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Friday, 10 February 2012 08:49

PGI of Saugatuck expands operations

Written by  Rod Kackley
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FENNVILLE — After 25 years in business, PGI of Saugatuck CEO Pete Palazzolo says his business is finally at the point where he can afford to keep it in the 48,000-square-foot facility in Fennville that it calls home.

He has also added a new division to his company, “Palazzolo’s Dairy,” and is using that name to expand the company into a new business sector.

The self-described “food artisan” has moved beyond Palazzolo’s signature-brand gelato and sorbetto to include a variety of dairy products thanks to the purchase of the company’s own pasteurizer, which allows it to become an HACCP-compliant Grade-A Dairy. For the first time, Palazzolo can take raw milk deliveries instead of being relegated to whatever the various dairies made available to him.

“This releases me from the handcuffs of the dairy industry to give people whatever they want,” Palazzolo said. “If someone wants a truckload a week of organic, non-GMO gelato, it is no problem.”

Instead of being locked into minimum orders of 6,000 gallons, he now has the flexibility to go as low as 300 gallons per order.

“This is the kind of path that anyone with my history would do,” he said. “This is the final stage: to be able to bring in milk from a dairy farmer and alter the base any way my customer wants.”

The company is still getting to know this new pasteurizer. Palazzolo said he and his 20 employees are finding they can do other things with it besides just making ice cream.

The company now offers liquid yogurt and yogurt drinks, fluid and flavored milk, soft serve and value tiers of ice cream from economical to super premium in price. Customers can also get very specific, asking for different pack sizes, price points, ingredients and options ranging from organic and non-GMO to corn-syrup-free and cow’s milk alternatives.

As his corporate name would imply, PGI of Saugatuck Inc. started in Saugatuck. Palazzolo said it moved to Fennville, four miles away, because he found a facility that would work and because he ran into problems dealing with city licensing and permits in Saugatuck.

Renovating the new home was a major project. The facility had never been used as a dairy, so Palazzolo had to put in new health and safety systems to meet government regulations to become a Grade A dairy plant.

PGI’s products are sold worldwide, including to restaurants, resorts, “places that scoop even in the middle of winter” and retail stores. Grand Rapids-based Spartan Stores is Palazzolo’s largest retail customer in Michigan. The Grand Hotel on Mackinac Island buys from his company, as do specialty shops like Martha’s Vineyard in Grand Rapids and Holiday Market in Detroit.

Business has been good, even during the recession. Palazzolo said PGI moved about 3,000 gallons of gelato every week in 2011, a 20-percent volume increase from a year ago. He is happy with that but has to wonder how much PGI could have sold in a bull market.

MIM

Palazzolo’s isn’t just ice cream, gelato or sorbetto that happens to be made in Michigan. All of the company’s products are made with as many Michigan ingredients as possible.

PGI of Saugatuck Inc. CEO Pete Palazzolo said the company uses Michigan-grown fruit and nuts in his products for a couple of reasons, but something as simplistic as taking pride in Michigan is not at the top of the list.

That sense of pride in Michigan is a factor, but Palazzolo feels it is more important to be able to work directly with the farmer-vendors that he chooses. It’s crucial to product quality to get fruit soon after it is picked instead of having it picked out of state and then sent to Michigan through a brokerage firm.

Then there is the issue of price.

“When you deal with Michigan farmers, you can have a set price instead of one that fluctuates,” he said. “We can’t be raising or lowering our prices every other day. I mean, who cares if fruit is selling for three dollars a pound in Brazil? We are in Michigan.”

As Palazzolo explained it, his motivation to buy made in Michigan goods has nothing to do with Al Gore urging him to shorten PGI of Saugatuck’s global footprint. The top issue is, and always will be, quality.

“I truly believe these products are better than what we could find anyplace else on the planet,” he said. “I buy honey from a farm in Allegan. This honey is so wonderful, I could take a bath in it.”

“All of us are sick of throwing away money on something inferior,” he said. “It is no different with ice cream. It is something you don’t have to have, but if you are going to, why not have something that gives you the most pleasure?”

Palazzolo makes ice cream the old-school way, the way it might have been made decades ago in the backyard after a Sunday dinner — except on a much bigger scale.

He uses real fruit and nuts, putting them in at the beginning, instead of just accenting the flavor at the end of the process. It is a process born of tradition and of necessity.

Just about everyone in the commercial ice cream world uses what is called a continuous freezer, he explained.

But when Palazzolo was getting started 25 years ago, there was no way he could even dream of buying something like that, so he went with very small batch freezers. That was a system that was affordable. It also allowed him to make ice cream the old-school way, “with raw fruits and nuts.”

The way many ice creams are made forces companies into a less-than-ideal flavor-adding process. The product is freezing in a continuous freezer system, and the flavor is added at the end of the process, almost as an afterthought, Palazzolo said. PGI adds the flavor the traditional way, right at the beginning.

Palazzolo has also rolled out a prototype mobile food truck on the streets of Los Angeles, selling $25,000 worth of gelato and sorbetto in just a month. The truck allows him to test a new, innovative way to sell: He offers 30 flavors with no scooping because the gelato and sorbetto is pre-packaged.

“You just grab it and sell it,” said Palazzolo.

What could become a mobile fleet of food trucks resulted from a bit of creative financing, he said. Palazzolo found banks were hesitant to lend money for a storefront retail operation, but Ford Commercial Credit was more than willing to do a vehicle loan.

“We were able to get a truck and we were off and running,” he said, adding the company always tries new techniques to sell product. “If we are not growing, we are going to be in trouble. Our goal is to put a shout out that we are artisans and are ready to give you what you want.”

Read 3530 times Last modified on Sunday, 12 August 2012 21:29

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