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Wisconsin Spice crushes the market for mustard

Posted on Jan 29, 2016 :: Cover Story
Posted by , Insight on Business Staff Writer

Big things often sprout from the smallest of opportunities.

The humble mustard seed measures between one and two millimeters in diameter. But its small stature belies the punch packed within.

The ability of mustard to grow from the smallest of seeds to the largest of garden plants earned it a place as the subject of a parable by Jesus in the New Testament of the Christian Bible. The power — and taste — of the chemical compounds within the tiny seeds has made mustard one of the most popular spices and food ingredients in human history.

Use of mustard as a condiment dates back at least to the ancient Romans, who spread it around the Mediterranean. Its uses have been growing ever since. “I think there are a lot of uses that would surprise people,” says Al Sass, vice president of operations for Berlin-based Wisconsin Spice. “It’s a functional ingredient that is used for a lot of properties other than its flavor.”

It’s not always yellow and it’s not just for your bratwurst. In addition to a world of varieties as a condiment, mustard — whether in paste, flour, husks or prepared varieties — is used in everything from mayonnaise and glazes to barbecue sauce and soups.

Helping food producers meet that demand is Wisconsin Spice. In 2015, the company processed about 40 million pounds of mustard seed into ingredients and prepared mustard for the food industry. With about $36 million in gross sales, the company employs nearly 75 full-time employees and ships products to more than 25 countries.

Like the seed itself, Wisconsin Spice grew from a small opportunity.

First planting

It was a mustard shortage that launched Wisconsin Spice on the path to industry mega-supplier.

In 1973, a deal to supply American wheat to Russia actually sparked food and commodity shortages as farmers shifted their crop production. As harvest projections declined, prices escalated and suppliers struggled to maintain inventories. It was around that time that Phil Sass, the founder of Wisconsin Spice, received a telephone call from a friend in the industry asking for help.

The elder Sass, a former quality control manager for R.T. French — known today as French’s Foods —   realized this call for help was more than a one-time opportunity.

Phil Sass was working out of Oconto at the time, and his wife was in school at UW-Eau Claire. He saw the demand from the sausage industry and began looking for a facility where he could produce milled mustard seed. An interesting quirk of fate would result in a new company and family home in Berlin.

“It’s the only place he could find a building to do what he wanted to do,” Al Sass says of his father’s decision to launch in Berlin. “It’s close enough to both the supply in Canada and customers.”

The building in question was an abandoned feed mill from the 1800s. At first, the company, with a second-hand stone grinding mill, milled mustard seed into mustard flower. Soon, additional capabilities were added, including the ability to mill prepared mustards, allowing the company to compete with industry players such as French’s.

Rapid growth and expanded quarters followed.

By 1985, the company had outgrown the old feed mill (it no longer exists) and moved into a state-of-the art production facility in Berlin’s industrial park. In 2015, the company completed the latest in a series of expansions — its 10th — adding both space — it is up to 130,000 square feet — and new technical capabilities, including being one of the only manufacturers that can produce both dry and prepared mustard solutions in the same facility.

“We certainly have grown a lot,” says Tim Gross, director of employee development and a 15-year veteran of the company. “For all the changes, we’ve always had stable leadership.”

For all the success, Wisconsin Spice is hardly a household name.

“We are a supplier to many of the food producers out there, if not directly, then indirectly through other producers who use our mustard as an ingredient,” Al Sass says. “We cut across the industry in a lot of ways.”

Don’t let the low profile fool you — food producers know the company quite well.

The food chain

Nearly three-quarters of Wisconsin Spice’s annual sales are in the category of industrial ingredients. These represent food producers who use mustard in their product, which in turn may be sold retail or used by another company to create additional products.

For example, a company that produces light mayonnaise uses Wisconsin Spice’s mustard to create its product for restaurants. With the heat and flavor removed, the properties of the mustard allow it to replace ingredients with higher fat content without altering the texture and mouthfeel of the mayonnaise.

“People would be amazed at everything it goes into,” says Jay Rozmarynoski, operations general manager, who has been through seven expansions with the company.  “We are in the meat industry, in sauces; I think we are in just about everything.”

Barbecue sauce maker Ken’s Foods, Inc. has been using ingredients from Wisconsin Spice for about 10 years, and they have become an important supplier to the company not only for the ability to deliver the ingredients, but the expertise Wisconsin Spice makes available, says Lee Gibson, senior director of purchasing for the Massachusetts-based company.

“They have a great reputation of standing behind their products and contracts,” Gibson says. “We started with the mustard bran and flour, but now we use several of the prepared mustards. Most of our dressing and sauces have mustard in them.”

The company is an important source of information not only on the technical side, but for the industry as a whole, he says.

“Their ability to lock in prices is a big key, and so is the technical knowledge,” Gibson says. “They are really knowledgeable about the marketplace.”

Wisconsin Spice’s mustard certainly travels widely. Take a walk through the shipping and receiving area of the company’s production facility and you’ll see shipping labels for customers in Asia, South America and Europe. All told, about 30 percent of the company’s sales are international.

The prepared mustards produced at Wisconsin Spice — which include Dijon mustards, honey mustards and other specialties — have enabled the company to penetrate the food service industries in both condiments and food preparation. The food service market accounted for about 10 percent of the company’s sales in 2015.

Where the company has seen tremendous growth opportunities the past few years are channels outside of the traditional ingredients and prepared mustard markets. Those outside channels accounted for about 17 percent of sales in 2015. Wisconsin Spice also has its own retail brand — affectionately named Uncle Phil’s after founder Phil Sass — though that line is probably only about 1 percent of current sales.

Al Sass says the company has worked hard to create a diversity of opportunities in those outside channels.

“They hired us because of our expertise and experience in the industry,” Sass says. “They could do it themselves, but they basically said ‘we trust you to do it better because it’s what you do.’”

Sass also knows that such deals can be short-lived and took steps to minimize the risks.

“I wasn’t going to do the deal if we couldn’t show a payback in a year,” Sass says. “I don’t want us to be paying for something we no longer do.”

Branching out

Sass is the second generation to take the helm at Wisconsin Spice. Like his father and his older sister Caroline Sass Blustin, he is a food scientist by training. Another sister who does not work for the company is a lawyer and all are proud graduates of the University of Wisconsin-Madison.

For as long as he can remember, Sass wanted to run the family business.

“I think my first job was picking weeds out of the parking lot,” Sass says. “I must have been about 10 or 11 years old.”

While in high school, he worked on the production floor and continued to work for the family business while earning his degree in food science. But interestingly enough, he would look elsewhere for his first professional position, landing a job with Kraft Foods in Chicago. “There was a time that I thought I would take a different path,” he says.

But after a few years, Sass felt the urge to return home to Wisconsin Spice. He went back to school to earn his MBA and rejoined the company in 2010 as director of business development. He recently took on the role of vice president of operations.

He may have come home, but he also brought with him some of the lessons he learned at Kraft Foods, lessons he has used to help double annual sales for Wisconsin Spice and grow the workforce by 50 percent.

“I find myself constantly looking back on my time at Kraft,” Sass says. “There are a lot of structural and management lessons to be learned from working in a really large company. I experienced a wide variety of people and practices, and I’ve been able to apply those lessons here.”

In many ways, he followed a path taken by his sister Sass Blustin, who planned to pursue other ambitions after earning her food science degree, but returned to Wisconsin Spice during the recession of 2001 while she worked on her MBA at the University of Wisconsin-Oshkosh.

“It started as a project to help update the computer systems,” Sass Blustin says. “I just kind of kept going, not really planning for it.”

In addition to the company’s finances, Sass Blustin also handles information technology and human resources for Wisconsin Spice.

With that many food scientists in the family, the critique of holiday meals and summer cookouts could get pretty rough, though Sass Blustin says the discussion doesn’t often focus on the food.

“It’s much more likely we are going to be arguing about sports,” she says. “We are pretty passionate about UW-Madison sports teams.”

All kidding aside, Sass Blustin says she and her brother have found complementary roles at the company.

“It’s great that Al came on board, he likes being out front on the sales and marketing side,” she says. “I prefer working in a more behind-the-scenes role helping us to get more efficient. It works out well.”

Not the mustard?

For all the mustard produced by Wisconsin Spice each day, Sass says that may not be the most important thing the company sells.

The most important commodity the company brings to the table is its expertise.

“What really sets us apart is the technical knowledge we can share when it comes to their demands and needs,” Sass says. “It’s really about information sharing and partnering with our customers.”

This is particularly important for clients who use mustard from Wisconsin Spice for the functional properties that have nothing to do with the flavor or heat the ingredient is best known for. Using its laboratories and knowledge, Wisconsin Spice can provide the technical details for food producers who are using the properties of mustard to complement and improve their products.

The effort is not confined to the lab, though. Sass and the sales team regularly conduct “Mustard 101” presentations to clients and prospects to demonstrate the flexibility of the ingredient in food production. The team will be making a similar presentation at the Association for Dressing and Sauces technical meeting in early May.

Wisconsin Spice also conducts “Mustard University” — a six-week course on the science of mustard — for all of its supervisors. They even provide a regular mustard report to customers and prospects detailing expected crop yields  and pricing.

“We are working to be a technical leader in the market,” Sass says. “We want our customers to feel like they can’t live without us because of the information and technical expertise we share with them. We show them how they can use mustard or use it better.”

It is that expertise, and willingness to share it, that has driven the company’s recent growth, he says.

“We may not always be the low-cost provider, but we will be an expert in fulfillment,” Sass says. “That’s what I want to be known for.”

Volatile harvest

An emphasis on customer fulfillment and technical expertise could be differentiating factors as the company executes its plans for 2016.

Early reports indicate there will be fewer acres of mustard seed planted this year, sending prices higher and industry suppliers scrambling for inventory. Yields in 2015 were also lower than expectation.

This is where Sass follows a recipe he learned from his father. Wisconsin Spice uses several techniques to ensure it can meet customer demand, leveraging its years of knowledge and contacts both with growers and within the commodities industry. In more than 40 years of operation, the company has always been able to avoid shortfalls.

“One of the things my dad always said was ‘The customer needs to know you can take care of them,’” Sass says.