02-24-04 Investor Business Daily: Entrepreneur Joe Semprevivo; Create A Niche: By making cookies a diabetic could love, he pleased himself first

Entrepreneur Joe Semprevivo; Create A Niche: By making cookies a diabetic could love, he pleased himself first

Joe Semprevivo wasn't going to let a little thing like a potentially debilitating disease stop him from enjoying life. Semprevivo, 32, was diagnosed with juvenile diabetes when he was nine years old. To make his life even tougher, his parents owned an ice cream shop in Deming, N.M. Every day after school, he'd go to the store, help his parents make ice cream and watch other people enjoy his work.

Finally, at age 12, he had enough. "I went back to the mixing room one day after school and I made a batch of the first-ever sugar-free ice cream," Semprevivo said in a telephone interview. At first, his parents were less than thrilled when he came running to the front of the store, "my face painted in strawberry ice cream." But when he explained what he'd done, they were as thrilled as young Joseph was. There was just one problem. It tasted great, but "when we froze it, it came out like a block of ice."

So Joseph's father, Larry, worked on the recipe until he came up with a good product. But this was Joseph's product and he took charge. He knew that customers respond to the personal touch. So he decided to do some research, and went to supermarket freezers to check out the labels on other ice creams.

Personalization, he figured, would make his product stand out. So he went with a "square label with a picture of me on it to add personality to the product line." He even recalled what the label copy said: "Hello. My name is Joseph Semprevivo. At 12 years old, I created this delicious, sugar-free ice cream for all diabetics and health-conscious consumers." Semprevivo made sales calls and used every advantage at his disposal. "I was 12 years old. The supermarket managers thought it was adorable.

They waived their fees for using their freezers for me. They asked me, "Don't you get an allowance?' I said, "Only if I sell ice cream.' " Going For Taste Over the next three years, Semprevivo got his ice cream into about 75 outlets, but young Joseph wanted more. He wanted a snack he could take to school, so he could be just like the other kids.

His parents, who used to own a restaurant, secretly worked on coming up with a tasty sugar-free cookie. "I was at a friend's house. I was supposed to spend the night, but my father called me and asked me to come home.

When I got there he gave me this cookie to eat, and I had tears in my eyes. It was the first cookie I'd eaten since I was 9 years old, and I wanted to share this cookie with everyone in the country." The ice cream business had drawbacks. Once a customer's freezer broke, and Semprevivo lost 1,000 pints of ice cream that were in the store on consignment. Cookies, however, had a shelf life.

The family decided to concentrate on what they could do well, while maintaining some control. Mom and Dad worked on developing more flavors they developed eight in the first year and young Joseph tried his hand at marketing. He got a lot of rejections early on, but, he said, "We were persistent. We wouldn't stop." Semprevivo built his market one store at a time.

His strategy was to go from independent supermarkets to regional chains to national chains. "Not only did I make sales calls, but I did product demos. I opened up the product, handed it out and explained the health benefits of the cookies," he said. They attended regional food and trade shows to meet buyers and got letters of recommendation from the managers of stores they were already in.

Every option was considered, including shipping the cookies on consignment. "I told them, "I'll ship you product. If it sells, you pay me.' And they did." He also set up a marketing program with the National Diabetes Outreach, which allows the organization to raise funds by selling Joseph's Lite Cookies. Slowly the company built its presence. Semprevivo estimates that cracking Kroger, a large national chain, took eight years and "1,100 sales calls. Seriously. The buyers kept changing.

They have nine regions. My first break after eight years was in Atlanta, Ga. I remember her name: Susan. She was a regional buyer, and she said, "I'll take a chance with your cookies. I'll take them on.' " Controlled Growth Semprevivo's entrepreneurial ability was recognized by the federal government. In 1989, President Bush presented the then-17-year-old Semprevivo with the American Success Award in a Rose Garden ceremony. (When the White House called the company to inform Semprevivo of the award, a secretary hung up, convinced it was a prank.)

Semprevivo's business is privately held, so it doesn't release financial figures. He does say, however, that since its inception in 1986, he has never seen less than 47% year-to-year growth. But growth has not been pell-mell. He believes in what he calls controlled growth. "I'll never buy a piece of equipment or move into a larger plant based on one customer," he said. "That way, even if you lose a customer or he files for bankruptcy, you are still protected."

The company first moved from the original ice cream store into a 2,000-square-foot plant, then into a 7,000-square-foot facility. It's now housed in a 48,000-square-foot building in a large industrial park. His production line runs at least 20 hours a day and sometimes more than that -- to keep up with demand. Part of the reason for the company's success, according to Semprevivo, is an insistence on strict attention to quality.

There are five people on duty at any time the line is running who are empowered to shut everything down if they suspect something is wrong with the cookies their taste, their texture, their color. They are the shift manager, the bagging manager, the assistant manager and the line manager. The fifth is the quality control manager. His enviable job is to taste a cookie every five minutes and press an emergency button if there's anything he doesn't like.

When that happens, "we throw it away," Semprevivo said. Semprevivo's employees -- he calls them team members -- get fully paid health and dental insurance and a 401(k) plan. The company also offers them lifetime employment. "My saying to all my team members is, "As long as I have a job, you have a job.' It's a real morale booster," he said. It's a concept he'd like to see spread to other companies. "I want to change the corporate culture as much as I can," he told the El Paso Times. "If a small company can do it, any company can do it."