The Wall Street Journal:

Decades after his father sold bagels and bialys on New York’s Lower East Side, Gary Schwartzberg was convinced he had a product that could reinvent his family business.

With a partner, Schwartzberg had developed a tube-shaped bagel filled with cream cheese — an all-in-one, portable breakfast for the on-the-go crowd.

He called it a Bageler and managed to get the product into supermarkets and schools in the Miami area, where his company, Filled Bagel Industries LLC, is based. But Schwartzberg, who made his first bagel at age 12 and later opened a chain of bagel shops in South Florida, couldn’t achieve the wide distribution he thought the product deserved.

“I always believed this would be a huge item,” he says, but “I went into supermarkets, and no one had heard of Filled Bagel Industries or Gary Schwartzberg.”

Two years later, the products are known as Bagel-Fuls, and they grace supermarket shelves across the U.S. in bright yellow boxes. But they don’t bear Schwartzberg’s or his company’s name. They are branded as a Kraft Foods Inc. product, and are filled with Philadelphia Cream Cheese — the best-selling cream cheese in the U.S., which is also made by Kraft.

Schwartzberg and his five-person enterprise are part of a growing trend: small companies, or even lone entrepreneurs, that stand behind major brands’ new products and technological enhancements. With competitive pressures mounting and a need for a continual pipeline of new product ideas, some of the biggest consumer companies in the world, including Kraft, General Mills Inc. and Procter & Gamble Co., are increasingly looking outside their own corridors.

Working with a behemoth like Kraft or General Mills can bring exposure and distribution that an entrepreneur never dreamed of, usually in return for handing over autonomy, naming rights and marketing control, and a good chunk of the profits.

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