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Galaxy capitalizing on niche in produce departments

Galaxy Nutritional Foods Inc., headquartered in North Kingstown, RI, got its start in 1972 as Fiesta Foods & Galaxy, which was founded by Angelo Morini in Pennsylvania. The company relocated to Orlando, FL, in 1991, where it established its own manufacturing plant and was renamed Galaxy Cheese Co.

"The company's strong growth enabled it to go public in 1987," Jamie Schapiro, director of marketing, told The Produce News. "It reached approximately $60 million in gross sales in 2000-2001. In November 2000, it was again renamed to Galaxy Nutritional Foods."

Brian O’Farrell, Sabrina Mak, Jerry Schwartz, Rick Antonelli and Jamie Schapiro at the Galaxy Nutritional Foods headquarters in North Kingstown, RI. (Photo by Gordon M. Hochberg)
By then, the company had approximately 400 SKUs and sold to natural food stores, grocery stores and foodservice operations domestically and internationally.

"In 2003, Galaxy raised additional equity," said Mr. Schapiro. "The majority of the funding - 57 percent - came from Fred DeLuca, founder of Subway Restaurants."

Galaxy Foods' soy-based products are purchased primarily by consumers with dietary concerns, such as heart health, allergies and lactose intolerance, as well as those who turn to soy alternatives as a lifestyle choice.

Galaxy's "Veggie" brand found its niche in the produce section, alongside other soy items, "while its competitors remained in the dairy section," Mr. Schapiro added.

Over the next few years, the company began to discontinue some of its SKUs and to slim down its operations. In 2006, it transitioned to 100 percent outsourcing with Schreiber Foods in Wisconsin, one of the larger cheese manufacturers in the country.

"This enabled Galaxy Foods to focus on brand management and product development," said Mr. Schapiro. "In 2008, Galaxy Partners bought out Fred DeLuca.

"In 2009, Mill Road Capital bought the company and took it private," he continued. "Mill Road tendered for the public shares and partnered with Galaxy Partners to take it private."

The company moved its headquarters to Rhode Island from Florida in February 2010. The entire management team was changed, and new people were hired to run the company.

Today, Rick Antonelli is the chief executive officer, Brian O'Farrell is the chief financial operator and Jerry Schwartz serves as executive vice president of sales and marketing. At the time of the transition, the company employed a staff of 30 people.

"Because all of our products are outsourced, we now have a staff of 19 people," said Mr. Schapiro. "There is high energy in the company, with a fresh and strong outlook on where we will go in the future. Management is seeking new brands, and with Mill Road as its financial partner, the company's focus is on special dietary needs such as lactose-free, wheat-free, gluten-free and dairy-free products."

Galaxy Foods' goal is to have additional brands to fold under one platform so the company will eventually have a brand portfolio. It now distributes product across the United States and into Canada and the Caribbean.

Mr. Schapiro said that the company's "Veggie" cream cheese is the No. 1-selling cheese alternative and adds an element of uniqueness to produce departments. "Veggie" is a soy-based, lactose-free cream cheese alternative that provides an excellent source of calcium without the cholesterol, trans fat and saturated fat found in cheese. The product is available in a variety of forms and flavors in slices, shreds, spreadables, blocks and grated topping.

Also sold in produce departments is the company's "Rice" non-soy-based, rice-derived product. It has no cholesterol, trans fat or lactose and is an excellent source of calcium. "Rice" is available in slices, shreds, blocks and grated topping. It comes in mozzarella, pepper jack, Swiss and American flavors.

"Our 'Vegan' brand products, also sold in produce departments, are free of all animal products," said Mr. Shapiro. "It is 100 percent dairy-free and perfect for vegan diets or for those with dairy allergies. This tasty soy-based offering is an excellent source of calcium with zero percent cholesterol, trans fat and saturated fat. 'Vegan' comes in a variety of forms, including blocks and grated Parmesan flavor toppings."

Galaxy Foods' "Rice Vegan" product, another produce department item, is free of preservatives, casein, gluten, dairy, soy, lactose, cholesterol and trans fat. It is available in individually wrapped slices and blocks.

The company's "Veggy" and "Wholesome Valley Organic" cheese-alternative brands are sold in dairy departments.

"Driving products is our current goal," said Mr. Schapiro. We want to get our 'Veggie' and 'Vegan' brands into the hands as many consumers as possible by getting it into stores. We feel we have a very good following, and we have established space in produce sections with these products. They taste and spread like real cream cheese, and they are cultured like regular cream cheese"

He added that Galaxy Foods' "mouse trap" is to drive a lot of attention and newness to produce departments with these new cream cheese products.

"Ultimately, we want to drive the growth of our category as a leader, and we feel that new products can drive that growth," he said. "Strategically, we want to provide people with healthy choices and great-tasting alternatives for their dietary and health needs."

Mr. Schapiro noted that according to Mintel International Group Ltd., a London-based market research firm, 30 million to 50 million people in the United States have food allergies and are lactose-intolerant.

Another leading research company, Intel Corp. in Santa Clara, CA, reports that 23 million Americans are vegetarians, and 1 million are vegans.

And the Nielsen Co., a leading global information and measurement firm, reports that cream cheese is a $925 million opportunity annually across all venues of trade.

"Many people have never tried our product, and many of those can never eat cheese again," added Mr. Schapiro. "Or they don't want to use cheese and butter due to their lifestyle choice. We are always looking to maximize consumers' taste profiles and usages, and Galaxy will continue to evolve its products to deliver the best-possible quality to consumers. Research and development, which is conducted at our Rhode Island facility, is therefore a very important part of our company."

Mr. Schapiro said that the company wants people to know that it is not the Galaxy Foods of the past.

"We're a new company, and we enjoy what we're doing," he said. "With new management and expertise, there is a lot of excitement at Galaxy today. We'll continue to do what's right from a business standpoint and to look at new products, while at the same time keeping our line slimmed down to what works best."

He added that integrity and service to its customers are paramount at Galaxy.

"People look to us as leaders of this category, and we are the drivers who will add a sense of newness to the scene," he said. "Rick Antonelli always mentions that we are not just selling a product, but selling a lifestyle."

Mr. Antonelli said, "We believe that Americans are demanding foods that satisfy their family's allergen and nutritional needs, and we want to help them find a great-tasting and healthy solution."