Rather than melt away in the face of consolidation—a hot ice cream industry trend—the founding companies of Matterhorn Group Inc. got in on the action.

Rather than melt away in the face of consolidation—a hot ice cream industry trend—the founding companies of Matterhorn Group Inc. got in on the action. Blending their creativity and resources, Matterhorn Ice Cream, Deluxe Ice Cream and VitaFreeze Frozen Confections formed Matterhorn Group in 2004. The company anticipates 20 percent annual growth this year. President and CEO Tom Nist says there is nothing it can't do when it comes to ice cream and ice cream novelties.

“Each of the three companies had long history working in the ice cream industry,” Nist states. “Deluxe Ice started in 1913 as a dairy and converted to ice cream the in 1930s.” In 2000, Outlook Capital purchased Deluxe. The company focused on ice cream and ice cream novelties sold in the Pacific Northwest, Nist explains.

“VitaFreeze formed in the mid-'30s and was the first place the original Vitaline machine was ever used—it was the standard way ice cream bars were made for many years,” he says. “Vitaline was a subsidiary of Crystal Creme and Butter for 35 years, and was brought into Matterhorn Group fold in 2004.”

Nist describes Matterhorn as “the new kid on the block.” It was formed in the early 1980s in California and made upscale products primarily sold in convenience stores. He purchased it in 1999 and began focusing the company on its brands and adding a portfolio of upscale ice cream and extruded novelties. “We've been able to add customers like Costco and Kroger's to offer upscale novelties under their brand,” Nist notes.

All three companies were healthy and growing when they joined together, he says, and offered strengths in their areas. The move was synergistic, he says, and “gave lot of additional scope in terms of what we could make for our customers.”

The capabilities of each former company combine in a complementary manner, Nist says. “Beyond geography, is the scope of our manufacturing capabilities,” he notes. “[We offer] upscale novelties out of Matterhorn, more value prices out of the other two and packaged ice cream out of Deluxe in pints to three-gallon tubs. Each one had some gap or Achilles' heel it couldn't make in its individual facility, whereas now the combined network really gets us the capability to make anything anyone would ever need.”

The company remains privately owned. Matterhorn Group is now “one of the largest independent manufacturers in the western United States, capable of making any product a retailer or distributor would need,” Nist says. “Our uniqueness is not only that we have size and scale to make things very efficiently, but always we've been very creative, agile and nimble, so we are in the position to react very quickly, whether it's new product ideas or creative ways to work with suppliers to take costs out of systems, as opposed some of the larger companies that tend to be a little slower moving.”

Matterhorn has plenty of creativity among its facilities, which gives it an edge, Nist states. The company works with customers to develop products that meet their needs. “One of the real benefits is we have developed some expertise in developing very creative novelties,” he says. “From a manufacturing company standpoint, we don't have some of the same resources as large companies, so what we've done is create a culture that fosters creativity in areas you might not expect to find it. For example, during a new product brainstorming session, everyone in our management team is required to come to the meeting with creative ideas and that has worked out extremely well.”

Vendors and retailers are also part of this annual meeting, he notes. “They are one step closer to the end-user than we are, so it worked out wonderfully well.

“Part of our vision is to be the premier manufacturer and creative leader of ice cream novelties; to be the creative leader not only in fun new products but also in how we work with different suppliers and things like that. That has been a successful recipe for us both upstream with suppliers and downstream with distributors.”

For example, Matterhorn Group worked with a box manufacturer to optimize its production runs and match that with its volume needs, Nist explains.

“It has worked out well with just-in-time inventories [for us] and for them to have a production run that fully utilizes their equipment for that period of time,” he states.

Nist says the company faces a competitive industry and has to continue to move forward with new ideas. “By definition, in the ice cream industry, you innovate or you die,” he says. “There is a compelling need to continue to come out with fun new products and fun new flavors. The industry continues to change in that market. In a macro sense, it has had consistent consolidation in the last 10 years. What we've done with bringing the Matterhorn Group together is consistent with the industry. There are fewer and fewer small ice cream manufacturers.”

Nist says the three companies coming together has helped them “successfully navigate this mine field,” but “it has taken a toll on small manufacturers.” In the future, the company plans to continue organic growth with new and existing products, and to grow its manufacturing portfolio with acquisitions.

Nist won the Ernst & Young Entrepreneur of the Year award in June 2005. The award recognizes outstanding achievements by entrepreneurs with small- to medium-sized businesses.