America’s agricultural heartland is home to some of the
industry’s most successful independent players
In the world of dairy, there is something to be said
about remaining true to a brand’s regional heritage. And refusing to
become the next national mega company has proven to be a profitable move
for several industry independents. But remaining successful and
independent is not without its challenges.
Still, many autonomous dairy manufacturers agree their
longevity comes from giving customers what they’ve come to expect: a
sense of ownership, trust in product character and company pride that can
come only from a valued reputation and consistency — providing
consumers with what sometimes gets lost in corporate America.
What follows is an exploration of the market
conditions some leading independent players in the Midwest/Midsouth
region face amid national competition.
Prairie Farms Dairy Inc.
Prairie Farms Dairy Inc. is one of America's largest
manufacturers of consumer dairy food products. Founded in 1938 as a
farmer-owned dairy cooperative, Prairie Farms and its joint venture
partners currently produce high-quality dairy products at 28 plants in 15
states throughout the Midwest.
Since its founding in south-central Illinois in 1938,
Prairie Farms' growth has naturally branched out from this heartland
location. “Prairie Farms Dairy appreciates the discerning tastes that
Midwestern consumers have for high-quality cultured dairy products,”
says Bill Montgomery, marketing director. “We believe our line of
cultured products consistently rewards consumer's expectations.”
The company offers a full line of traditional fresh
dairy milk, cottage cheese, sour cream, dips and ice cream —
virtually all dairy food products with the exception of hard cheese items.
In addition, Prairie Farms produces a variety of orange juice and fruit
drinks. Responding to the latest low-carb craze, Prairie Farms subsidiary
Ice Cream Specialties Inc. offers various frozen treats under the North
Star brand CarbWise line of low-carb products.
With an already active school vending machine program,
Montgomery anticipates this segment growing to make milk the beverage of
choice among young consumers. “Our Ice Cream Specialties subsidiary
has also developed a vending machine program for frozen-treat
products,” he says.
The industry concerns of Prairie Farms are likely to
be similar with other dairy operations, says Roger Capps, chief executive
officer, with the volatile butterfat market at the top of the list. But
with net sales in 2004 of about $1,058 billion, Capps says the company
plans on continued internal growth.
Yarnell Ice Cream Co. Inc.
Yarnell Ice Cream Co. is a fourth-generation,
family-owned company founded in 1932 when Ray Yarnell picked up the pieces
of a bankrupt dairy. Processing ice cream and other frozen desserts ever
since, Yarnell’s is now the only ice cream company in Arkansas.
Over the years, with the help of its loyal consumers,
the company has become one of the nation’s leading regional ice cream
companies, serving the entire state of Arkansas and major markets in
In addition to the company’s premium ice creams
and products for health-conscious consumers, Yarnell’s manufactures
innovative frozen novelties. And being a direct-store-delivery company,
Yarnell’s places its products in frozen food cases at all
supermarkets by its own professional route salesmen.
The company’s growth has not been limited to new
products alone. In fact, Yarnell’s says it has achieved an aggressive
expansion program. According to the company, additions are continuously
being made to the manufacturing capabilities and ice cream storage capacity
at the Yarnell’s Searcy plant.
Sales routes are found in western Tennessee, Arkansas,
Mississippi and Missouri. In order to better serve its market areas, the
company has branch facilities in Fort Smith, Springdale, West Memphis, Hot
Springs, Paragould and Texarkana, Ark.; and Tupelo, Jackson and Gulfport,
Miss. Additionally, Yarnell’s has been exporting products to Russia
Yarnell’s says it is determined to remain the
best ice cream company in its region of the United States. The company
employs independent market research firms to conduct periodic taste tests
to compare its products with the other leading brands. This, in addition to
Yarnell’s own sensory evaluation facility, assures the company will
remain No. 1 in taste and quality, Yarnell’s says.
Also, Yarnell’s says its vision is to move from
being a small regional company to a mega regional company in the
direct-store-delivery frozen dessert sector while simultaneously achieving
national recognition through its Guilt Free products.
Berner Foods Inc.
With corporate offices in Dakota, Ill., and corporate
sales office in nearby Roscoe, Berner Foods Inc. is a privately held
multi-divisional company whose current product lines include process cheese
products; natural cheese products such as Swiss, muenster and havarti; and
soymilk. In its process-foods division, the company manufactures
approximately 70 percent of all private label cheese sauces and spreads in
North America, approximately 85 percent of private label salsa con queso
products, 90 percent of private label aerosol canned cheese products and an
assortment of portion control cups ranging from 1 to 5 ounces.
Berner Foods operates a natural-cheese facility that
processes about 1.5 million pounds of milk a day into Swiss, muenster,
havarti and specialty performance low-cholesterol cheeses, plus a
food-grade soy solids production platform that manufactures soy
concentrates for soymilk. Finally, the company has a sister division
— Illinois Protein — where Berner Foods receives about 20
million pounds of whey per week that is concentrated into human food-grade
The company plans to open its fourth division — a
single-serve bottling operation — in early 2005 which will be
dedicated to producing healthy, single-serve nutrition drinks, says
Steven Fay, senior vice president.
Berner Foods recently completed a 72,000-square-foot
expansion of its process-foods facility, says Fay, and a retrofit for
increased brining capacity at its natural cheese plant. “A
reconfiguration and expansion of our soy facility is planned this
year,” he says.
According to Fay, what makes the Midwest unique as a
region and a place in which to do business is the availability of
high-quality milk. “Obviously, for a company that has made cheese for
61 years, it is the proximity to a very high-quality milk source that has
contributed to our success,” he says. “Midwest milk yields more
cheese per hundredweight than milk from many other regions. We also have
access to a labor force with a good Midwest work ethic. Our centralized
location also affords us opportunities to sell coast to coast. This region
is a central location for food processing and affords us many opportunities
Regarding favorite regional flavors and tastes, Fay
recalls a funny story about the production of Limburger cheese that was
once banned from shipment by the U.S. Postal Service. “The battle
raged for months until Midwest cheese makers ultimately prevailed,”
he says. “It seems the Limburger cheese was so strong that the
postman’s bag would smell for days afterward and most of the mail he
delivered would have the wonderful aroma of Limburger saturating it.
“The Midwest is a repository of diversity. We
are black, white, Asian, Hispanic and American Indian. We have German
bratwurst and beer, we have Scandinavian lefse (a potato-based soft, flat
bread) and lutefisk, we have greens and chitlins. Milwaukee has a dozen
fests every year, from Polish Fest to Italian Fest.”
Responding to the low-carb craze, Berner Foods has
several initiatives in place to make customers more aware of the
company’s low-carb product offerings. “Private label products
like those we make are often the last to respond to fads,” says Fay.
In terms of current industry issues having an affect
on the company, Fay says the consolidation of retailers can be very
challenging. “As they grow larger, we have our eggs in fewer baskets.
The costs to serve and interface with these giants are sometimes daunting
for smaller manufacturers,” he says. “The other issue looming
on the horizon is retailers leveraging their size through things like
e-bidding and auctions for their business that has depressed margins in the
food manufacturing sector and may put some companies that supply them at
Associated Milk Producers Inc.
New Ulm, Minn.
Associated Milk Producers Inc. (AMPI) is a dairy
cooperative owned by 4,600 member dairy farms in Iowa, Minnesota, Missouri,
Nebraska, North Dakota, South Dakota and Wisconsin. The cooperative’s
member farmers produce 5.2 billion pounds of milk with annual sales of $1
About 1,700 AMPI employees in 13 locations across the
upper Midwest process and market a full line of dairy products and
ingredients for the retail, foodservice and food ingredient sectors. The
cooperative’s products include cheese, butter, instant milk,
shelf-stable cheese and pudding, plus a host of value-added dairy
In the retail case, AMPI dairy products are sold under
the AMPI State Brand and numerous private labels. The Midwest cooperative
is among the top 10 largest in the United States in terms of milk volume.
It is also one of the nation’s largest producers of cheese, butter
and instant milk.
AMPI adds value to milk, which enables the cooperative
to return value to its dairy farmer members. This value is measured in
terms of on-farm milk prices, return on investment, an annual cash
dividend, timely equity revolvement and early equity revolvement for
AMPI also offers services to help members with their
on-farm business. These services include milk contracting, equipment
financing, milking system analysis and daily milk component testing.
Because AMPI is a cooperative, dairy farmer members
have a voice in how their business is operated. Through a system of
grassroots representation, members help guide the cooperative and craft
policies that promote an environment in which they can produce milk at a
profit. Each member of the AMPI corporate board of directors is an active
AMPI says its mission is to maximize the return on milk marketed
and equity invested while keeping ownership in the hands of current members,
building a viable market for future members and representing Midwest dairy producers
in the development of dairy policy.
Regional Dairy Advocates
The Midwest has several strong support systems. The
Wisconsin Milk Marketing Board, the Midwest Dairy Association and the
Wisconsin Dairy Products Association are three major organizations helping
to increase dairy equity in the Midwest.
The Wisconsin Milk Marketing Board (WMMB), funded by
Wisconsin dairy producers, voted in 1983 to establish a mandatory state
milk marketing order to help affect demand for dairy products made from
Increasing demand for Wisconsin’s raw milk
remains WMMB’s goal. Because the majority of that raw milk is used to
make cheese, the most effective way to accomplish this goal, the
organization says, is to focus on marketing and promotion programs for
Wisconsin dairy producer funds are put to work
accomplishing WMMB’s objectives in a variety of ways, including the
deployment of sales and marketing programs in the retail, foodservice and
food processing channels. WMMB has expanded its retail promotions to all 50
states and is increasing its emphasis on foodservice operators. Already,
more cheese is sold through foodservice channels than retail outlets, and
the foodservice market continues to grow. WMMB has programs in place to
capitalize on this trend and increase Wisconsin cheese sales.
An integrated communications program, says WMMB, also
plays an important role in building demand for Wisconsin milk by
maintaining, and in some cases establishing, awareness of the high quality
found in Wisconsin milk and the dairy products produced with it. Through
advertising, publicity and promotional work, Wisconsin dairy producer
checkoff dollars are building brand awareness and greater demand for
Wisconsin-produced dairy products.
The Midwest Dairy Association (MDA) is a non-profit
organization financed and directed by the dairy producers in nine states
— Arkansas, Illinois, Iowa, Kansas, Minnesota, Missouri, North
Dakota, South Dakota and eastern Oklahoma. The organization’s mission
is to develop and implement programs that build demand for dairy products
and lead to the economic betterment of Midwest and U.S. dairy farmers.
The Midwest Dairy Council, MDA’s
nutrition-education division, works with health professionals, teachers,
school foodservice personnel and community leaders to help develop sound
and effective dairy nutrition education programs for their clients and
students. Registered dietitians are trained to serve as media spokespeople
to communicate the nutritional attributes and safety of dairy foods to
The Wisconsin Dairy Products Association (WDPA) is the
only Wisconsin trade association that represents all segments of the dairy
industry. Its processor member companies (both cooperative and proprietary)
process fluid milk, cheese, butter, ice cream, yogurt, dried milk and dried
whey, as well as market fluid milk, package cheese and distribute a wide
variety of dairy products. The organization’s associate members are
companies that provide supplies and services to the dairy industry. WDPA
members are responsible for 80 percent of the milk and dairy products
marketed in Wisconsin.
Continually striving to improve the business climate for its
members in order to assist them in achieving their profit goals, WDPA says its
primary mission is to represent its members in the formation and adoption of
rules and regulations pertaining to the dairy products industry. The association
also provides educational opportunities for its members to improve their business
Company Fast Facts
1978—Introduced the first all-natural ice milk in the nation.
1989—All-natural ice milk replaced with 95% Fat-Free Premium
—Introduced 98% Fat-Free
Lowfat Frozen Yogurt.
1990—Introduced a nonfat, no-sugar-added fudge bar made with
—Markets nonfat, cholesterol-free
—Regular Pal Bar joined by
—Introduced lowfat frozen yogurt
—Developed and introduced Guilt
Free, the nation's first fat-free, no-sugar-added ice cream featuring NutraSweet
1992—Improved sherbet line re-introduced as FrostiFruit, a
99 percent fat-free sherbet with chunks of fruit.
1993—Extended Guilt Free line of fat-free, no-sugar-added products
to include frozen yogurt, Pal Bars and Fudge Bars.
1994—Granted Dean Foods Co. an exclusive license to manufacture
and market nonfat and lowfat dairy and specialty food products under Yarnell’s
Guilt Free brand throughout the United States excluding region Yarnell’s serves.
1995—Completed largest expansion program in its history. The
enlarged and additional facilities doubled the company’s production capabilities.
—Introduced Guilt Free ice
1996—Introduced Guilt Free sorbet, the country's first no-sugar-added
1997—Introduced Homemade family of flavors.
1998—Introduced new easy-to-find-your-flavor cartons.
1999—Introduced Yarnell Light, containing half the fat of regular
2000—Introduced new feature flavors such as Homemade Apple
Pie, Homemade Peach, Cotton Candy and Blackberry Cobbler.
2001—Expanded manufacturing facility to 56,000 square feet
adding two new frozen treat lines capable of producing stick novelties from
1.75-ounce bullets to 4-ounce flat bars at the rate of 40,000 dozen per day.
2002—Repackaged Yarnell’s premium ice cream line by adding
new color-coded flavor labels to improve product recognition and added Lots
of Stuff line of feature flavors.
2004—Expanded Guilt Free line by adding three new novelty flavors
— Guilt Free Fruit Bars, Chocolate Decadence and Strawberry Cheesecake 8-ounce
cups in a four-pack.
2004—Introduced Guilt Free CarbAware™ in response to consumer
demand for low-carb offerings.