Photo courtesy of Uplands Cheese Company

Mike Gingrich, president of

Uplands Cheese Company,
stands amidst his company’s
hand-crafted artisan cheese.
Marketed as Pleasant Ridge
Reserve, the cheese is pro-
duced in small batches using
milk from the company’s
grass-fed cows and hand-
rubbed for several months to
produce its superior flavor.
The company uses the Inter-
net as a supplemental sales
channel for its cheese.

Planning for Success:

Uplands Cheese
Company
A North Central Initiative for Small Farm
Profitability case study

By Mark Hutchison
Copyright 2002, UNL Food Processing Center
 Uplands Cheese Company, Inc.
http://www.uplandscheese.com
4540 County Rd. ZZ
Dodgeville, WI 53533
Phone: 866.588.3443
Fax: 608.935.7030
E-mail: contact@uplandscheese.com
Mike Gingrich, President

About the North Central Initiative for Small Farm Profitability

The North Central Initiative for Small Farm Profitability is a four-state, multi-institutional, farm-
to-fork effort designed to improve the profitability and competitiveness of small and mid-size farms
in Nebraska and the Midwest. This initiative brings together a unique and powerful blend of farm-
ers, food and social scientists, marketers, extension educators, economists and others who are at-
tempting to identify, adapt and apply practical, science-based, market-driven strategies that work.

Partners include the University of Nebraska’s Center for Applied Rural Innovation (CARI) and
Department of Food Science and Technology/Food Processing Center, Iowa State University, Uni-
versity of Missouri, University of Wisconsin, the Center for Rural Affairs in Nebraska, Practical
Farmers of Iowa, and the Michael Fields Agricultural Institute in Wisconsin. The initiative is
funded by a three-year grant from the U.S. Department of Agriculture.

For more information, contact Ken Wurdeman, Initiative Coordinator, University of Nebraska,
58 Filley Hall, Lincoln, NE, 68583-0947, Tel: 402.472.0807 or Email: kwurdeman2@unl.edu.

About the Case Studies

More than 40 case studies will be developed in the four-state region, including 26 in Nebraska. The
case studies will focus on new generation cooperatives, networks for marketing high value crops
and livestock, production and cooperative arrangements that increase the farmer’s share of food
system profits, community support of small and mid-size operations, successful capital transfer
strategies that benefit both beginning and senior farmers, on-farm diversification, and successful
use of the Internet by farmers and small rural businesses to market products.

About the Author

Mark Hutchison is a native of Nebraska. He has been involved in agriculture and the food industry
most of his professional life including almost 15 years of experience with two Fortune 100 compa-
nies. He currently works full-time as a consultant at the University of Nebraska-Lincoln’s Food
Processing Center. Mark can be reached at 402.472.0381 or mhutchison1@unl.edu.

About the University of Nebraska-Lincoln’s Food Processing Center

The Food Processing Center provides a one-stop resource for established and emerging value-added
food companies. Its mission is to advance the value-added food manufacturing industry by partner-
ing on technical and business development from idea through on-going market support.

UNL Food Processing Center • Page 2 •

Table of Contents
Overview 4
Introduction 5
The Beginning 5
The Marketing Plan 7
Conclusions 11

UNL Food Processing Center • Page 3 •

Overview
Since the early days of agriculture, farmers and
ranchers have sought ways to increase the value of
their crops and livestock in the marketplace. In the
nineteenth century, pioneers grew a wide variety of
crops and owned several types of livestock. They used
the inputs from their diversified operations to produce
finished goods. They ground their grains into flour
and utilized the flour, along with their milk, butter,
and eggs, to bake pies, breads and other products not
only for their own consumption but also in an effort to
generate a higher return for their labors. These value-
added agricultural products were then sold or traded
with their neighbors and local merchants. These pio-
neers were producers, processors, and marketers.
Over time, as the population increased, towns and
cities developed and the country’s food system grew,
the local processing and distribution of value-added
products steadily declined. Farmers and ranchers sold
their crops and livestock for others to process, dis-
tribute, and market. The “Trends in U.S. Agricul-
ture” report, published by the National Agricultural
Statistics Service (NASS) of the United States Depart-
ment of Agriculture, included this about the variety of
agricultural products produced on a farm at the begin-
ning of the twentieth century:
A typical farm or ranch at the beginning of
the century produced a wider variety of com-
modities than those operating at the end of
the century. Farm operators and the coun-
try’s population were much more self-
sufficient 100 years ago. Farms and ranches
are now much more specialized, with a small
number of operators producing the majority
of agricultural products consumed today.
In recent years agricultural producers have been
seeking once again to increase the value of their out-
puts in an effort to increase their farm income. Prices
for commodity products have declined faster than
the cost of producing those products. The NASS
report cited above bears this out.
Adjacent is a chart that shows the ratio of the
Prices Received Index to that of the Prices Paid
Index over most of the century. The former is the
measure of prices ranchers and growers receive
for their products while the latter is the measure
of the costs of the inputs necessary to realize
saleable commodities. When the ratio (red line)
drops below 1 (black line) farm profitability has
decreased.
Nationally, the inflation-adjusted per farm
average market value of agriculture products in-
creased by 6.6 percent from 1992 to 1997 while in Wiscon-
sin, this average declined by approximately 4 percent from
1992 to 1997 according to the 1997 Census of Agriculture.
In Iowa County, Wisconsin, the home of Uplands Cheese
Company, the situation was even worse. The inflation-
adjusted per farm average market value of agriculture prod-
ucts declined by 17.4 percent from 1992 to 1997. Addition-
ally, during this time, the number of full-time farms in Iowa
1
County decreased by 10 percent. Iowa County is in an
agricultural area that has been experiencing significant
change. Another North Central Initiative for Small Farm
Profitability case study, “The Dane County Farms and
Neighborhoods Initiative: Saving the Country, Saving the
City,” by Maria Powell and Greg Lawless provides a good
2
snapshot of the changes affecting the area. Dane County is
the neighboring county to the west of Iowa County.
Iowa County is located in the Western Uplands of
southwest Wisconsin. It is a highly scenic area of the state
characterized by rolling hills (or ridges) and valleys. It is
here where Mike and Carol Gingrich and Dan and Jeanne
Patenaude made the decision to return to the past, in more
ways than one. The partners are not only processing and
marketing a value-added product but also utilizing
centuries-old techniques in the operation of their dairy farm
that allows them to achieve a unique quality of milk neces-
sary for creating their award-winning cheese, Pleasant
Ridge Reserve.
Pleasant Ridge Reserve has been a success for Uplands
Cheese Company. The grounded wisdom of Mike Gin-
grich, who operates the cheese portion of the operation, has
played a key role in achieving this success. Whether it was
doing the research to identify the kind of cheese to produce
or planning their marketing strategy, Gingrich has taken a
well thought-out, realistic approach to the business. This
levelheaded approach served Uplands Cheese well when the
time came to develop a Web site during the dotcom mania
at the end of the twentieth century.
UNL Food Processing Center • Page 4 •
Introduction University of Wisconsin’s Center for Dairy Research
The advertisement ran often
during the dotcom boom of the late The Wisconsin Center for Dairy Research (CDR) serves as a national leader
twentieth century. A group of in strategic research to improve the competitive position of the dairy indus-
young, eager entrepreneurs are try. The Center links its staff and University faculty, students and the dairy/
gathered around a computer staring food industries to address key issues resulting in transfer of technology and
intently at the screen. The person at communication of information. The Wisconsin Center for Dairy Research
the keyboard presses a key and the is organized into four functional areas: research, applications, communica-
budding company’s Web site goes tions programs and administration.
‘live’. The commercial switches to
the computer screen showing an The CDR provides individual assistance to manufacturers exploring new
order counter. Immediately, the specialty cheese opportunities. CDR staff will sit down and discuss concepts
company begins to receive orders and then assist in creating a plan for manufacturing the cheese. CDR can
and the room erupts in cheers. Sud- run research trials at the UW Dairy Pilot Plant and also assist with plant
denly the order meter speeds up and trials at the company to develop new products.
within a matter of seconds, this new
company has received tens of thou- The CDR's pilot cheese making facility is located in the UW-Madison Dairy
sands of orders. Plant, an operational Grade A dairy. This setting offers flexibility in cheese
The obvious objective of this milk preparation. The CDR's pilot facility is ideal for testing new cheese
®
IBM commercial is that this new, ingredients.
immediately successful Internet-
based company was going to need The Center is located at the University of Wisconsin – Madison. For more
lots of hardware, software, and tech- information, contact John Jaeggi by phone (608) 262-2264 or e-mail
nical help to handle all of those or- jaeggi@cdr.wisc.edu.
®
ders coming in and IBM was more
than willing to be there to help.
What it also represents, though, is
When the owners of Uplands The Beginning
Cheese Company were ready to The Web site is only one exam-
the expectation many companies
launch their business in the Fall of ple of the wisdom Gingrich, his
had about the Internet during the
2000, they also wanted to set up a wife Carol, and their partners Dan
wildly optimistic era at the end of
Web site for taking orders online. and Jeanne Patenaude, have shown
the twentieth century. If they set up
Company President Mike Gingrich, in the development of their farm
a Web site, their company could
though, had realistic expectations. and cheese business. The families
become an overnight success.
Gingrich wanted to reach con- decided in 1994 that they wanted to
With high expectations, there
sumers from across the country, but farm on a larger scale and imple-
was a rush by companies to set up
knew that the Web site wasn’t going ment a production method called
Web sites so they could sell their
to work as his primary marketing rotational grazing. The cows in
products online. Many bought in to
channel. “I didn’t expect anybody their herd are moved to a different
the promise of constant orders com-
to be surfing the Internet looking part of the pasture every day, allow-
ing in from all over the world. Un-
for cheese. So I wasn’t really trying ing the grasses the cows eat to re-
fortunately, for most, their plans did
to…catch their eye. What I was grow. This allows them to provide
not work out as they had hoped.
thinking was that if someone had a regular supply of fresh grass for
Many of those companies selling
heard about our cheese, through a the herd to eat, which is a key ele-
products online or selling the equip-
friend or an article they had read in ment in producing the quality of
ment and services to support them
the paper or having had it in a milk needed to make a cheese like
experienced a bad ending. During
restaurant somewhere, they had a Pleasant Ridge Reserve.
the period from January 2000 to
previous contact or a reason to want It took Gingrich and Patenaude
February 2002, according to the
[or] find our cheese, that was the around three years to layout the pas-
Web site WebMergers.com, more
kind of person I wrote the Internet ture fences. They built 20 separate
than 800 Internet-related companies
site for.” pastures on land that had been all
had shut down their Web sites or
declared bankruptcy.
3 contoured strips with no fences.

UNL Food Processing Center • Page 5 •

 Growth of Specialty Cheese
Specialty cheese has seen significant growth in recent years. Overall cheese consumption has dramatically increased
in the past 30 years, jumping from 11.3 pounds per person in 1970 to 31.2 pounds per person in 2000. Per capita
consumption is expected to continue to grow rapidly by rising to 37.5 pounds by the year 2009. Specialty cheese
consumption is helping to drive this growth.

Retail sales of specialty cheese reached almost $2.4 billion in 2000, a 4 percent advance over 1999 sales. Retail sales
of gourmet/specialty cheese will continue to grow at an approximate rate of 4 percent over the next five years to
nearly $2.9 billion by 2005. This would represent an increase of 22 percent over 2000 sales.

Some of the reasons behind the growth of the specialty cheese market include: more Americans traveling abroad and
tasting unique varieties of cheese in Europe and other areas; restaurants offering the time-honored European tradi-
tion of the cheese course; the overall trend of Americans wanting more variety and robust flavor in their food; educa-
tion from retailers, foodservice, and cheese organizations in the types and use of unique cheese; the growth of ethnic
populations and interest in ethnic food; and a greater availability and access to a wide variety of cheese.

Source: Zumwalt, Brad, The Specialty Cheese Market, University of Nebraska Food Processing Center, 2001.

They also worked hard at building a herd with the type
of genetic make-up they thought would produce the
quality of milk they thought was possible. It took
about three years to scale-up their new farming opera-
tion. In 1997, they were finally ready to pursue some
value-added initiatives. Being located in Wisconsin,
one would not be surprised the partners eventually de-
cided on making a cheese product, but ultimately it
was the milk that lead them to that decision.
“We heard a lot of anecdotal information from
older cheesemakers that June milk was the best milk
for making cheese, that you got great flavor when the
4
cows first got out on the grass,” said Gingrich. This
was confirmed when Gingrich discovered that a Uni-
versity of Wisconsin professor, Bob Lindsey, had iden-
tified certain flavor compounds that were more preva-
lent in grass-fed milk. Having the anecdotal informa-
tion confirmed by a scientific source was an important
part of Gingrich’s own research in the type of cheese
they decided to make.
Knowing they wanted to do a raw milk cheese
made from milk from grass-fed cows, Gingrich began
learning all he could about different types of cheese
and the cheesemaking process. First, he completed the
University of Wisconsin’s Cheese Technology Short
Course to become familiar with the cheesemaking pro-
cess. Gingrich then combed through Cheese Primer, a
book by Steven Jenkins that contains information on
over 300 types of cheese. First, he identified those
made with raw milk. From that group he narrowed the
search further by identifying those made with milk
from grass-fed cows. This left around 10 different
kinds of cheese from which to find the cheese they
would eventually make. Then came the fun part. Gin-
grich and his friends had a tasting party at which he
served as many of the 10 cheeses that he could find. The
winner was a Beaufort French cheese.
Once they had decided on the general type of cheese
they wanted to make, it was time to prepare some sample
batches. During Gingrich’s participation in the cheese
short course, he had met John Jaeggi, a researcher at the
university’s Center for Dairy Research (CDR) (see sidebar
on previous page). Jaeggi had been very enthusiastic
about Gingrich’s plan for making a cheese based upon the
quality of their herd’s milk. Jaeggi worked with Gingrich
in preparing samples in the CDR’s pilot plants. After sev-
eral trials and tasting sessions, the team believed they had
a cheese with superior taste attributes.
Another key member of Gingrich’s team was Bob
Wills. Wills was already in the cheese business and oper-
ated a cheese processing facility. Wills was more than
happy to not only let Gingrich use his Cedar Grove
Cheese processing facility to make his own cheese, but
also lend a hand in the product’s development as the team
refined and scaled-up the make procedure. Gingrich
knew that every part of the cheesemaking process would
have a profound effect on the final quality of the cheese.
“It’s the milk, the make procedure we use, the way we fin-
ish it, all combined that give us the flavor,” said Gingrich.
Gingrich finishes the cheese by hand-rubbing it for
several months. Besides being labor intensive, it meant
that Gingrich had to find a long-term storage facility for
the cheese once the processing was done at Cedar Grove.
He eventually found a facility in the nearby town of
Spring Green, Wisconsin. He installed walk-in coolers
enabling him to control the temperature and humidity

UNL Food Processing Center • Page 6 •

environment for the cheese where
he could do the finishing work. He
also uses this facility for shipping to
his customers.
The Marketing Plan
Confident in the quality of their
product, Gingrich and Uplands
Cheese Company began commercial
production in June 2000. Then
came the next challenge—finding
the most effective way to market
their product. “Initially, we didn’t
know the best channel to market it,”
said Gingrich. However, they knew
they wanted, and needed, to be in
the high-end artisan, specialty
cheese market. “We were making a
handcrafted product that had a lot
of labor and was made in small
quantities so we knew that the only
place where we could get the kind
of price that we would have to get
would be in the high-end of the
market,” said Gingrich.
They decided on four primary
markets to get started—high-end
cheese stores, white tablecloth
restaurants, farmers’ markets and a
Web site. “We planned to explore
those four channels the first year
and try to figure out, based on the
experience of the first year, which
one would be the best or the one we
would want to concentrate on,” said
Gingrich. Appropriately, the nature
of the product strongly influenced
his decision on the marketing chan-
nels he targeted.
An additional consideration
that Gingrich had to factor into his
marketing plan, and the role that
the company’s Web site would play
in the plan, was market channel
conflict. Many existing companies
with established distribution net-
works have difficult decisions to
make when it comes to deciding
whether to sell online. If they
choose to sell directly to their cus-
tomers, thereby eliminating the
middlemen (their distributors), they however, the consumer must pay to
risk alienating those on whom they ship individual packages, which can
currently depend upon for selling increase the final cost to the point o
their products. On the other hand, being prohibitive. Resolving the
they also risk missing a potentially issues of pricing, distribution, and
significant market if they choose not channel conflict can be daunting.
to sell online. Additionally, the To learn more about market channel
company may be giving up addi- conflict, see the sidebar below.
tional profits. The mark-up on spe- Gingrich already had a well
cialty cheeses from the manufac- thought-out plan for what he
turer to a consumer can range any- wanted for the company’s Web site.
where from 50 percent to 300 per- “I thought I had to have an easy
cent. A company may be able to way to order. I’ve seen these Web
capture some of the additional prof- sites where you print out a sheet
its traditionally garnered by its dis- that you fill out and fax in and I just
tributors and retailers by offering didn’t want to do that. I didn’t
the product for a price similar to or think it was professional enough,”
slightly below its channel partners; said Gingrich. If a potential cus-
Market Channel Conflict
A channel conflict exists when a company sells products to the same market
through more than one distribution system. Conflicts can take several dif-
ferent forms. One form might occur if a processor of a specialty food prod-
uct (i.e.—Uplands Cheese) tries to sell its product in both specialty/gourmet
stores and traditional retail grocery stores in the same market area. The
specialty/gourmet stores may be less inclined to carry the processor’s prod-
uct because the product’s image as a special, gourmet, or unique item is
‘diluted’ by its presence in the traditional grocery store.
The emergence of the Web as an e-commerce vehicle has brought another,
more common, form of channel conflict to the forefront. By establishing a
Web storefront on the Internet, manufacturers of almost any product have
an efficient means of selling directly to their customers. Companies like
Dell Computer have taken advantage of this opportunity and have been ex-
tremely successful. In making the decision to sell online, Dell ran the risk
of alienating its other distribution partners (i.e.—computer stores, electron-
ics superstores, etc.). By selling online, Dell certainly cannibalized sales
from its distribution partners. This is channel conflict in its purest form.
Any manufacturer or food processor that is deciding whether to sell online
must weigh the advantages of selling directly to their customers with the
risk of undermining their products’ success in their other distribution chan-
nels. With most retailers using some form of category management to
determine what products to carry and promote, such a decision to directly
compete must be taken seriously. In the case of Uplands Cheese, Mike
Gingrich took the right approach. He wanted to provide a sales channel to
those customers who lacked access to the product through his other distribu-
tion channels, but by adding a shipping fee and only minimally promoting
the Web site, Gingrich increases his sales without undermining the success
of Pleasant Ridge Reserve in his primary distribution channels of specialty
cheese shops and white tablecloth restaurants.
UNL Food Processing Center • Page 7 •
tomer found their way to the Up-
lands Cheese Web site, Gingrich
wanted to make sure they could not
only conveniently order, but also get
to know the people behind the com-
pany, the hand-process involved in
making the cheese, and their fam-
ily’s farming philosophy. He real-
ized that unique challenges existed
for companies that want to sell food
over the Internet, especially one
with an expensive product like
Pleasant Ridge Reserve.
One of the early and most dis-
cussed skepticisms of the Web as a
marketing channel had to do with
the fact shoppers could not taste
food, try on clothes, or otherwise
‘handle’ products before they pur-
chased them. Despite this being
especially true of a high-end prod-
uct like Pleasant Ridge Reserve,
Gingrich believed a Web site could
fulfill an important role in his over-
all marketing strategy. “It is for the
person who doesn’t shop in a spe-
cialty cheese store, but has heard
about the cheese [and] wants to try
it,” said Gingrich.
“A cheese like this has to be
sampled if somebody is going to buy
it. We even named it avoiding any
suggestion of flavor. We didn’t
want anyone to have a preconceived
idea of what it was going to taste
like,” said Gingrich. The only sub-
stitute for tasting it is to have a
trusted authority or friend or a
writer who says this is a great
cheese, you ought to try it,” accord-
ing to Gingrich. Ultimately, this
fact largely determined the market
channels that would be the most
successful for Uplands Cheese.
Since the key to the company’s
success was in getting people to
sample the cheese, this is where
Gingrich spent his time. He pre-
pared some display materials in-
cluding labels, brochures, and shelf
talkers for retailers and restaurants
to use if they decided to carry his
cheese. First, he sent samples and
brochures to specialty cheese stores.
He followed up each lead with a
phone call and began gaining distri-
bution in metropolitan areas on the
east and west coasts. He reached
chefs in much the same manner.
He researched white tablecloth
restaurants that had a cheese course,
sent samples, and communicated
the history and unique properties of
the cheese.
One of the farmers’ markets
Gingrich attended that first year
helped the company get a foothold
in restaurants. One Sunday a
month, a restaurant industry group,
Chef’s Collaborative, sponsors a
farmers’ market in Chicago. Open
to the public, the event is also at-
tended by key chefs from the Mid-
west. Eventually, word of the qual-
ity of his product began to spread
and the number of outlets carrying
Pleasant Ridge Reserve grew.
The vast majority of retail out-
lets that carry Pleasant Ridge Re-
serve are specialty cheese stores lo-
cated on the east and west coasts.
Gingrich estimates that Pleasant
Ridge Reserve is carried by approxi-
mately 50 specialty cheese stores.
He said he can’t be sure of the exact
number because around 25 percent
of his sales are to people and firms
that resell to restaurants, including
many of the specialty cheese stores.
Pleasant Ridge Reserve is on the
menu in some form in approxi-
mately 100 restaurants, according to
Gingrich. This left a significant
part of the country, and many po-
tential customers, with no local out-
let for purchasing the cheese. The
kind of customers that, in today’s
Internet wired world, expectantly
turn to the World Wide Web.
“These [types of] customers would
deliberately come to the site. They
would come with the idea, ‘Gee,
maybe I want to know something
more about this and if my expecta-
tions are fulfilled, I might order
some’.”
UNL Food Processing Center • Page 8 •
Thus, once a potential customer
arrived at the Uplands Cheese Com-
pany’s Web site, Gingrich wanted
to be ready to tell the company’s
story and provide a means for them
to order Pleasant Ridge Reserve.
He identified a local Web site de-
sign firm, Web Wise Design and
Marketing, to help him convert his
vision into reality. Gingrich said he
chose Web Wise because they had
been around for a relatively long
time and had done quite a few Web
sites for area firms. “I had a lot of
confidence in him,” said Gingrich.
Gingrich had a budget of
$1,500 for developing the Web site.
He was able to get it done for that
amount by contributing heavily to
much of the content on the site. He
did all of the writing and took all of
the photographs that appear on the
site. Web Wise would create a draft
layout and send it to Gingrich to
review and provide feedback. It
didn’t take too many versions before
they had one that achieved what
Gingrich wanted.
Besides the cost savings
achieved by doing the writing him-
self, it is obvious when visitors to
the site read about the farm, the
cheese, and the families of Uplands
Cheese Company that Gingrich not
only knows his product well, but
also is passionate about the values
behind its production.
One of the challenging aspects
of selling the cheese on a Web site,
and in particular selling direct to
consumers, was in deciding how to
merchandise the cheese on the site.
It is produced in 10-pound wheels
that sell, at $15.00 per pound, for
5
$150.00 each. Gingrich thought
this might be cost prohibitive for
consumers, especially considering
that the target audience for the Web
site was those consumers who had
never tried the cheese. It was
highly unlikely they were going to
purchase $150.00 worth of cheese
just to try it. As was typical of Gin-
grich, he wanted to keep things
fairly straightforward so as to sim-
plify packing and shipping the or-
ders he received from the Web site.
He decided to offer the product in
four sizes—an eighth, a fourth, and
a half wheel in addition to a full
wheel. The eighth of a wheel sells
for $18.75 plus shipping.
This brought Gingrich to the
next important decision. How much
would consumers be willing to pay,
on top of the cost of the cheese, for
shipping the product? While he
considered putting in the logic to
calculate the actual cost of shipping
for each order, he decided against it.
“It seemed more than was neces-
sary,” said Gingrich. He chose to
charge a flat rate for shipping and
handling, whether the customer was
one block away or 2000 miles away.
An eighth of a wheel (1.25 pounds)
costs $10.00 to ship, a quarter of a
wheel (2.5 pounds) $12.50, a half
of a wheel (5 pounds) $15.00, and a
whole wheel (10 pounds) $20.00.
This particular decision is a risky
one for Uplands Cheese as shipping
charges often deter consumers from
purchasing things online.
According to a recent Ernst and
Young research report, “Global On-
line Retailing,” 46 percent of con-
sumers identified shipping as the
biggest factor discouraging online
purchases. Additionally, almost 55
percent indicated that free shipping
would get them to visit a site more
6
often.
Gingrich has a separate ship-
ping policy for his commercial cus-
tomers. He utilizes software pro-
vided to him as part of his arrange-
ment with United Parcel Service to
calculate the actual cost of shipping
an order. He prints out an invoice
with the actual shipping charges
and includes it in the package when
he ships it.
The cost of having the Web site
designed was only part of the ex-
pense of developing an e-commerce
Web site. While Gingrich decided
not to calculate actual shipping on
the site, he was committed to allow-
ing customers to pay with a credit
card. As a result, he needed some
additional functionality built into
the site. He not only needed to have
the site hosted on a secure server, so
credit card numbers could not be
stolen while in-transit, but also set
up an online merchant account (see
sidebar below).
Given the hand-crafted nature
of the cheese aging process, Gin-
grich knew he needed the ordering
and payment part of the Web site to

Merchant Account Terms

Merchant Credit Card Account: Enables a merchant to accept credit cards from shoppers for payment.

Independent Sales Organizations (ISOs): ISOs market the merchant account services of others, typically banks.
They are a “distributor” of merchant accounts. They will place a merchant with a Merchant Bank for a transaction
fee and/or percentage of sales. The bank's own fees are usually much lower. ISOs are more likely to accept compa-
nies perceived as being high risk.

Credit Card Processor: The Merchant Bank contracts with a firm—called a credit card processor—to processes credit
card sales, debiting credit cards and depositing money in your account when a transaction ‘clears’ or is completed.

Payment Gateway: In order to get real-time credit card authorization, a merchant needs a bridge between its
e-commerce website and the credit card processor that will relay the credit card information securely to the processor
and then tell the shopper the status of the transaction (completed or rejected). A merchant needs some way to com-
municate with the processor, either (1) a card-swipe terminal, (2) a PC software program and modem, or (3) a Web
payment gateway.

Chargebacks: These are disputed and/or fraudulent charges that are ‘charged back’ to the merchant.

Discount Rate: A percent of each sale that is paid to the bank that provides the merchant account. The actual rate
depends on the volume of transactions and value per transaction. Rates are typically around 2-4 percent for small
businesses.

Minimum Monthly Processing Fee: A minimum fee charged by the bank for a merchant account. This only comes
into play if the total monthly dollar amount the bank receives from its share of the merchant’s transaction volume
(discount rate) doesn’t equal or exceed this amount. The bank wants to be guaranteed a certain amount of money
each month.

Transaction Fee: This is a flat fee charged by the bank or payment gateway provider. It is typically 15 to 50 cents
per transaction.

UNL Food Processing Center • Page 9 •

be as efficient as possible. He
wanted the entire payment process
to be seamless. When a customer
submitted an order with their credit
card information, the credit card
would be verified, the customer
charged, and Gingrich paid without
him having to do anything.
Once again, he turned to his
partners at WebWise Design and
Marketing. WebWise, in addition
to performing design work, also op-
erated a hosting service called Host-
Wise. Uplands pays $90 per month
for the secure hosting service.
While this provided the secure host-
ing solution, Gingrich still needed a
merchant account. Based upon the
advice and assistance of WebWise,
he set up a merchant account with
Card Service International (CSI).
CSI, a subsidiary of First Data
Corporation, is one of the largest
credit card processing firms in the
United States. While more expen-
sive than some other merchant ac-
count providers, Uplands Cheese
pays $51 per month with a 2.35 per-
cent discount rate (see sidebar), CSI
offers some usability features that
many small businesses find appeal-
ing.
Mymerchantoffice.com is a CSI
Web site where account holders can
go to manage their account, includ-
ing entering credit card numbers
from individuals who call in their
order instead of using the mer-
chant’s Web site payment form.
Additionally, the company’s anti-
fraud measures are fairly robust.
Their payment gateway utilizes an
address verification service, assigns
a card verification value (based
upon predetermined risk factors),
and provides multiple ways to pre-
vent repeat fraud. While fraud is
not a big problem with food prod-
ucts, these preventative measures
are reassuring to companies selling
products online.
There are a seemingly infinite
number of merchant account
providers available from which to
choose. Uplands Cheese may have
been able to find superior features
and pricing by shopping around;
however, rather than tie up his time
in learning about the sometimes
confusing aspects of merchant ac-
counts, Gingrich relied on the ex-
pertise of his development team in
selecting CSI.
Once the transaction mecha-
nism was in place, the Uplands
Cheese Web site was ready to go
live. It went up in August 2000.
The first year the site was up Gin-
grich was busy gaining distribution
in the specialty cheese outlets and
white tablecloth restaurants. Ini-
tially sales through the site were
very small. While he wasn’t able to
provide exact numbers, Gingrich
said online sales grew significantly
the second year. The distribution he
had achieved gained the cheese, and
the company, some important expo-
sure.
In July 2001, the New York
times included Pleasant Ridge Re-
serve in an article about artisan
cheeses entitled, “Food Stuff; New
Gambits for Masters of the Cheese
Board.” Getting mentioned in arti-
cles of this nature was a part of Gin-
grich’s overall marketing plan. In
fact it was part of his motivation for
developing the Web site. “I wanted
to get an article in magazines where
people write up the cheese. You get
a couple of articles like that and you
can see it in the Internet business.
UNL Food Processing Center • Page 10 •
You get a bunch of orders for a
short period of time,” said Gingrich.
“We recently had an excellent arti-
cle in Wine Enthusiast magazine
(“The Best of Everything”) and it’s
amazing how when the magazine
hits the streets we get 3, 4, 5 orders
every night,” said Gingrich. “I re-
ally think that justifies having [the
site],” he said. The life of an article
is about 10 days before orders start
to drop off according to Gingrich.
The company’s big break came
at the 2001 American Cheese Soci-
ety Show. Although Uplands
Cheese had only been producing
Pleasant Ridge Reserve for about a
year, it was awarded the Best of
Show award for 2001. Pleasant
Ridge Reserve beat out 85 other
cheese companies and 375 other
entries to win the award. One of
the first things Gingrich did when
he got home was to have the Web
site changed, highlighting this pres-
tigious award on the front page of
the site.
Since receiving the award, Up-
lands Cheese Company has been
mentioned in numerous other arti-
cles. Knowledge of the company
and its special cheese has spread
and sales have increased. Unfortu-
nately, sales are not the issue for
Gingrich. The company ran out of
cheese in the summer of 2001 and
again in the spring of 2002. Gin-
grich doesn’t particularly mind run-
ning out by the time summer comes
around, though. The product is
more expensive to ship in the sum-
mer because it requires more pack-
aging to protect it from the heat. In
addition, the cheese-making process
begins again in late spring and Gin-
grich usually has his hands full, lit-
erally.
Pleasant Ridge Reserve is hand
rubbed as part of the aging process
for four months. It takes a lot of
time. “Our limitation is our energy,
it’s a lot of work,” said Gingrich.
Despite only using approximately
10 percent of the milk produced on
the farm, the partners have been
reluctant to hire additional help in
the production of the cheese. One
gets the feeling that Gingrich and
Patenaude are enjoying their roles
as old-world farmers ‘preserving
their summer’s bounty’ in the lim-
ited quantities of Pleasant Ridge
Reserve that Gingrich alone can
produce.
Typically, being out of product
for four months would be disastrous
for a food company supplying retail
and foodservice markets, but in the
artisan cheese market it almost
seems to add to the product’s, and
the company’s, old-world charm.
There are many other market-
ing opportunities that Gingrich
could pursue when it comes to mar-
keting the company’s Web site and
Pleasant Ridge Reserve; however, in
this case, Mike Gingrich seems to
have hit upon the right mix for sell-
ing their product. A mix that in-
cludes selling and promoting prod-
uct successfully on the Web. “[The
Web site] does everything we want
it to,” summarized Gingrich.
Conclusions
Uplands Cheese Company sells
a small percentage of their annual
production through their Web site.
Sales generated from the company’s
Web site are around 5-6 percent of
annual sales or approximately
7 8
$10,000 to $12,000 per year.
While such a small online sales per-
centage would be disappointing to
the majority of companies selling
their products online, Uplands’ Web
site is serving its intended purpose
of providing a means for customers
with no other means of purchasing
the company’s signature product,
Pleasant Ridge Reserve, to do so.
Additionally, by only mini-
mally marketing the site, Gingrich
is protecting his primary, and more
lucrative, markets of specialty
cheese stores and white tablecloth
restaurants.
As Mike Gingrich said, it ac-
complishes everything he intended
it to when he planned on including
it in his marketing mix. The site
not only provides the avenue to sell
product to those who lack access to
it in retail outlets, but also allows
everyone who comes to the site to
learn more about the cheese and the
company behind it.
Today, many consumers have
the expectation that any company
serious about customer service will
have a Web site. According to a
study by Deloitte & Touche, the per-
cent of North American consumer
goods companies with a Web site
grew from 67 percent in 2000 to 91
8 price increased to $16.00 per
percent in 2001. It provides an
easy way for customers to interact
with a company—everything from
providing product feedback to mak-
ing business suggestions.
Gingrich admits he was sur-
prised by the amount of e-mail he
gets from his company’s Web site.
Customers will e-mail questions
about the cheese, where it is avail-
able, or just to say hi. Sometimes
they just want to compliment us on
the cheese and tell how much they
enjoyed it. “I always answer those,”
said Gingrich with a chuckle. On
occasion, customers will even pro-
vide Gingrich with a lead for a new
specialty cheese store or restaurant.
During the mania years of 1999
and 2000, many companies em-
braced unrealistic visions of mil-
lions of dollars in online sales.
Mike Gingrich and Uplands Cheese
Company went about their business
of planning and building a modest
Web site as part of a well-
conceived, well-grounded market-
ing plan that is fulfilling its in-
tended role perfectly.
UNL Food Processing Center • Page 11 •
Endnotes
1
“Agriculture Census Iowa County,
Wisconsin,” 1997 Census of Agri-
culture, Wisconsin Agricultural
Statistics Service, 2001.
2
Powell, Maria and Greg Lawless,
“The Dane County Farms and
Neighborhoods Initiative: Saving
the Country, Saving the City,”
University of Wisconsin, 2002.
3
“Internet Shutdowns and
Bankruptcies Pass 800 Mark in
February,” WebMergers, April
2002.
4
“Tasting Success with Farmstead
Cheese,” Dairy Pipeline, Volume
13, Number 1, March 2001, pg. 6.
5
Beginning in 2002, the Website
pound, $160.00 per wheel
(Source: Mike Gingrich).
6
“Global Online Retailing,” Ernst
& Young, CyberAtlas, February 8,
2001, (http://cyberatlas.internet.
com/markets/retailing/article/
0,,6061_583861,00.html).
7
Production in 2002 of 12,000
pounds times $17.00 retail price
equals approximately $204,000 in
annual sales. Estimated Internet
sales percentage of 5% times
$204,000 in annual sales equals
Internet sales of approximately
$10,000. (Source: Mike Gingrich).
Blumberg, William and Lindsay
Parker, “Defining the Online Role
in a Multi-Channel Business,” Re-
tail Insights, Vol. 10 No. 4, 2001.