SAN ANTONIO, TX — A self-proclaimed “ag head,” Francisco Pergola, CEO of Cheddies, discovered that producing high-quality cheddar called for milk from a dairy that followed regenerative organic farming practices. Francisco and his brother Tomas, co-founder of Cheddies, landed on Alexandre Family Farm in Crescent City, CA, which provides its cows with open pastures to create the best milk possible while also having a positive impact on the environment.
From creation to certification — which included a six-month cheese aging process, obtaining the necessary certifications and paperwork, finalizing business agreements and manufacturing time — it took the Pergola brothers about a year and a half to get the crackers on store shelves. However, the investment of time and research paid off.
Cheddies became the first business to produce regenerative organic cheddar and the first snack company to use it in its product. As a result, the brothers were able to gain traction in the category and appeal to investors, with the regenerative cheddar becoming a major part of the brand’s fundraising story.
“When we did our big seed rounds, we raised more than $3 million,” Francisco said. “A big part of that was showcasing our passion and our enthusiasm for being the first regenerative snack brand on the market and for being two years ahead of our competition.”
With cheddar as the crackers’ primary ingredient, the R&D process was what Francisco described as some of the hardest times due to the pair’s lack of knowledge about manufacturing.
“Looking back, I think we could have avoided a large majority of the mistakes that we made,” he said. “But one of the biggest issues that we faced early on is we were trying to use way more cheese in our formula than we use today.”
The amount of cheese they were using made it nearly impossible to manufacture the crackers.
“I remember the first place we went, we mixed the dough and they opened it up and it was basically like a piece of chewing gum because of how much cheddar was in it,” Francisco said. “It was like a melted ball of cheddar cheese. It was delicious, but it was impossible to sheet the dough down to a millimeter and cut it consistently.”
Batch after batch, they kept reducing the amount of cheese in the recipe until they achieved a formula that created a dough stable enough for commercialization.
Now a national brand, Cheddies is available in retailers such as Sprouts Farmers Market, Hy-Vee, H-E-B and Albertsons. Outside of traditional retail locations, the cheese crackers can also be found at big tech company campuses such as Google as well as in the sky on domestic first-class American Airlines flights.
The Pergolas are in the process of expanding the brand’s distribution to big box stores, c-stores and other wholesale accounts. Cheddies currently has three flavor varieties, and it has been able to enter other channels by altering the pack sizes from its traditional 4.2-oz. box to a 2-oz. snack pack.
“Changing the pack size has been a big strategy for us,” Francisco shared. “And seeing what other channels we could segue into, I would say it’s helped a lot.”
As Cheddies’ co-founders look to the future of the brand, new flavor varieties are not out of the question. With the benefit of the cheese crackers having a strong enough base flavor to stand alone, Francisco shared that they’re exploring new flavor opportunities emerging in the salty snacks segment such as Thai chili.
“I would love to do a sweet and spicy,” he mused. “We are rolling out a chili lime that has a little bit of sweetness to it. It’s delicious, and I know that it’s something that we’d pitch to convenience stores since that’s a pretty hot flavor these days.”
In addition to its regenerative cheddar, Francisco also shared that they hope to find a wheat supplier that would continue Cheddies’ brand commitment of supporting regenerative farming.
“When you talk about carbon, saving the earth and all of these terms, they can seem kind of foreign to the consumer,” he said. “But I think at the end of the day, the core message is that regenerative tastes better. It has higher nutrients, it’s tastier, and I’m hoping that catches.”
Five years in, Cheddies is making its mark on the salty snacks category and proving the resilience of entrepreneurship and regenerative agriculture.
This story has been adapted from the October | Q4 2023 issue of Commercial Baking. Read the full story in the digital edition here.
