Business

Trend towards healthier eating helps Old Neighborhood Foods prosper

Workers at Old Neighborhood in Lynn measured and weighed hot dogs. The company focuses on minimally processed meats that are low in salt, artificial ingredients, and preser-vatives.

Jessica Rinaldi/Globe Staff

Workers at Old Neighborhood in Lynn measured and weighed hot dogs. The company focuses on minimally processed meats that are low in salt, artificial ingredients, and preser-vatives.

LYNN — Back in 1914, the owner of a small grocery shop here returned from Boston, proclaiming that he had found the best Greek sausage in the city. His wife tasted it and immediately announced, “I can make better sausage than that.”

Then she did.

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That marked the beginning of Old Neighborhood Foods, a Lynn food processor that has tapped the trend toward healthier eating to grow into a national player, with more than $130 million in annual sales and 375 employees. Its original market stretched only as far as the trolley lines out of Lynn; today, its minimally processed meats — low in salt, artificial ingredients, and preservatives — are available at all of the major grocery chains in the Northeast as well as Publix supermarkets in the Southeast; Kroger stores in the Midwest and Southeast; and 1,000 natural food grocers nationwide, according to the company.

This month, the company launches a new line, Waterhill Naturals & Organics, which it promotes as USDA-certified organic, with meat sourced from family farms and pure ingredients such as water, sea salt, and honey. The line follows last year’s debut of Waterhill Naturals, which uses meat free of antibiotics and hormones.

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“People have gotten more conscious what they’re eating, and that falls right into our bailiwick,” said Tom Demakes, company president and grandson of the talented sausage maker. “We want you to pay attention to the labels.”

The Waterhill name comes from the street where the business got its start a century ago. Today, Old Neighborhood is run by Demakes, 73, and his three sons, Andrew, Elias, and Tim, who represent the fourth generation of family ownership.

While many of the region’s family-owned meat processors, including New England Provision Co., Colonial Provisions, Jordan’s, and Kirchner’s, have closed or been sold, Old Neighborhood has survived by carving out a niche by reducing the additives in its foods.

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Two years ago, the company purchased an old seafood plant in Danvers and made a $3.5 million bet on the future: a high-pressure pasteurization unit that extends the shelf life of preservative-free food by three to five times.

About the size of a house, the equipment subjects sealed packages to water pressure higher than in the Mariana Trench, the deepest place in the ocean. The process pulverizes bacteria, while leaving the taste and texture of the product unaffected.

Old Neighborhood is using the equipment to diversify into nonmeat products. Recognizing the emerging popularity of coconut water, Tim Demakes lined up a supplier in Thailand for the company to sell the potassium-rich drink under the Waterhill Naturals label. The company also is looking into producing organic avocado dip and baby food.

Old Neighborhood is headquartered just yards from where founders Jean and Thomas Demakes operated that small neighborhood market. Jean Demakes was the brains and brawn of the fledgling business. Standing 5 feet, 8 inches tall, she was a formidable woman, built like an NFL tackle, said her grandson. “You didn’t want to cross her.”

Old Neighborhood is run by Tom Demakes, 73, and his sons (from left) Andrew, Elias, and Tim, who represent the fourth generation of family ownership.

Jessica Rinaldi/Globe Staff

Old Neighborhood is run by Tom Demakes, 73, and his sons (from left) Andrew, Elias, and Tim, who represent the fourth generation of family ownership.

In the early years of the business, everyone, including the shopkeepers’ eight children, pitched in. Before going to school, the four boys would take the trolley to solicit orders from small grocers; after school, they’d hop back on the trolleys to deliver the sausage.

Succeeding their parents, Louis Demakes (Tom’s father) and two brothers broadened the product line to include hot dogs and cold cuts.

Tom was drafted into the company by his father in 1967, after earning a degree in economics and finance at William and Mary in Williamsburg, Va., and serving a year in Vietnam. At the time, annual sales were less than $2 million, and the factory — “old and dilapidated by today’s standards” — employed 30 to 35 people, Tom Demakes recalled.

‘[Major brands] see their sales plummeting because people have gotten more conscious what they’re eating. And that falls right into our bailiwick. We want you to pay attention to the labels.’

Tom Demakes,  president of Old Neighborhood Foods
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Assigned to sales, Demakes, then 25, borrowed his sister’s Mustang and made cold calls to grocery stores. For months, he met with rejection. Supermarket executives questioned what made his products any different. “I was sick and tired of hearing that,” Demakes said.

He first broke from the pack with prepared roast beef, “just like you would cook in your own house,” Demakes said. From the cap of the roast beef, the company made shaved steak, popular in subs. “We sell 150,000 pounds a week of shaved steak,” he said. “Ours has no additives whatsoever.”

Reducing additives played a key role in another turning point. In a last-ditch effort to win over a Stop & Shop buyer, Demakes asked, “What can I make that you would be interested in?”

Low-salt bologna and salami, the buyer said.

So Demakes and his crew tinkered with different sodium levels and ingredients. After much trial and error, they came up with a winning product that Stop & Shop and others bought. This became the Thin ‘n Trim line in the 1980s.

It wasn’t always in the cards that Demakes’s sons would enter the business. All in their 30s and born a year apart, they initially worked in real estate.

Demakes said he began talking with his sons about coming aboard only after buying out the rest of the extended family, almost a decade ago. “I could make all the stuff in the world. I couldn’t sell it,” he said. “I needed help.”

Andrew, 35 and the youngest, joined about eight years ago, followed within a few weeks by Tim, 36. Elias, 37, joined a few years later.

The father and three sons together earned MBAs from Suffolk University in 2012. Among their professors was David Hartstein, founder and co-owner of KaBloom flowers. “They are very passionate and very competitive,” said Hartstein. “It is something you don’t see many times with a family that is [four] generations in the business.”

Demakes, who remains at the helm, divided 99 percent of the ownership equally among his sons. The brothers, each responsible for separate parts of the business, envision someday succeeding their father as a team.

Tom Demakes admits that after having run things alone for so long, he’s had to get used to consulting with his sons. Over the last four years, consultant Tom Harvey has helped father and sons work through the inevitable conflicts that arise in family businesses. “It’s a challenge, but I’m very encouraged by Tom’s willingness to have me there as a bit of a provocateur,” Harvey said of his role in prodding family members to reexamine their relationships with each other.

That’s not always easy, said Elias Demakes. “You watch ‘Seinfeld.’ You know what Kramer is famous for: brutal honesty. You’ve got four Kramers sitting around this table.”

Tom Demakes, meanwhile, doesn’t have any immediate plans to step aside. His job now is to keep the company moving ahead while navigating the strong personalities.

“They’re grown men,” he said. “And all I can do is be like a tugboat and nudge them a little here and there.”

A worker sorted shaved beef at the plant in Lynn.

Jessica Rinaldi/Globe Staff

A worker sorted shaved beef at the plant in Lynn.

Steve Maas can be reached at stevenmaas@comcast.net.
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