Frozen Chosen

In the mid-1990s, Minnesota entrepreneurs Steve Gill and Eddie Phillips turned a couple of obscure Polish vodkas into a new product category. Having sold the Belvedere and Chopin “luxury vodka” brands to French luxury-goods giant Moët Hennessy Louis Vuitton in 2005, Phillips and Gill began hunting for their next upscale opportunity.

“We felt our expertise was strongest in premium consumer goods,” recalls Gill from Phillips’ “headquarters,” the former Pillsbury public library in Northeast Minneapolis. “We looked at literally dozens of businesses, some local, some not.”

Last September, they found what they were looking for—in Dallas.

There, in 2001, Josh Hochschuler had started a company called Talenti that makes gelato, an ice cream–like dessert that was developed in Italy. After operating a storefront operation (popular, but with very high overhead), Hochschuler in 2006 began selling a packaged version of his gelato and sorbetto (think sherbet, only classier) at Dallas gourmet food shops and local Whole Foods stores. “In every case, the brand sold very, very well at high prices to consumers who are looking for something better than the norm,” Gill says.

"It is important that we build the business based on the product attributes, and that the product and the brand are better than the alternative."

A mutual friend of Hochschuler and Gill got the company and investors together. Phillips and Gill both considered Talenti’s gelato and sorbetto the best they’d ever tasted. “We felt that they were people we could partner with, that the product that Josh makes was a world-class product, and that the business opportunity that existed was there,” Gill says.

Ice cream is a $23 billion industry in the United States; less than one-tenth of 1 percent of that is currently gelato and sorbetto, according to Gill. So there was room to grow. And Gill and Phillips believed that they had the tools to make that growth happen.

“It was clear from the perspective of both Talenti management and ourselves that they certainly needed that capital, because they were classic entrepreneurs who were running short, but also we could add tremendous skills,” Phillips says. He believed that “carryover of luxury marketing principles” that he and Gill had developed with Belvedere and Chopin “could add tremendous value” to Talenti.