After 25 years in business Pete Palazzolo, the chief executive officer and founder of PGI of Saugatuck, said his business was finally at the point where he could afford to keep it in the 48-thousand-square-foot facility that he calls home.
This Fennville, Michigan entrepreneur had just added a new “DBA” to his company, “Palazzolo’s Dairy,” expanding into a new business sector when I spoke with him in 2012.
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The self-described “food artisan” moved beyond Palazzolo’s signature-brand gelato and sorbetto, to offer a variety of dairy products thanks to the purchase of the company’s first pasteurizer. This investment allowed the company to become an HACCP-compliant Grade-A Dairy. For the first time, Palazzolo could take raw milk deliveries instead of being relegated to whatever dairies made available to him.
“This releases me from the handcuffs of the dairy industry, so that I am able to give people whatever they want,” Palazzolo explained. “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-thousand gallons, he can go as low as 300-gallons per order.
“This is the kind of path that anyone with my history would do,” he explained. “This is the final stage, to be able to bring in milk from a dairy farmer and alter the base anyway my customer wants.”
As they got to know this new pasteurizer, Palazzolo said he and his 20 employees found they could do other things with it besides just making ice cream.
The company began offering liquid yogurt and yogurt drinks, fluid and flavored milk, soft serve and value tiers of ice cream from economical to super premium. Customers could also get very specific, asking for different pack sizes, price points, ingredients and options ranging from organic to non-GMO, to corn-syrup-free, to cow-milk alternatives.
As his corporate name would imply, PGI of Saugatuck Inc. started in Saugatuck, Michigan on the Lake Michigan shoreline. Palazzolo said they moved four miles inland to Fennville for two reasons. First, because he found a facility that would work, and second, because he ran into so many problems dealing with city licensing and permits in Saugatuck.
Renovating their new home was a major project. The facility had never been used as a dairy, so they had to put in new health and safety systems to meet government regulations to become a Grade A dairy plant.
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Palazzolo gelato and sorbetto products are sold around the nation now, and overseas, to restaurants whose customers want more than just regular ice cream, to resorts, to “places that scoop even in the middle of winter,” as well as to 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 Great Recession. Palazzolo said they moved about 3-thousand gallons of gelato every week in 2011, a 20-percent increase from year ago numbers. He was happy with that, but had to wonder how much they could have sold in a “bull market.”
“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 have it, why not have something that gives you the most pleasure.”
Palazzolo makes ice cream the old-school way, the way you might have made it in the backyard after a Sunday dinner a couple of decades ago, 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.
However 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 and not be compromised.”
While the ice cream is freezing in the continuous freezer system, it has to be smoothed and with the more automated system the way you add flavor is compromised. You add the flavor at the end, almost as an afterthought. Palazzolo adds the flavor the traditional way, right at the beginning.
Palazzolo is not strictly a West Michigan food processing entrepreneur. He has also rolled-out a prototype mobile food truck on the streets of Los Angeles, selling $25,000 worth of gelato and sorbetto in a month. “I am in the process of wrapping that bad boy up.”
This turns out to be a case of innovative selling, thirty flavors, no scooping. The gelato and sorbetto is pre-packaged. “You just grab it and sell it,” said Palazzolo.
What could become a mobile fleet of gelato and sorbetto selling trucks is also an example of creative financing.
He found banks to be hesitant to lend money for a storefront retail operation, but Ford Commercial Credit was more than willing to do a vehicle loan “so we were able to get a truck and we were off and running.”
“If we are not growing, we are going to be in trouble,” he said. “Our goal is to put a shout out that we are artisans and are ready to give you what you want.”
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Palazzolo’s isn’t just ice cream, gelato or sorbetto made in Michigan. It is ice cream, et.al made with as many Michigan products as possible.
Palazzolo said he 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 and to get fruit as soon after it is picked as possible 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 explained. “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.”
But the top consideration is quality. As Palazzolo explained it, his motivation to buy ‘Made in Michigan’ has nothing to do with Al Gore urging him to reduce PGI of Saugatuck’s global footprint. Issue number-one is, and always will be quality.
“I truly believe these products are better than what we could find anyplace else on the planet,” he stressed. “I buy honey from a farm in Allegan, Michigan. This honey is so wonderful; I could take a bath in it.”
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