Ethnic cheese: Building workforce, changing a rural economy

Workers at Specialty Cheese Co. package products on the floor of the company’s Reeseville plant Feb. 27.

REESEVILLE — The business here is cheese.

Most of it is not the typical Wisconsin fare, even in this era of Gruyeres, smoked Goudas, brie, flavored feta and those cheeses made with sheep and goat’s milk.

The vats and the 250 employees at Specialty Cheese Co. turn out paneer, considered the cheddar of India, but which does not contain rennet or salt, key ingredients in most other cheese.

The daily production schedule can also include Ackawi, a white-rind cheese native to Palestine; jibneh Arabieh, a soft white cheese popular in Egypt and the Arabian Gulf; and a long list of Hispanic fresh, hard and melting cheeses like asadero, a Mexican version of Monterey jack, and Cotija, a grating cheese used on salads, tacos and tostadas.

Specialty Cheese does make a cheddar, but it’s baked into a bar called Just The Cheese. It looks like a granola or energy bar only it’s 100% cheese, and it is turning out to be one of the company’s biggest-selling items.

Rural recharge

“Business is pretty simple. Identify a market need, figure out how to do it, get access to capital,” said Paul Scharfman, 65, who, along with his wife, Vicki Semo Scharfman, founded the company in 1991. “I add a fourth, which is about motivating people.”

And that approach to his business and his people is designed to reduce rural poverty by eliminating barriers to employment. Paul Scharfman, a Harvard Business School graduate and a former Oscar Mayer marketing manager, is proving that there are swaths of people who want to work but have issues with transportation and child care, the Wisconsin State Journal reported.

That’s why Scharfman has taken a number of steps in recent years to attract and retain employees beyond the $15-per-hour wage in a county where 39% of the 34,648 households have incomes above the federal poverty level but struggle to afford basic necessities. The statewide average is 37.5%, according to a United Way study.

At Specialty Cheese, all employees, some of whom may have been out of the workforce for months or even years, take classes in emotional intelligence. Since implementing the program in 2014, employee retention has gone from one in five to four in five. The classes, attended by supervisors and line workers alike, and presented in both English and Spanish, can include meditation, breathing and how to handle conflict resolution.

“I live by this stuff,” Scharfman said. “Compassion works. Feelings matter. Soft skills matter.”

Scharfman also employs 10 people to serve as drivers to shuttle workers to and from work in cars and vans. About 75 employees, one-third of his workforce, use the service. They live in communities such as Fond du Lac, Watertown, Waupun and Beaver Dam.

The newest program at Specialty Cheese focuses on child care. Scharfman just started advertising that he will provide free child care at the Beaver Dam YMCA for new employees for their first 90 days of employment and then pay half of the costs thereafter. He’s considering building a child care facility next to his cheese plant.

“Rural America is the Detroit of 2008,” Scharfman said. “As a model for revitalizing rural America, this company says that there is a hidden workforce in rural America.”

Growing business

The initiatives have helped the Scharfmans’ company explode with growth. In 2012, Specialty Cheese, located since 2002 in a former high school building, made about 6 million pounds of cheese. A $4 million, 15,000-square-foot addition that year helped more than double production by 2019 to 15 million pounds made from 100 million pounds of locally sourced milk.

Later this year, ground will be broken on a $10 million, 8,000-square-foot addition that will include a second pasteurizer and is designed to help the company again double production.

Over the past 17 years, Specialty Cheese has experienced 14 to 15% growth each year.

“I think Paul is an idea guy. He’s an idea factory,” said John Umhoefer, executive director of the Wisconsin Cheese Makers Association. “He thinks way outside the box because I think he came at the industry from the outside. It’s really amazing what he’s showing you can do if you lead with ‘how can I make it possible for people to work here.’ It’s really impressive for any industry.”

Finding a niche

The Scharfmans are an unlikely presence in this village of just over 700 people where many of the businesses in the downtown have been shuttered. There is a funeral home, diner and post office, but one of its biggest businesses, Caldwell Lumber Co., is abandoned along the dual set of railroad tracks that carry freight trains and Amtrak’s Empire Builder.

Semo Scharfman is a Columbia University graduate and worked for Colgate Palmolive in New York. Paul Scharfman, after leaving Boston, worked for General Foods in New York before ultimately coming to Madison. They still live on the city’s Far West Side near Owen Conservancy.

In 1991, after Paul lost his job at Oscar Mayer, he and Vicki purchased the former Heim Cheese plants in Reeseville, Lowell and Lebanon and combined their marketing skills with that of the Heim cheesemakers. But they focused not on the brick and Muenster that had been staples at Heim but on niche markets for ethnic communities around the country.

“We don’t say no. We’re the yes people,” said Jeanie Korth, 59, who was working at Heim as an accountant at the plant in Lowell when the Scharfmans purchased the company but is now running Specialty’s customer service department. “We’re weird. We try the weird stuff and we’re lucky enough to be able to try the weird stuff because we’re small enough.”

Korth’s day can include talking to restaurateurs, retailers and wholesalers with strong Indian, Russian, Spanish, Polish and Greek accents.

More than cheese

But one of Specialty’s biggest initiatives is its growth of baked cheese products. They began in 1996 and by the early 2000s had products that, while covered with cheese and spices, weren’t 100 percent cheese but were highly popular with the Atkins diet fad. The Scharfmans purchased the former high school building in Reeseville in 2003 and began converting for cheese production, where the former gymnasium is now a warehouse, some production happens in the former music and art rooms and Paul Scharfman’s office is in a former detention room where the one-way glass remains.

By January 2004, Scharfman had his products in Atkins’ catalogs and in Walgreens and Kroger. He turned down Walmart because he couldn’t keep up, even though he employed 100 people and was baking 24 hours a day, seven days a week. He also gave the keynote address at the first annual low-carb convention in Denver. But by June of that year, the low-carb diet no longer was a trend so Scharfman laid off his staff, padlocked the doors and was nearly bankrupt after a series of disputes with his retailers over unsold product.

“It was a very unpleasant time. We just about lost everything,” Scharfman said. “We had sacrificed our refrigerated customers. We didn’t get rid of them but I didn’t pay attention to them.”

Scharfman worked with his banker to avoid bankruptcy and ramped up production of paneer and other ethnic cheeses that he had been making prior to the explosion of baked products. But in 2017, under the push by Scharfmans’ son, David, a new product that was 100 percent cheese was introduced. Last week, the company was notified that its Just The Cheese bars will soon be in 829 Target stores while they’re also eyeing Kwik Trip and Costco. It’s not uncommon for to sell 500, 12-count boxes in a day. The company also has Just The Cheese Minis, a small baked cheese cracker, but the baked bars outsell the crackers 10 to 1.

“It’s unique, but I don’t have to convince people that cheese tastes good,” said David Scharfman, 33, who works on getting the products into retailers. “I literally just have to get it into stores and get people to try it. And once they do, they come back. But it’s no small feat to get it into the stores.”

The baked products come in a variety of flavors including white and orange cheddar, garlic and chive, jalapeno and aged cheddar and are in 2,500 stores nationally. Increased marketing and distribution, coupled with the expansion of the cheese plant later this year could double the store count and push production into millions of more bars.

For Paul Scharfman, ethnic cheese and his baked products are the business, but the model for his company is beyond cheese. It includes sponsoring the Reeseville Art & Music Festival and getting more people to live in the community, which could lead to more businesses and a better tax base.

“This company is an example, it is a model, it’s a way of demonstrating that, yes, it can be done,” Scharfman said. “This community is better off because of us.”

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