George Siemon, the chief executive officer of Organic Valley, likes words. The origin of “change,” he told Fast Company magazine, comes from the word for “kind of crooked.” It’s an apt word to describe the dairy products company. Change doesn’t happen in a straight line.
Organic Valley’s headquarters is in La Farge, Wis., which sits in the Kickapoo River valley. Coincidentally, “Kickapoo” is a Native American word meaning to go here and there, or crooked.
The evolution of Organic Valley has followed a crooked path since its founding in 1988. A self-described lifelong naturalist, Siemon was one of seven Wisconsin farmers who formed a cooperative, which became known as the Cooperative Regions Of Organic Producer Pools, or CROPP, the owner of the Organic Valley brand. The members pledged to farm without antibiotics, synthetic hormones, pesticides or genetically modified organisms, and to pasture their animals. While they believed in sustainable agriculture, they were also seeking a way to save the small family farmer by paying a guaranteed price for their produce. A cooperative of organic farmers seemed to be the way to achieve that goal.
CROPP’s first products were organically grown produce and meats, and it sells those items today. The first dairy product it made was cheese. Organic Valley has grown into a national marketer of organic milk, butter, yogurt, cream cheese, cottage cheese and soy beverages. Dairy is so dominant that it accounts for most of the co-op’s estimated $630 million sales this year.
Despite a tough national economy, the company has grown its retail sales of dairy products, private-label products and exports. It launched new products and new marketing campaigns. The company has worked tirelessly to save the family farmer and to preserve rural communities.
For these reasons, Organic Valley is Dairy Foods’ Processor of the Year for 2010.
CROPP is independent and farmer-owned, with 1,624 farmers in 34 states and four Canadian provinces. It is the largest cooperative of organic farmers in the United States and ranks 46th on Dairy Foods’ Dairy 100 list of largest processors.
Heading Organic Valley is Siemon, who also carries the whimsical title of “C-E-I-E-I-O.” (Everything at Organic Valley is carefully crafted to reinforce the company’s ties to farmers.) Siemon speaks thoughtfully and deliberately of words related to organics: organ, organism, organization. CROPP itself is an organ in a larger organization. Farmers take care of the earth through sound agricultural practices. The cooperative takes care of farmers by providing stable pricing. The products are sold to consumers seeking foods grown without pesticides and chemical fertilizers.
Milk is the company’s core product, with more than 90 SKUs of full-fat to fat-free dairy beverages, including omega-3, flavored, lactose-free, shelf-stable, non-homogenized, buttermilk, eggnog, cream and half-and-half.
New products this year are omega-3 milks with DHA, EPA and ALA. The whole milk and reduced-fat (2%) SKUs are sold as ultra-pasteurized in half-gallons and pasteurized in gallons. An 8-ounce serving contains 50 milligrams of EPA and DHA combined. The omega-3s are from sustainably harvested fish. The company says a glass features more supplemented omega-3s per serving than any other organic milk on the market.
That milk line is growing like “gangbusters,” says Eric C. Snowdeal III, the associate product manager for white milk and cream. Consumers like the health, nutrition and convenience found in the omega-3 milks, he says.
The other successful launch this year is a drinkable and pourable probiotic-cultured yogurt. The low-fat yogurt (in plain, vanilla and berry flavors) is sold in 32-ounce bottles. The company promotes the product for use on cereal, blending into smoothies, dips, marinades and dressings - or drinking straight from the bottle. The vanilla and berry yogurts are sweetened with organic agave nectar. Organic Valley promotes the sweetener’s low-glycemic index (17, compared to 65 for cane sugar).
In January 2011, Organic Valley will launch flavored, dairy-based half-and-half in vanilla and hazelnut flavors. The company also is developing organic soy-based nondairy creamers.
Organic Valley has found success with diversity, says Eric Newman, vice president of sales. That refers not only to its product offerings, but also to its channels of distribution. Of the estimated $630 million in sales this year, private-label business accounts for roughly $100 million. The ingredients division is a $50 million business. Organic Logistics, a wholly owned subsidiary for warehousing and transporting organic and natural foods, has annual sales of about $5 million.
Managing the private-label business is a bit of a balancing act because Organic Valley does not want to see its own brand suffer from store-brand sales of organic products.
“We churn more organic butter than anyone,” Newman says, adding that its branded sales of the product equal its private-label butter sales.
Exports are growing. Organic Valley does business in roughly 12 Asian countries. Mexico was a strong market until the country slapped tariffs on U.S. cheese imports this year in a Nafta-related dispute.
Newman said he wants to grow export sales of milk in asecptic packaging, and his eyes widen as he discusses the potential in China. Although Organic Valley has a program for foodservice operators, the institutional market is underdeveloped, Newman acknowledges.
Organic Valley is not in the ice cream business, and for now the company is sitting on the sidelines. In the ice cream category, “luxury” and “indulgence” are more important aspects than “organic,” as consumers stick with their favorite brands, Newman says. He adds that no national brand has been successful in marketing organic ice cream.