Tulkoff sets a new course

The Baltimore Sun

Philip Tulkoff spent most of his career in engineering and computers. The food manufacturing business started by his Russian immigrant grandparents nearly 80 years ago had only been his high school summer job.

So no one was more surprised than Tulkoff, 47, when he was asked three years ago to take over as chief executive of Baltimore-based Tulkoff Food Products Inc., best known for its horseradish and related products.

"It totally came out of the blue," Tulkoff said. "I really had to learn everything."

But the fresh eye he brought to the company is now taking it in a new direction. Tulkoff Food recently completed a new headquarters and manufacturing plant in Baltimore, and it is developing additional distribution channels. The company, which has a retail presence in the Mid-Atlantic states, hopes to sell its brand in supermarkets nationwide.

Family-owned Tulkoff Food is unusual in that it has remained a small but stable Maryland manufacturer that managed to keep its 100-person work force largely within city limits. It manufactures 1.5 million cases of product per year and 12 million pounds of horseradish for customers such as Sysco Corp. and U.S. Foodservice Inc. as well as Mars and Safeway stores. It also has a California manufacturing plant.

The company's horseradish operation currently dominates the food service arena, providing products to many of the nation's largest restaurant distributors as well as private-label production. And Tulkoff sees promise in new products such as flavored butter, which he acknowledges is revolutionary compared with the company's decades-old staples of horseradish, garlic and ginger.

Like other manufacturers, Tulkoff said his company must evolve with the market, technology and corporate culture to survive.

"We need to change or die," Tulkoff said.

For decades the business was run the same way, Tulkoff said, from the top down. Nothing could be bought or sold without approval from the head office. There was no such thing as a staff meeting when he came on board, he said.

So Tulkoff hired consultants and brought on new midlevel managers. He adopted lean management practices that streamlined production and improved margins. He invested in training for all employees. And he held more meetings.

"I think it's a more open environment now," he said.

While he declined to disclose annual sales or revenue data, Tulkoff said the company posted its best annual sales ever for the fiscal year that ended June 30. He said each employee received a bonus as thanks.

Tulkoff also is investing profits back into the company, with employee financial incentives for attendance and food safety training, and for purchase of new equipment.

"Some of the equipment was older than I am," he said, walking through the plant recently wearing a Tulkoff polo T-shirt and a white hairnet.

The company moved in March to a new 80,000-square-foot building in Holabird Industrial Park that offers more room than its former space inside an old Canton brewery on South Conkling Street - an area being redeveloped into apartments, offices and commercial space. The company has remained in the city since Tulkoff's grandparents first began grinding horseradish and bottling it in East Baltimore along "Corned Beef Row" on Lombard Street during the 1930s.

City and state economic development officials said they offered routine assistance to help the company expand and move in Baltimore. Baltimore Development Corp. said it provided a low-interest, $500,000 loan to the company so it could purchase equipment for the new plant. The city also sold 5.9 acres of land in the industrial park to Tulkoff Food for $490,400. Maryland Economic Development Corp. said it assisted the company in securing $6 million worth of private bonds to help build its headquarters.

The new plant will allow the company to be more efficient and manufacture additional product with the same number of employees, Tulkoff said. There also is a test kitchen for creating new products, the company's first.

Tulkoff recruited Mark Natale, who spent more than 25 years in the food business, most of them at Columbia-based U.S. Foodservice, as vice president of sales and marketing. Immediately, Natale said he noticed the company had a lot of untapped potential. Tulkoff Food had limited distribution to grocers, clubs such as Costco and BJ's and restaurant chains.

"Every time I walk into a grocery store and see a competitor [on the shelf] I come back and yell at Mark and say, 'Why aren't we there?'" Tulkoff said.

Among those competitors is Hempstead, N.Y.-based Gold Pure Food Products Co. Gold's, also founded almost 80 years ago and family run, claims the top spot as the retail leader for horseradish sales. Both companies are part of the Horseradish Information Council, a trade group. In the horseradish industry, companies like Tulkoff and Gold have strong brands that are wedged between a few mom-and-pops and corporate giants like Heinz.

Steven Gold, president of Gold Pure Food, said horseradish sales have been growing during recent years. He described the industry as a small group of "friendly competitors" who are trying to build more awareness about the product and its use in recipes.

While he welcomed Tulkoff's bid to expand its retail presence, Gold said he hoped his company could build sales in the food service business currently dominated by his competitor.

"You don't stop trying," Gold said.

Like Tulkoff, Gold has expanded its product line to build on the success of its brand name.

"Some of the items may not be a big seller but your customer is looking for it, so you do it," said Gold, whose company has introduced specialty sauces such as wasabi and dill horseradish during recent years. "It makes sense."

With its existing product lines as a base, Natale believes Tulkoff Food's new products such as flavored butter can open new markets and revenue sources. Products such as scampi butter, horseradish and blue cheese butter and ginger soy butter sauce were introduced during the past year.

Natale's sales team is taking samples to distributors and large customers for test tasting. He envisions it being a hit with retail chains because it adds flavor to dishes in two easy steps: "All you have to do is scoop and melt it," he said.

But some food analysts believe the added products will be a tough business for Tulkoff to edge into.

"This one doesn't wow me," said Bob Goldin, executive vice president of Technomic, a Chicago-based food industry consulting company.

Goldin said most restaurants and food distributors have their own methods for flavoring butter, and often use butter-flavored oils. He said the butter business is dominated by brands like Land O' Lakes, which can manufacture more products at less cost.

Goldin said small companies like Tulkoff run the risk of diluting their brand by dabbling in too many product lines. He believes Tulkoff can have more success pursuing new outlets for its existing products that already have brand awareness.

Tulkoff executives said they will add new products carefully.

"We are keenly aware of the risk involved with diluting the brand," Natale said in an e-mail, "so we are deeply scrutinizing any new products that we plan on bringing to market."

New is what the company is embracing with its move across town and its revamped logo that highlights the Tulkoff name in black capital letters above a red triangle. It also is investing in more advertising in trade publications and is developing a new Web site, which hasn't been changed since it was launched.

"It's a lot of pressure," Tulkoff said. "We're feeding their families based on the work they do and I feel responsible to keep that going."

Tulkoff Food Products Inc.

Owned:: By the Tulkoff family

Headquarters:: Baltimore - recently moved to Holabird Industrial Park

Founded:: During the 1930s on the city's famed "Corned Beef Row" on Lombard Street

Employees:: About 100

Products:: Over 25 different product categories, including horseradish, Tiger Sauce and barbecue sauce

Operations:: Manufacturing plants in Baltimore and Pittsburgh, Calif.

Source: Company interviews and Web site

The series

This is the first in a series of occasional articles about Maryland manufacturing companies that are bucking an industry trend of downsizing, disappearing or sending production offshore.

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