Monterey Gourmet buys remaining stake in Sonoma Jack

Monterey Gourmet Foods announced a deal Thursday to acquire the remaining 20 percent of Sonoma Foods, the popular cheese brand with deep roots in Sonoma County.

The Salinas-based speciality food producer will buy out the remaining stake in Sonoma Foods for $50,000.

In 2005, Monterey Gourmet paid $3.3 million in cash and $198,000 in stock for an 80 percent stake in the former Sonoma Cheese Factory. The Viviani family, which co-founded Sonoma Cheese Factory in 1931, retained ownership of the retail store on the Sonoma Plaza.

Sonoma Foods, which produces cheese in a variety of flavors under the Sonoma Jack brand, has been unprofitable, said Eric C. Eddings, president and CEO of Monterey Gourmet.

He blamed "production and procurement decisions." Sales of cheese under its Sonoma Foods brand fell 23 percent last year, a $2.5 million decline, according to the company’s annual report.

As part of the deal announced Thursday, Monterey Gourmet will release Sonoma Foods’ executive leadership from its employment contracts, consolidate the majority of operations, change the packaging and reduce other costs, saving $700,000 a year.

The turnaround plan will "eliminate managerial distractions," increase productivity and improve margins, said Scott Wheeler, Monterey Gourmet chief financial officer.

Monterey Gourmet will write down intangible assets, inventory and accrue severances, which is expected to total $2.4 million.