derived from pizza operations, such as Pizza Hut, and 20 percent from its own manufactured cheeses, chief among them its Quality Locked Cheese products. The remainder of Leprino’s sales came from other fast-food chain operators, such as Manchu Wok, Miami Sub, and Subway. In 1990 the company’s revenue deriving from distribution sales rose to $401.7 million; in 1991 sales were at $414.1 million. In 1993 Stouffer Foods Corporation selected Leprino Foods as its first Certified Supplier, becoming Leprino’s largest industrial customer and increasing distribution-derived revenues yet further.
Then, in 1994, in a sudden narrowing and focusing of operations, the company sold off both the assets and business of its restaurant supply distribution operation to International Multifoods Corporation, leaving it with only its cheese manufacturing business. Though neither company ever revealed the purchase price, industry analysts estimated that Multifoods paid from $100 to $125 million for Leprino Foodservice Distribution. The acquisition included seven warehouses, the lease on two others, a fleet of trucks, and the contract for a second, leased fleet.
Overseas Speculation in the Mid-1990s
It appeared that Leprino Foods had decided to pinpoint its efforts on its growth overseas. In association with Pizza Hut, for whom Leprino was the sole U.S. supplier, the company began to speculate about expanding into Europe. In 1994 the company attempted a joint venture with the Irish dairy cooperative Golden Vale, whose Northern Ireland Leckpatrick subsidiary was one of the largest single milk buyers in all of Ireland. Leprino had similarly attempted to establish its presence in Europe in 1993, but plans to base its manufacturing operations in the Republic of Ireland were shot down when Irish dairy companies protested that the move would put too much pressure on milk supplies available for Irish cheese production. The new Leprino production unit, which was to have an initial capacity of 18,000 tons a year, was scheduled to begin operations in 1996.
As plans for the plant went ahead in 1994, however, opposition to the proposed development once again became intense. The Irish-dominated European Association of Mozzarella Manufacturers threatened European court action if the British government granted aid to the foreign facility. The Association claimed that there was already excess capacity in the industry and that the use of government funds to create jobs would simply displace existing jobs elsewhere. Finally, after six months of speculation, the European Commission officials gave the project state aid approval, and the Industrial Development Board, the government grants agency in Northern Ireland, confirmed that it would formally offer Leprino Foods aid on a par with two other existing mozzarella manufacturers in Northern Ireland. However, plans for the plant were aborted suddenly when Pizza Hut would not guarantee its European market to Leprino Foods.
The following year, an attempt to expand sales into Canada also ended abruptly in failure when the Canadian government refused to waive a 300 percent tariff levied against shipments of cheese from the United States into Canada in excess of an annual quota of 45 million pounds. Pizza Hut of Canada, which had had hopes of cashing in on the success of its parent company’s “Stuffed Crust” promotion in the United States, requested a shipment from Leprino Foods worth about $30 million to import 20 million pounds of a special string mozzarella produced exclusively by Leprino, only to find out that the annual Canadian-American quota had already been met.
Success Nationally, Strained Ties Locally: The Late 1990s
This setback notwithstanding, Dairy Foods magazine ranked Leprino Foods third—behind only Kraft and Suiza Foods in its third annual listing in 1995 of North America’s largest dairies, both private and public. In addition, although Leprino Foods dropped one position to number four in the magazine’s 1997 tally, it was still among the top 100 companies as calculated by dairy sales totals at the retail and foodservice levels. In 1996 Leprino was 158th in Forbes magazine’s listing of the nation’s 500 largest private companies; it had climbed to 140th two years later in the magazine’s 1998 tally.
Leprino Foods was without question the world’s largest mozzarella cheese manufacturer by the late 1990s. In June 1998 the board of directors of Dairy Farmers of America approved a letter of intent to sell a total of six of its cheese plants—one in Wisconsin and five in Nebraska—as well as its interest in a seventh New York plant to Leprino Foods as part of an ongoing business relationship between the two. In announcing the alliance, according to a report in Dairy Market’s Weekly, Dairy Farmers of America’s board chairman praised Leprino’s record of growth and innovation from 1988 to 1998.
Back at home on 38th Avenue in Denver, however, the relationship among neighbors was less than convivial. Leprino was still located at its original, albeit significantly modified and enlarged site, which housed office space and a research center and laboratory. The company hit the press in 1998 when a September report released by the Colorado Public Interest Research Group “Troubled Waters” placed it at the top of a list of corporate polluters discharging toxins into Colorado’s streams. In addition, a simmering land use battle involving the company, which had begun in 1996, went forward to the full city council in June 1998 after city-sponsored mediation between residents and Leprino Foods failed to reach an accord. Neighbors complained that Leprino’s continued expansions were ruining their neighborhood and blighting their streets with traffic, noise, and a sour, cheesy odor. They also said that the company had not honored past promises to landscape some parking areas, avoid converting a vacant lot into parking, and curtail heavy truck traffic through the neighborhood. The discord was resolved eventually after the company threatened to pull out of Denver if the city vetoed its expansions, and the council voted unanimously to rezone to allow the company another expansion. In return, Leprino agreed to reduce the bulk of its buildings and to restrict truck traffic.
Flynn, Kevin, “Cheese Dispute Growing Ripe; Upset Neighbors Say ‘No Whey’ to company’s Research Plans As Rift Continues to Soar,” Denver Rocky Mountain News, June 25, 1998, p. 5A.
“Green Light for Leprino/Golden Vale Joint Venture,” Dairy Markets Weekly, June 8, 1995.
Leib, Jeffrey, “Denver’s Big Cheese,” Denver Post Magazine, April 16, 1995, p. 10.
“Leprino Foods Co.; Top 25 Specialized Foodservice Distributors,” Institutional Distribution, February 1990, p. 93.
“Leprino Foods to Buy Cheese Plants from DFA,” Dairy Markets Weekly, June 25, 1998, p. 6.
“Leprino Foods to Set Up Mozzarella Production Plant in Europe,” Dairy Markets Weekly, December 15, 1994, p. 3.