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Small company winner: Opportunity knocks for Cheating Gourmet's co-founder brothers

BY Lori Valigra

12/12/2016
Photo / Tim Greenway
Photo / Tim Greenway
Cheating Gourmet co-founders Jon Demers, left, and his brother Scott at Shaw's in Auburn. Their products are sold in 3,200 stores.

Cheating Gourmet LLC

86 Main St., Auburn


Founded: 2011


Top leaders: Scott and Jon Demers


Sales growth 2013–15: 198%


Number of employees: 9


Contact: (207) 577-8513 www.cheatinggourmetfoods.com

Scott and Jon Demers of Cheating Gourmet LLC saw opportunity in the frozen seafood market, where innovation and value-added products have been as inactive as the food in a grocer's freezer case.

Scott, who was in real estate finance, and Jon, who was a firefighter in Lewiston, started the company with their own money and made gourmet appetizers like lobster crostini and bacon-wrapped scallops in Scott's kitchen, taste-testing them among friends and family.

“We bring innovation to the category,” says Scott from the company's Auburn office. Cheating Gourmet — so named because consumers are essentially “cheating” by merely heating up gourmet appetizers — sources its seafood from the North Atlantic, and has a copacker in Massachusetts.

Their idea caught on so quickly that the company's revenue grew 198.19% over two years to $1.96 million in 2015, up from $1.03 million in 2014 and $655,862 in 2013. That makes it Mainebiz's fastest growing small company.

Over that span the company went from two to nine employees. It plans to add a director of operations this year and three to four people in 2017.

Cheating Gourmet products are in 3,200 supermarkets and club stores, up from 900 stores in 2015 in 500 in 2013. It expects to be in 5,000 to 6,000 U.S. stores in 2017. While it does sell directly to some stores, including Hannaford, Costco and Shaw's, it uses distributors like C&S Wholesale Grocers, Bozzuto's Inc., KeHE and the SuperValu network of independent grocery stores.

Cheating Gourmet is a brand under Demers Foods LLC. They have a range of frozen seafood products, like Lobster Crostini, Crab Stuffed Mushrooms and Bacon Wrapped Scallops. They plan to add a burger line, Brava!, in March.

This year the company has gotten more efficient with production, which has allowed the company to price products more competitively. Products that retailed last year for $9.99 are now $6.99, Scott says.

The frozen fish/shellfish market was $4.7 billion in 2014, up 8.9% over 2012 sales of $4.3 billion, driven by improved taste and consumer perceptions that fish and shellfish are healthier alternatives to beef and pork, according to market researcher Mintel of Troy, Mich.

One of the strengths of the company, notes Scott, is that he and his brother “know what we don't know.” Early on they surrounded themselves with experts.

Stuart Klane, retired founder and president of SM Klane Food Brokerage, which represented hundreds of food lines including Chobani Greek Yogurt, was an influential, early mentor, says Scott. Klane is now an advisor to the board.

Scott and Jon also are on the board, as are Art Drogue, a retired Unilever executive; John Burns, president of Breakaway Ventures; and John Maggiore, category manager of natural foods at Stop & Shop.

Another key player is Robert Craig of Centerman Capital in Needham, Mass., an advisor who has invested $250,000 in the company through his firm, $50,000 personally and committed another $100,000.

“These guys, Scott and Jon, come in and think about how to turn a low innovation marketplace into a high innovation one — and a healthy one,” Craig says. “They do what they say and say what they do.”

What's ahead for Scott and Jon in 2017 is fast growth expected in food service. They'll launch the Brava! burger line. They also want to increase the reorder rates on products.

“We want to increase health with a gourmet impact,” Scott says.