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Bringing Brats to China

June 16, 2008

By DORIS HAJEWSKI

Sheboygan Falls — Getting consumers to taste the product has been a key to Johnsonville Sausage’s marketing strategy for years.

Now the Wisconsin-based sausage maker is taking the effort to a new level, with Orya, a chain of bratwurst restaurants in Shanghai.

China is an interesting place to try to sell brats, said Bill Morgan, Johnsonville’s president.

The question, whenever Johnsonville tries to start selling in a new country is, he said: “What would be a good way to get product in consumers’ mouths?”

After seeing that Japanese restaurants were featuring its brats on menus, Johnsonville decided to open its own restaurant in Shanghai, devoted mainly to bratwurst. The company found a Chinese businessman who had opened McDonald’s franchises there to oversee the new brat restaurant chain.

There are two Orya restaurants open now, and Johnsonville plans to have five soon, with a goal of 30 in the future. Brochures explaining sausage from America are placed in the restaurants.

“It’s going terrific,” Morgan said.

The Chinese bratwurst restaurant is the latest effort in an international strategy that Johnsonville embarked upon during the 1990s. International sales are a small but fast-growing part of Johnsonville’s business, totaling $35 million last year, when the company had sales of about $700 million.

Thanks in part to the growth of the international business, Johnsonville has nearly doubled its work force in the past five years, to 1,400 now, up from 750. The company, which is still owned by the family of founder Ralph Stayer, refers to employees as “members.”

Chief Executive Officer Ralph C. Stayer, son of the founder, first decided in the early 1990s to pursue sales outside the United States as a way to keep growing after Johnsonville achieved distribution across the country. By 2003, international sales had increased to the point that the company had to build an additional plant at its headquarters campus in Sheboygan Falls.

The headquarters is located just south of the site of the original Johnsonville butcher shop, in the unincorporated community that was its namesake. Stayer’s parents, Ralph F. and Alice Stayer, started the business in 1945.

Now Johnsonville ships sausage from Sheboygan Falls to China, Japan, Korea, Taiwan, Canada, France, Spain, Latin America and the Caribbean. The company also makes fresh sausage in France for distribution in Europe.

In May, Johnsonville received the “E” Award for export excellence from the federal government. The award, which was established in 1961 by President John F. Kennedy, was presented to Johnsonville executives in the Oval Office.

International research

Johnsonville spends time studying the tastes of each country it enters, Morgan said. There’s been much to learn.

One lesson — and this will come as no surprise to people familiar with American obesity statistics — is that people in many other countries eat less than we do. When Johnsonville first took the company’s standard one-pound packages of smoked sausage to Asia, consumers there were amazed at the size of the links and the quantity in the pack.

“They said, ‘That’s too much for one person to eat,’ ” Morgan said.

So Johnsonville developed smaller sizes for export. The standard one-pound packages are sold overseas in Costco stores as large family packs, Morgan said.

Probably the biggest lesson for Johnsonville was that salt levels in food are much lower in both Asia and Europe, Morgan said.

“We had to take a lot of sodium out,” he said.

Johnsonville’s export meats are marketed overseas as an American product, with front labels that look similar to the U.S. version. But information on the back of the package is in the language of the country where it is sold.

“In many areas, American brands have a wonderful cachet, for consumer goods as well as fashion brands,” said Bill Bishop, president of Willard Bishop Consulting, a grocery industry consultant in Chicago. Johnsonville’s success overseas speaks volumes to the company’s progressiveness in watching the trends, Bishop said.

In the U.S., Johnsonville dominates the market in sales in some categories, including bratwurst, smoked cooked link sausage and breakfast link sausage. Johnsonville’s biggest competitors in the U.S. in most categories are small regional or local companies such as Klement’s and Usingers in Milwaukee, Morgan said.

Johnsonville’s domestic sales are a small part of the total U.S. market of $17.6 billion in 2007 for refrigerated processed meats. The category includes cold cuts, which, according to Packaged Facts, accounted for 40% of the refrigerated processed meat industry.

The research firm in March predicted that a slowdown in the U.S. economy would result in slower growth for the processed meat industry.

In the 52 weeks that ended in mid-May, U.S. sales of refrigerated dinner sausage, excluding Wal-Mart, have increased in dollar volume by about 4%, according to Information Resources Inc., a market research firm. During that same time period, Johnsonville’s sales of dinner sausage through the same outlets have increased by 8.8%, IRI reported.

Food and health

Johnsonville makes most of its sausage at three plants at its 50- acre Sheboygan Falls headquarters site. The company moved its corporate office from Kohler to a new building at the Sheboygan Falls campus about 18 months ago.

The new office building includes a 24-hour gym, which is open seven days a week and is free for employees. Employees get a discount on sausage, but they’re also invited to join a Weight Watchers program that meets on site.

Johnsonville also has opened two health clinics staffed by physicians employed by the company. Staff members who use the clinics pay nothing for the visits, Morgan said.

All of this is aimed at promoting employee health, and it helps to cut health insurance costs, Morgan said.

“We went smoke-free last June,” Morgan said. The company gave workers a year’s notice on the smoking ban, which includes the whole campus, and provided free smoking cessation programs. Even so, a few people quit their jobs, he said.

Johnsonville operates three slaughter facilities, in Watertown, Momence, Ill., and Holton, Kan. The plants in Momence and Holton also make sausage.

Johnsonville first started selling products outside Wisconsin in 1978. The company launched its first television ads that same year, featuring Charlie Murphy, the character who is now famous for grilling Johnsonville brats.

The company’s first international sales were in Canada, where proximity and similar consumer tastes eased the entry. Now Johnsonville employs 25 salespeople who work outside the U.S. In addition, every market area outside the U.S. has a general manager who is native to the country.

Together, all of the Johnsonville plants are capable of turning out 1 million pounds of sausage per day. From Easter to October, the company cranks up production to peak levels, because it’s the season when Charlie, and his counterparts all over the world, grill a lot of Johnsonville brats.

BEER NOW OR BEER LATER?

It’s a long-simmering debate: whether to cook a brat in beer before grilling or after. Johnsonville President Bill Morgan says it’s grill first, beer later. Here’s his recipe:

Prepare a kettle full of beer; onions; a little bit of garlic, lightly sauteed; and a dash of caraway seed. Then put raw brats on the grill and cook them slowly, on low heat. You don’t want to pierce the casing and let out the juices. After the brats are grilled, put them in the beer mixture and keep warm until ready to serve.

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