Brookshire Grocery Co., is a modestly-sized regional retailer based in Tyler, Texas. The Kroger Co., Cincinnati, is the nation’s largest grocery retail company, operating more than 2,400 stores coast to coast. Like all grocery retailers, both Kroger and Brookshire have stores that compete head-to-head with the Wal-Mart out by the interstate.

Brookshire Grocery Co.,  the modestly-sized regional retailer based in Tyler, Texas, has carried organic dairy products for nearly ten years.  Operating a chain of 155 stores, mostly in east Texas, Brookshire can turn to its own BGC Manufacturing unit for its private label products, including dairy. 

The Kroger Co., Cincinnati, is the nation’s largest grocery retail company after Wal-Mart, operating more than 2,400 stores coast to coast, or about 18 for every store in the Brookshire group. It also has its own manufacturing capabilities.

Like all grocery retailers, both Kroger and Brookshire have stores that compete head-to-head with the Wal-Mart out by the interstate. Both have also been kept busy of late not only bringing more organic and natural dairy products into their stores, but developing and manufacturing those products themselves. Both companies also make a number of products for other marketers, Kroger even has a separate division for its private label manufacturing.

 “We’re doing pretty good with our private label organic program,” says Mike Giles, dir. of dairy operations at BGC Manufacturing. “Our organic sales are up about 30-40% in the last year.”

Organic milk has been an important part of BGC Manufacturing since 2005, when the plant was certified so that the company could begin co-packing Texas Pastures milk for Organic Valley. That business has since gone to a larger company in Texas, but Brookshire has replaced it with a some business for a national specialty retailer.

Meanwhile, Kroger’s Dairy Group, Dairy Foods’ Processor of the Year in 2007,  is rolling out more and more products under two different private label organic and natural families.

 While the efforts of Brookshire and Kroger to capture more of the organic dairy business for themselves may be a testament to how far dairy has come, there is nothing in the current 2008 picture indicating that the organic and natural dairy business has become any easier to figure out and project. 

As we come to the center of the year, there may in fact be more questions than ever about the organic and natural sector. While organic supplies are tight and prices fairly high, the price of everything else have gone up and up, including the conventional products organic competes with, and the commodities needed to produce them.

There are still no pasture access standards in the USDA’s National Organic Program, an upgrade that was expected nearly a year ago. The program itself is undergoing a realignment, and there may be a connection.

The debate over the relative relevance of organic food compared to local food, which started more than a year ago, continues. With dairy, you can toss no r-BST milk and grass fed, non-organic milk into the discussion.

Within the organic community, and among consumers, the question of whether or not organic is being co-opted by corporate giants rages on. Other issues abound, and yet the organic foods segment continues to show strong growth.

Our own brand

Organics is nothing new for Kroger. Branded and private label products have been in the company’s stores (which are operated under more than a dozen banners) for many years.  But last year the company began expanding its line of organic foods with the idea of making it easier for customers to find organic products throughout the stores.

Kroger’s expanded organics line is being sold under its exclusive Private Selection brand and includes more than 60 products such as pasta, waffles, tea, peanut butter, snacks and milk.

“Kroger offers a range of organic products, and they have been trickling into the stores for over a year,” says Linda Severin, v.p. of corporate brands, told Dairy Foods last fall.  In August Kroger announced the launch of its Private Selection Organic line which by then included 67 items across the store, including produce, dairy, bakery, deli and grocery. That number has since doubled.

“There is a large group of our shoppers who are interested in making smart food choices,” Severin says. “They may not be fully involved in that lifestyle or have the money to go to a specialty, but our Private Selection Organic products are throughout the store right there with all the conventional selections, so they can make those decisions on a case by case basis.”

Severin says Kroger’s research indicated that the dairy case is often where shoppers first try organic, so Kroger has increased its organic milk offerings and now packages its own private label organic milk.

Kroger’s Private Selection Organic line is offered in addition to its Naturally Preferred natural and organic foods line, first introduced more than five years ago.

Kroger isn’t the only national retailer to go organic with its private label products.  Wal-Mart forever changed the dichotomy of U.S. organics in 2006 by indicating that it wanted more national brand and store-label organic products in its humungous fleet of Wal-Mart and Sam’s Club stores.

Until recently, Brookshire marketed organic milk under its Goldenbrook brand, but under a recent rebranding coordinated with Topco, those product lines have converted to the Full Circle brand. The company’s ice cream plant has also begun contract manufacturing an organic ice cream line sold regionally through Whole Foods Markets and other retailers.

Giles points out that from a production standpoint, running organic milk in addition to a conventional milk operation requires special consideration beyond segregation of the milk.

“The cooperative doesn’t balance the milk for you”, he says. “You buy it straight from the farm, and you have to get the load in. It’s hard to balance orders to supply. If your delivery comes in higher than your orders, you might have to co-mingle the leftover as conventional, or, you may have to cut the orders of your stores if the orders come in too high.”

BGC currently runs Organic milk two to three times a week.  In addition to the organic ice cream products, the company hopes to eventually add organic offerings to its cultured lines.

Organics and nutrition

It’s generally accepted that most U.S. consumers buy organic foods because they believe that the products are more nutritious, more wholesome and better tasting. Environmental impact, the one consideration in which organics is most able to credibly distinguish itself, might be close behind, but it is not the main driver of organic purchases.  But for the most part, marketers of organic foods have been cautious about suggesting to consumers that their products were more nutritious than conventional counterparts. All involved agreed that the science simply was not there to back those kinds of claims. But that may be changing.

The year 2007 brought several studies (some of them receiving a great deal of attention in the press) indicating that organic foods may indeed offer more nutritional benefits than conventional.  Reasearch from the UK released in August in the British Journal of Nutrition  concluded that children whose diets contained 90% organic had a 30% lower risk of eczema compared to those who’s diets contained less than 50% organic foods.

Other research from Britain showed that the predominantly grass-diet of organic cows in the UK led them to produce milk that is significantly higher in conjugated linoleic acids (CLAs). A similar conclusion was reached in the U.S. relative to the cows from herds managed with rotational grazing. 

In June, a long-running trial on organic farming methods produced what might be the most important published work on the topic in recent years. Published in the June 23 issue of Journal of Agricultural and Food Chemistry, the UC Davis University research found that the soil health of organically farmed land had produced tomatoes with nearly double the flavanoid nutrients found in comparison tomatoes. Other studies have found evidence indicating that plants produced with nitrogen overloads from heavy use of conventional fertilizers can result in produce that are larger, with larger cell structures, and that those oversized cells reduce nutrient density and may leave the produce less protected from pathogens.

Omnivorous dilemmas

In 2004 the independent film Super Size Me jarred the food service industry while capturing the attention of everyday folks with its tale of one man’s quest to determine how bad a steady diet of fast food really is for you. Michael Pollan’s book The Omnivore’s Dilemma has sent similar ripples throughout the food industry and the organic segment in particular as readers have gobbled it up.  The New York Times dubbed it one of the ten best books of 2006.

Pollan’s book ponders a modern world in which the average consumer had an unprecdented number of dietary options, but has an increasingly difficult time deciding  “what should we have for dinner?”

Pollan follows four meals from the farm or field to the plate. Each is derived through a different food production system. Along the way, Pollan examines the ethical, political, and ecological factors at play in modern industralized food production, large-scale organic, small-scale organic, and personal (hunting and gathering) food chains.

Pollan’s conclusions, along with an article that appeared in TIME magazine a bit later led many foodies to conclude the locally-sourced food was quickly becoming the new organic.

“I think we have emerged from that a bit now,”  says Nancy Hirshberg, v.p. of natural resources at Stonyfield Farm, Londonderry, N.H. “When The Omnivore’s Dilemma came out, it was more or less promoting local food and blasting organic. Six months ago the whole local food story was getting a lot of play, but I think people are starting to understand the bigger issues about food. The positive thing is that people are now far more educated about food than they were five years ago, and there is more interest than ever in organic which is fabulous.”

Sometimes organic and local go hand-in-hand.

Recently a farm family located a few minutes northeast of Madison, Wis., opened a farm-based micro-creamery which packages only the milk from their two herds-300 conventional cows and 100 organic cows.

More than anything, Sassy Cow Creamery is selling added values that stem from its locality-freshness and consumer connectivity to the source.

“Our milk is fresher because our turn-around time is so much quicker than most dairies,” says co-owner James Baerwolf. “We can bottle the same day’s production, and the fresher the milk, the better it tastes.”

Small creameries like Sassy Cow are cropping up in other parts of the country as well, providing special niche products for consumers who are willing to pay a premium. Sassy Cow sells its conventional milk at a premium over major brands, and its organic line fetches an even better price.

Animal welfare continues to be an issue with what Chad Pawlak describes as the health and natural consumer.  Pawlak is president of  Organic Farm Marketing and Grass Point Farms, two Wis.-based companies that market organic and grass-fed dairy products.

“Humane is really a big deal right now,” says Pawlak. “We currently work with an independent auditor to ensure that our producers follow the standards we have developed.”

Another issue that’s emerged in the organic segment recently is farmer equity.  A number of farmers have gone public with complaints that processors are doing little to help them at a time when all their costs have risen. 

Meanwhile, more and more dairy processors are offering milk made without the use of  rBST.

Formerly disparate organizations like Dean Foods, and Stonyfield Farm and IDFA now find themselves in the same camp over r-BST-the camp that is defending the processor’s right to make label statements regarding their choice not to use the synthetic growth hormone. Farmers and the advocates say there should be higher premiums paid for raw milk made without rBST.

A recent study conducted by researchers at Cornell University addressed a specific debate within the larger issue-the question of whether no-rBST label statements have a stigmatizing effect on conventional products when sold side by side. The study concluded that indeed consumers would spend less money on conventional products if given a choice to instead buy products produced without r-BST.

Perhaps one of the most interesting aspects of the study came at the very end of the conclusion of findings:

“In order to prevent a large stigma effect on milk, there are two possible directions the dairy industry could take.  First, other states could follow Pennsylvania and Ohio’s leads and ban the use of certain labels on milk containers such as ‘hormone free.’  Second, the industry could pursue the more dramatic option on transitioning to all rBST-Free milk.  In any case, the dairy industry needs to confront this issue head-on or risk a possible major negative impact on milk consumption.”

Pasture Butter

Organic Valley’s Pasture Butter is a limited edition product made from the milk of organic cows eating the nutrient dense pasture that grows during May through September. Milk from summer pasture produces butter unusually high in nutritional benefits. Pasture Butter contains elevated levels of beneficial fatty acids-CLA (conjugated linoleic acid), and Omega 3 and 6 essential fatty acids in an optimal ratio. Organic Valley adds lactic acid culture to the milk to ripen the cream and bring out the natural sweetness of the butter. Pasture Butter is churned longer than other butters, lowering the moisture content and increasing the fat content to 84%.

A Year of Milestones for Organic Pioneers

Two of the leading dairy companies in the organic foods arena are celebrating special anniversaries in 2008. Stonyfield Farm, Londonderry N.H. turns 25 years old, and Organic Valley Family of Farms, La Farge, Wis., is celebrating its 20th anniversary this year.

In April, Stonyfield kicked off its celebration noting that the company began in April 1983. 

“On a little farm in southern New Hampshire, Samuel Kaymen, with the help of his wife, Louise, their six kids, and seven cows, made a 50-gallon batch of delicious, whole-milk yogurt-the first yogurt he’d ever made for sale,” Stonyfield stated in a press release.  Kaymen was operating an ambitious, yet struggling organic farming school called the Rural Education Center on his farm. He later brought one of those first quarts to Gary Hirshberg, a young windmill builder and eco-activist who joined the Center full-time a few months later.

“Back in 1983, we were just trying to raise a little money for our organic farming school. We didn’t know we’d one day sell yogurt in stores across America,” says Hirshberg, now  Stonyfield’s Pres./CEO. “Today our farming school is just a memory, but thanks to Stonyfield Farm organic products and our very loyal consumers, we’re keeping more than 60,000 farm acres free of toxic, persistent pesticides-a feat our little farming school could never have achieved.”

In Wisconsin, Organic Valley (CROPP co-operative) recently held its 20th co-op meeting. A handful of neighboring Wisconsin farmers formed the group in 1988 with a shared vision the cooperative still maintains. Its tenets are to:  work in partnership to produce healthy, nutritious organic food; keep family farmers farming; help revitalize rural communities while serving as stewards of the earth; and always offer a stable, sustainable pay price to its member farmers.

Today, Organic Valley is the nation’s largest organic farmer-owned cooperative, with more than 1,200 farmers in 34 states and one Canadian province. And, as the organization prepares to celebrate this year with a variety of events and activities, it is reporting its 2007 revenues reached $432.5 million, a 29% percent increase over 2006 and an almost 250% increase over the past five years.

From its first load of milk, CROPP has processed products through existing, local processors to reduce capital investments in bricks and mortar and in order to create a regional production model. To date, CROPP has been instrumental in influencing 91 processors to become certified organic.

Four-Season Cheese

A new organic cheese line from Wisconsin-Seasonal Cheddars, from Otter Creek Farm-offers an astounding amount of information to consumers. All but the winter variety come from cows that are in pasture, and the label of each cheese includes an explanation as to how the seasonal diet effects the milk characteristics, and ultimatley the flavor of the cheese.


Photo by Greg Sutter

Pasture Certified Cheese

Speaking of  pasture, Grass Point Farms has expanded its line and broadened its market in the last year, selling more cheese and butter from coast-to-coast. The Wisconsin-based brand was developed a few years ago to help Wisconsin grazers get an added return for their high quality nutritious milk.