When Norman Kraft took over the company he wanted to leave his mark. I think he succeeded. What do you think?
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner, Dave Young.
Before we get into today’s episode, a word from our sponsor, which is… Well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So, here’s one of those.
[Wagmore Garage Door Ad]
Dave Young:
Welcome back to the Empire Builders Podcast. Dave Young here. Stephen Semple is sitting here and just told me that we’re… You keep… Man, do you know how to dial into my childhood, Stephen?
Stephen Semple:
It’s all about you, Dave.
Dave Young:
It is.
Stephen Semple:
It’s all about you.
Dave Young:
I don’t want to make it about me, but it always is. It’s the Swiss Miss and the…
So, he’s like, “It’s not the company, but it’s the product inside the company.” We’re going to talk about Kraft Singles.
Stephen Semple:
Yes.
Dave Young:
I’m assuming we’re talking about cheese…
Stephen Semple:
Yes.
Dave Young:
… or the American cheese product, whatever that means.
Stephen Semple:
Yeah.
Dave Young:
But my God, did I eat a lot of cheese as a kid? I don’t know why. My mom would just let me, my sister sit in front of the TV and grab a stack of Kraft Singles and watch Gilligan’s Island and all the things that were on TV right after school. So, we had a dachshund who knew what a Kraft Single being opened sounded like.
Stephen Semple:
Oh, that does not surprise me.
Dave Young:
Right. Is like, “Oh, someone is opening some cheese.”
Stephen Semple:
You have my attention now.
Dave Young:
I might get myself a little bite. So, today we’re going to learn about the Kraft Singles story.
Stephen Semple:
Yeah, and I know it’s a bit unusual because Kraft is a massive company and was a massive company even at the time that this was created, but they were going through a bit of a problem. And I just thought there was some innovative ideas inside the development of Kraft Singles.
And look, they sell billions of slices every year. It’s like, look how recognizable it was. Kraft Singles. “Oh, you’re talking about the cheese thing that’s wrapped in the plastic and…” Talk about recognized. Whether you eat the product, like the product, don’t like the product, we all know what it is. The moment I say it, everyone would know what it is.
It was very much driven by a change that was happening in the world and a bunch of things that Kraft had recognized because the Second World War has ended and basically what ends up happening was the baby boom. And instead of roughly two million births a year, suddenly the country is having three and a half million births a year, 60% increase. That changes everything. Schools overcrowded, new classrooms being built, neighborhoods appear overnight, but there’s also the whole thing of feeding the kids. School lunch programs were still developing. Kids brought lunch from home, and these lunches were uninspiring. They were yesterday’s pork chops. They were deviled eggs. They were bologna sandwiches. It’s just they were boring, and convenience hadn’t yet caught up to the sandwiches that kids were taking to school.
So, it’s the late 1940s. Kraft wasn’t a small food company. It was the largest cheese company in the world. It was primarily cheese at that point, and it was selling roughly a million pounds of cheese a day, generating tens of millions of dollars. So, they were big. And James Kraft had built the company around processed cheese, the product that kind of spoilage and consistency. That’s what the business was built on.
But after James retired, the leadership passed to his brother, Norman Kraft. And Norman wanted to make his mark on the business, and he noticed something. What he noticed was… This is the thing I found interesting. He looked at it and he went, “Wait a minute. Pre-sliced bread has changed the bread industry.” Wonder Bread, pre-sliced bread.
Dave Young:
Yeah, yeah, yeah. So, wait. When Norman took over, they weren’t even slicing cheese. They were just-
Stephen Semple:
No.
Dave Young:
… selling cheese.
Stephen Semple:
Correct.
Dave Young:
Okay. So, this is way before they were wrapping them individually.
Stephen Semple:
Correct. Correct.
Dave Young:
Okay.
Stephen Semple:
They were just basically selling cheese. And he looked at it and he said, “Well, there’s pre-sliced bread, and people seem to really like that. What if we could do cheese as easy?”
Dave Young:
And you know how hard it is to slice a single piece of cheese the size of a Kraft Single?
Stephen Semple:
It’s really hard.
Dave Young:
That’s no easy task. Yeah.
Stephen Semple:
Right, because the-
Dave Young:
You need a wire or something. Right? Yeah.
Stephen Semple:
Well, and it crumbles, and it falls apart, and it dries out. So, the engineering challenge of slicing wasn’t actually easy, wasn’t actually easy. And what they discovered was it’s about when to slice.
Dave Young:
Ah, okay.
Stephen Semple:
So, what they did was… What the Kraft research team discovered was this elegant solution. Instead of waiting for the cheese to cool completely, they would spread the molten processed cheese across a massive chilled stainless surface and the cheese cooled in the perfectly even slices.
Dave Young:
Oh, wow. Okay.
Stephen Semple:
Those slices were then flattened and cut into perfectly uniform three-inch squares.
Dave Young:
Okay.
Stephen Semple:
So, they made it the size to fit into a standard slice of bread. So, he looked at what’s a standard slice of bread. Cheese should fit into that. Brilliant, brilliant.
The product launched not as Kraft Singles. There’s another interesting thing. It launched as Kraft Deluxe.
Dave Young:
Kraft Deluxe?
Stephen Semple:
It was eight perfectly sliced pieces in a block, first product of its kind. And guess how well it did?
Dave Young:
I don’t know.
Stephen Semple:
Failed.
Dave Young:
Well, because I remember before we had Singles, we’re buying that. We’re buying a block of Kraft cheese that you just had to peel them off.
Stephen Semple:
Yeah, but the thing is nobody noticed, and here was the problem.
Dave Young:
Nobody noticed it was sliced. Is that what you saying, [inaudible 00:06:55]?
Stephen Semple:
Right, the packaging held the innovation. The name held the innovation. Kraft Deluxe, what’s that mean?
Dave Young:
Yeah.
Stephen Semple:
So, what consumers saw was a block of cheese. They couldn’t tell it was already sliced because they didn’t even know to look for it being already sliced. The biggest advantage was invisible. Sales suffered. Between 1949 and 1950, the Kraft cheese business declined by almost $8 million.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Using Stories To Sell]
Dave Young:
Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.
Stephen Semple:
Between 1949 and 1950, the Kraft cheese business declined by almost $8 million.
Dave Young:
Okay. Just they were having trouble letting people know that this cheese is already sliced and easy to grab one and put it on a piece of bread.
Stephen Semple:
By 1962, more than a decade later, sliced cheese blocks still had not caught on.
Dave Young:
All right.
Stephen Semple:
And the product wasn’t failing because people disliked it. The product was failing because people didn’t understand it.
Dave Young:
What’s Norman going to do here?
Stephen Semple:
Well, he realized something-
Dave Young:
I’m rooting for him.
Stephen Semple:
Yeah. Well, what he realized was something profound. People don’t buy invisible innovation. That’s the problem. People couldn’t immediately see the convenience, so therefore, the convenience didn’t exist. His answer was simple, what he decided to do. Now, here’s what he decided to do according to the documentation, but I actually think there’s a secondary reason why it suddenly became successful. He decided to wrap every slice individually. Now, each slice announced its own benefit. Right?
Dave Young:
Sure. Yeah.
Stephen Semple:
That’s what he decided to do. No explanation required. However, when they did that, they also changed the name from Kraft Deluxe to Kraft Singles.
Now, I believe, I believe, yes, the wrapping in the plastic was cool, but I believe the thing that made it successful was actually the name change. I think if they had just changed the Kraft Singles, I think they would’ve had success because now the block of cheese, you’re like, “Oh, it’s sliced in the single pieces.”
Dave Young:
Yeah, I don’t even have to worry about peeling one slice off of the rest, because sometimes that works and sometimes it doesn’t work. Yeah.
Stephen Semple:
So, they created the world’s first individually wrapped cheese slices, and that changed everything. Grab one slice, no knife, no mass, perfect proportions, perfect sandwiches. I believe it’s also the name change that contributed to it. Changing it from Kraft Deluxe to Kraft Singles is what made it work. And now, all of a sudden, instead of, you know, just peanut butter and jelly, you can now have ham and cheese, turkey and cheese-
Dave Young:
Yeah, yeah.
Stephen Semple:
… bologna and cheese, grilled cheese. Cheese suddenly became a standard sandwich ingredient because it was now as convenient.
Dave Young:
Bolognan and cheese with a couple of slices of extra cheese just tossed into the lunchbox.
Stephen Semple:
Yeah, because all of a sudden it was now as convenient as the bread.
Dave Young:
You could do it.
Stephen Semple:
Right.
Dave Young:
Yeah.
Stephen Semple:
You could do it, and you could drive the dog nuts by peeling it off. So, by 1970, it’s just massive. And now, sadly, Norman Kraft did not see all of the success because he died less than two years after Kraft Singles launched.
Dave Young:
Oh, wow.
Stephen Semple:
He saw it takeoff, but he didn’t see it become the iconic thing it is today, so that’s too bad.
But here’s the lesson, because this story to me is partially about cheese because, to me, there’s two things. There’s the one, the noticing sliced bread and going, “Well, why don’t we do sliced cheese?” That’s cool, but I think the biggest thing is you have to make your innovation visible.
Dave Young:
Yeah, I think that’s a great insight.
Stephen Semple:
Right? They had already invented a better product, but the problem was a communication problem. Consumers couldn’t see the innovation. It wasn’t easy. It was a marketing problem, and suddenly the packaging became the advertisement, Kraft Singles. And instantly the benefit is I don’t have to educate the consumer. Single slice of cheese, oh, crap, that’ll make making the sandwiches easier.
Dave Young:
Yeah. And once that becomes visible, as you say-
Stephen Semple:
Yes.
Dave Young:
… then you understand what you’re buying.
Stephen Semple:
Right.
Dave Young:
And everybody does it now. Right?
Stephen Semple:
Yes.
Dave Young:
You can buy a brick of Cheddar Jack cheese or you can buy individual slices, and the packaging looks different.
Stephen Semple:
Well, and even now-
Dave Young:
It doesn’t matter if it’s Kraft.
Stephen Semple:
… the individual slices-
Dave Young:
Right? Yeah.
Stephen Semple:
… they put that little piece of-
Dave Young:
It’s a little piece of paper.
Stephen Semple:
… paper in between. Yeah.
And here’s the other thing is that they realize, “We didn’t have to explain to people, ‘Oh, you could now do a ham and cheese sandwich.'” People would figure that out on… The moment it’s convenient, people will figure out all the ways to add cheese to the sandwich.
Dave Young:
Yeah. Do you remember eating cheese? These were not single wrap, but Kraft sold a little brick of cheese that was sliced, and the wrapper was like a wax-coated plastic that you could sort of reseal. Right?
Stephen Semple:
Oh, right. Yeah.
Dave Young:
But if you were relying on an eight-year-old kid like me to reseal the cheese so that it didn’t get exposed to air in the fridge, it was a losing proposition. You’re going to open it tomorrow, and there’s going to be one edge of it that’s all dried and yuck that you’re going to have to probably carve off of there if you want to eat any of it. So, the Singles wrapping them individually solved that problem, too.
Stephen Semple:
See, my-
Dave Young:
It made the cheese Dave proof.
Stephen Semple:
We did not have processed cheese in our house because my parents were very cheese picky. So, the processed-
Dave Young:
Oh, really?
I did not have processed cheese until I actually was on my own in university having to fend for myself.
When all of a sudden stars lit up the sky, and you tasted the wonderful magnificence that is a Kraft Single. I want to grab a brick of it right now and go sit down and try to find some old reruns of some black and white show. Yeah.
Stephen Semple:
So, my challenge to people is, moment you have an innovation, make it easy for people to see it and experience it. That’s the goal. If the innovation is hidden or requires all sorts of education around it, the innovation is just not going to take off. No matter how great the innovation is, the innovation has to be easy to see the innovation, or if it’s something that’s intangible, the impact of the innovation because, otherwise, the innovation will just never catch on, never catch on.
Dave Young:
Yeah, I think it’s a good observation. So, where are you going to take me next in my childhood? That’s what I want to know. How do you find-
Stephen Semple:
I’m not sure.
Dave Young:
… about all these things about me?
Stephen Semple:
Well, we have our spies.
Dave Young:
Been doing some deep research. Yeah.
Stephen Semple:
I just asked the Dave AI.
Dave Young:
Yeah. How come nobody has named an AI Dave?
Stephen Semple:
Are they all just… Isn’t it just implied, Dave? Isn’t it just-
Dave Young:
I’m going to tell Claude that I’m renaming it. From now on, you’re Dave. All right. Anything else about cheese? Are we done?
Stephen Semple:
That’s it for right now. That’s it. Yep.
Dave Young:
Okay. Thanks for bringing us the sliced cheese story to the Empire Builders podcast.
Stephen Semple:
Thanks, David.
Dave Young:
Talk to you later, Steve.
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