Page 2 of 5 Graeter S Continuing Case Part 5

Page 2 of 5 Graeter’s Continuing Case Part 5

As of: 10/12/10 PHK BUSINESS (11e) VIDEO SERIES FINAL (10/11/10)

EDITOR: A. Grazioso
SEGMENT: Part 5: GRAETER’S (Products, Marketing, Distribution)
VERSION: Final (10/11/10)

Interviewees

Richard Graeter II

Co-Owner/Chief Executive Officer

Robert Graeter

Co-Owner/ VP Manufacturing

Chip Graeter

Co-Owner/ VP Retail Stores

Robin Guiler

Chief Operating Officer

David Blink

Controller

Paul Porcino

Business Consultant

George Demman

VP sales and marketing

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Chip: I’m certain that my fore fathers never ever envisioned shipping ice cream or being in grocery stores for that matter. We had our own retail stores and that was enough for them.

Richard: For most of our family’s history, we have only been in Cincinnati. We operated neighborhood retail stores in Cincinnati. We operate neighbor retail stores in Cincinnati.

George: The Graeter’s brand is a beloved brand her in Cincinnati. Most people think the company is a lot bigger than it really is.

Robin: Graeters in Cincinnati is synonymous with ice cream. People will say let’s go get a Graeters. They don’t say let’s go get an ice cream.

Robert: You know, we are the beneficiary of that loyalty that our customers have built up over so many years, multiple generations. There are plenty of stories where our customers have told us where they we introduced to the product through their grandmother or a special time. People don’t come to ice cream because they have to. They don’t come to our stores because they have to; they come because they want to. It is happy time, a joyful time. It is something - - people are looking for a sweet reward in their life and we are able to provide that to them and we are very happy we can do that because it makes the job fun. It makes our business a lot of fun

Richard: Even though Graeters is really been a small local business, we have a national reputation. We have been on the Food Network. We have been on the Fine Living Channel, the Travel Channel. We have even been on the History Channel. In 2002 we were on Oprah. She said that Graeters is the best ice cream she has ever tasted and that really drove our mail order sales through the roof.

Paul: We’ve created excitement even beyond that. We are on national press frequently. How does that happen? It happens because we have a product and a process and a growth that is exciting.

Richard: And we have been making it for over a hundred and forty years so it’s our reputation for quality that brought these shows to us.

Chip: We have a great online store that we developed over the years and it’s a fantastic store. It is not cheap. It is quite expensive simply because UPS charges to get it, to get it there the very next day which creates a fairly large cost in that product but you can get six or twelve pints shipped to you anywhere in the continental United States next day air.

In respect to advertising we have - - we have a company that we use in Cincinnati, Sunrise Advertising that we use for all of our retail advertising here in Cincinnati. We do a lot of stuff in the store meaning a lot of different pictures and a lot of different props that we use to help advertise our products. We do a little bit of radio. We do radio and sometimes we will do some billboards and we will do some print as well, a few magazines but those are the main focuses of our advertising.

M: Myself and our team, we come up with the concept, the idea of this is what we need to have done. whether it is a new flavor or whether it is a new product or whether it is a special that we have going on for National Ice Cream Month or what have you.

David: Our main focus going forward is to get into large supermarkets throughout the country.

George: This past year we went from close to seven hundred stores to almost seventeen hundred stores nationwide.

I don’t know if you realize this but ninety seven percent of all new items fail in the first year. So there a re a lot more product failures then there are successes. So when you roll into a Texas or Kansas City or a Los Angeles, the brand is relatively unknown so we face the same challenges that any small regional niche has. That is establishing a relationship with the consumer, building brand awareness, trial and repeat so that we meet those hurdles that are expected of us as a manufacturer/retailer relationship in launching new product.

Krogers has actually told us that we actually have the number one brand loyal brand within their entire store and within their entire store chain. What drives this brand is the taste, the quality. One of the first things we do is we demo the product. We get it out in front of the consumer and get them to taste because that sells itself.

Point of sale material is our signs, pictures that you are allowed to put in the store. We have developed some great frozen door clings that graphically in four colors illustrate how great tasting this product is. So we take our black raspberry chocolate chip and we have, you know, the bold statement; the best ice cream you will ever taste right on the point of sale material. When you walk up to the ice cream case and you grab that door, the first thing you see is this beautiful point of sale cling that is on the door visually showing the consumers how we are different and why we are worth five dollars a pint.

We also have been trade promoting, reducing our price and as a result we get the features, the ad features and displays in the store and that is a great way of letting consumers know, hey try me I am on sale. So if a consumer that has maybe been buying Ben and Jerry’s and never considered ours because maybe that dollar price point difference was too high, this gives here the opportunity to try us and once she tries us we know we’ve brand switched that consumer right then.

We are also doing nontraditional methods. We are looking at electronic couponing where consumers will be able to go to our website as a new consumer in Atlanta and secure a dollar off coupon to try Graeters just for coming to our website or joining up on Facebook. We’ve done loyalty programs with Kroger where they have actually direct mailed loyal consumers and offered consumers discounts as well. So we’ve used traditional and nontraditional approaches with our limited budgets and so far it’s worked well for us. We’ve had to go back and look at the return on the investment on each of these programs and cut some things out and improve on some other things but in the end we have been very pleased with the results today.

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Submitted for review by NKP Media Inc.