Independent milk processors have it tough. They are a dwindling breed. Their competition tends to be multistate conglomerates. Migration at the retail level from branded to private-label products have burned up brand loyalty by turning milk into a commodity, often selling the beverage as a loss leader. Then there is OPEC. It might not be obvious to the consumer, but milk processors depend heavily on the price of oil. Not only do processors get socked at the gas pump when they refuel their delivery vehicles, but they also pay more for petroleum-based plastic resins to form bottles and containers.
Despite these conditions, independent milk processors can thrive. Take Guida’s Milk of New Britain, Conn. The company succeeds by co-packing, finding customers to buy its excess cream, developing new products and manufacturing non-dairy beverages, such as water, orange juice and iced tea.
Guida’s is a family business. Mike Guida is president. His brother Al is chairman of the board. James Guida is senior vice president, and third-generation family members hold management positions in the company. Annual revenues were about $120 million in 2010. The company ranked No. 69 on the Dairy 100, Dairy Foods’ list of the nation’s largest dairy processors.
Guida derives as much as 30% of its revenues from co-packing. Retail sales of its own dairy and non-dairy brands to supermarkets and convenience stores account for about 25% and foodservice sales are 15%. Guida’s supplies milk to in-state school districts and many of Connecticut’s state universities. Cross-border customers include the University of Massachusetts at Amherst and the University of Rhode Island. Additional revenue comes from milk and cream sales to food manufacturers and from broadliners that deliver dairy and other food products.
The company is organized into three functional areas: administration (including sales, service and IT), plant operations and distribution. The management style is democratic, says executive vice president and treasurer Michael Young, the first non-family member to serve in an executive capacity. Executive committee members meet weekly. A board of directors, drawn from various disciplines, helps provide oversight, governance and direction.
Young, who joined the company 20 years ago after working for 10 years in public accounting, says the board challenged Guida’s to write a strategic plan. Prior to the plan, the company was “plant driven and not customer focused,” Young says. Guida’s made a decision to grow by becoming a low-cost processor that could serve co-pack partners and private-label marketers, as well as maintaining its own brand. Young says the plan showed the company that “it’s okay not to make your own products as long as you’re fulfilling the customer’s needs.”
Processing non-branded and co-pack milk allows Guida’s to pump volume without any associated marketing expenses. Guida’s has more than 600 SKUs to manage. As a result of the strategic plan, the company planted its flag as a low-cost provider. Activity-based accounting helps Guida’s monitor efficiencies and to identify costs to drive out. The company benchmarks its performance against other processors tracked by Carl Herbein + Co., Reading, Pa.
Guida’s co-packs national brands, including Organic Valley, based in La Farge, Wis., and regional ones, such as The Farmer’s Cow of Lebanon, Conn.
“They take good care of us,” says Louise Hemstead, Organic Valley’s chief operating officer and a long-time customer. “They are very accommodating.”
She says she likes the cold separation, especially for skim milk, because it gives the beverage a better mouthfeel.
Guida’s was “a key component in us getting started,” says Robin Chesmer, the managing member of The Farmer’s Cow, a co-operative of six dairy farmers. “They let us get in the milk business,” he says.
Guida’s processes the co-op’s milk in gallons, half-gallons and half-pint containers, and half-and-half in pints and quarts. The Farmer’s Cow also buys ice cream mix from Guida’s and uses the processor’s distribution services.
By deciding to be a low-cost processor, Guida’s made a change to being customer-focused from plant-focused, Young says. Thus, it manufactures bulk containers, like the 320-gallon totes for food processors who don’t want a large tanker of cream but need quantities greater than 5-gallon bags.
Guida’s processes more milk and creates more cream than it can use, so it has found ready buyers in food processors. Blount Seafood, Fall River, Mass., buys 320-gallon totes of cream for use in its soups and prepared foods. YoCrunch of Naugatuck, Conn., is a customer of fluid milk. Pie makers are buying Guida’s Sweet and Creamy topping. (That product was originally introduced at retail but consumers never took to it, so Guida’s reformulated the product and found takers among large-scale users.)
Guida’s processes milk for most IGA grocers in Connecticut and sells its brand in convenience stores. James Guida describes the changes in the retail grocery industry that have had an impact on all milk processors. Limited-assortment stores like Aldi have come on the scene. General merchandise retailers and warehouse clubs have added food to their stores. Guida’s serves private-label customers in both of those channels: Family Dollar, based in Matthews, N.C., and Costco, Issaquah, Wash., (added in February 2011).
David Drezek, director of customer service and distribution, says the customer needs and demands are “priority No. 1. We have invested financially and with personnel to become a customer-centric company.”
All customer issues are documented in a new customer retention management software program. Each issue is left open until the customer is satisfied with the resolution.
“Customers love that we call them back several weeks after the issue has been resolved to ensure that they are satisfied and there have not been any reoccurrences,” he says.
While Guida’s provides co-packing services, it is also a customer for other dairy plants. The company outsources the production of its sour cream, cottage cheese, butter and single-serve waters. Guida’s bottles its own gallon containers of spring water.
Products and introductionsMike Guida admits his company is not a new-product innovator. It does not have the staff or budgetary means to create new beverages. Guida’s does stay atop of food trends and reacts to the market. For example, school-milk product Healthy Moo is a sucrose-sweetened flavored milk. Guida’s replaced high-fructose corn syrup with sugar. Another new product, the aforementioned Sweet and Creamy pie topping, has found favor with dessert manufacturers.
Guida’s sells a range of branded milk – whole, 2%, 1% and non-fat – in paper and plastic 4-ounce, 8-ounce, 10-ounce, 16-ounce, quart, one-half gallon and gallon containers. It sells a 5-gallon polybag dispenser for foodservice and a half-pint product for vending machines.
On the flavored milk side, Guida’s processes low-fat chocolate milk (in paper half-pints and 5-gallon polybags), Dutch chocolate milk (in 16-ounce and quart plastic containers), low-fat Dutch chocolate milk (one-half gallon plastic containers) and 1% chocolate milk (in 10-ounce paper containers).
Vanilla and chocolate soft-serve ice cream mix is available in 5% and 10% butterfat concentrations in 5-gallon polybags. Guida’s produces 14% and 16% butterfat ice cream mix in 5-gallon polybags.
Exotico is the name of Guida’s punch brand, available in strawberry, pineapple, tropical and citrus flavors and sold in plastic gallon containers. Guida’s bottles Florida orange juice in 4-ounce, 8-ounce, pint, quart, one-half gallon, gallon and 5-gallon containers. Some SKUs have calcium added. A line of 16-ounce non-dairy drinks is available in fruit punch, grape, lemonade and orange flavors, and Guida’s makes iced tea.
Guida’s distribution arm delivers other dairy beverages, including Hershey’s milkshakes, Lactaid milk and International Delight flavored coffee creamers. Food items include eggs, cheese and lunchmeat.
MarketingGuida’s holds its own against larger rivals. Measured in dollars, its whole-milk sales rose 13% with units increasing nearly 15% in the fourth quarter of 2010. In a recent 52-week period, dollar sales of Guida’s whole milk rose 13.3%, while one major competitor’s sales rose 9.7% and the other’s dropped 3.8%, according to data compiled by Symphony IRI, Chicago.
James Guida says the company has a small marketing and advertising budget. The milk processor piggybacks on MilkPEP campaigns, and while it does use supermarket circulars and television advertising, Guida’s takes advantage of cause marketing and community events.
It supported Roses for Autism, a training and employment program based out of Guilford, Conn., by promoting the organization on specially marked gallons of 1% milk. The dairy regularly participates in Susan G. Komen For the Cure events. Guida’s Milk is the largest sponsor for the Brain Injury Association of CT (BIAC) and assists in coordinating its annual fundraising golf tournament. Sports tie-ins include promoting a family night package with the Connecticut Whale of the American Hockey League, promotions with the Rock Cats, a minor league baseball team from New Britain and sponsoring a race car for Gallo Racing. Its caped and masked SUPERCOW mascot makes personal appearances. Guida’s was the first milk processor to develop and print photos of missing children on milk cartons. Later, its anti-drug message campaign resulted in invitations to a lunch with President Ronald Reagan.
Industry involvementChairman Al Guida, who no longer is involved in the day-to-day operations, serves the company in a consulting capacity. He is an opinionated and outspoken advocate for milk and milk products.
The chairman is also fiercely supportive of Guida’s independent status. Customers need an alternative to large milk processors, he says. A key tenet of the company’s management philosophy is “treat customers right,” which is a competitive advantage, Guida says. He notes some of the company’s other advantages, including its flexibility to serve customers, the plant itself and the employees. Having family members involved at all levels of the company means that a customer who asks to speak to an owner can usually be accommodated, he says.
Guida serves on the Milk Industry Foundation board of the International Dairy Foods Association, Washington, D.C., and is an advisor to Milk Processor Education Program. Vivien P. Godfrey, ceo of the Washington, D.C.-based MilkPEP, says Guida brings the perspective of a small, independent processor from the East Coast. “It’s important to have that representation,” she says.
Guida is not shy about sharing his opinions during conference calls or in-person meetings, Godfrey says.
Guida says membership in these organizations is invaluable because he can stay current and informed on dairy-related issues by talking with legislators and milk industry peers.
President Mike Guida feels as strongly about treating customers like family. Even non-family employees say they feel like a part of the family.
“We have better help than the competition,” Mike Guida says.
Asked to name what’s important, Guida mentions family and farmers. Size is important, but he adds, “it’s not everything. Bigger isn’t necessarily better.”
Money isn’t everything, either. Cold separation of raw milk leaves behind a little more cream in the skim. Over the course of a year, that little bit of cream adds up to gallons of product that could be re-sold. But the retained fat produces a better-tasting skim, which is another example of treating the customer right.
Guida says he heads to the production floor when he needs to clear his head. He can operate every piece of equipment, he notes with satisfaction. His children know how, too, having worked all the jobs in the plant. Daughter Ashley Davis, whose title is call order lead, also can drive a 10-wheeler, he says with pride.
Looking aheadAshley, her brother Jon (distribution manager) and their cousins Mark Zydanowicz (sales representative) and David Zydanowicz (security) are members of the third generation. They are spearheading the company’s sustainability project this year, which will touch on use of natural resources and recycling.
Guida’s, as well as other milk processors, have been helped by the public’s interest in where their food is sourced, how it is made and the organic movement. Years ago Guida’s stopped taking milk from cows treated with rBST. Its commitment to manufacturing quality products is found in little things that all add up. It uses an inner-foil cap on plastic bottles that keeps milk safer, fresher longer and preserves the quality. Cold separation is a gentler way to handle milk and preserve its integrity.
The company headquarters is in a quiet residential neighborhood. SUPERCOW sits atop the roof and the name Guida-Seibert is on the front door of the headquarters. Mike Guida’s father, Al Guida Jr., started delivering 13 quarts of milk out of the back seat of his car in 1929 and grew the business from there. In 1947, Al Guida Jr., acquired J.E. Seibert and Son, which was established in 1886. Al Guida’s brother, Frank, joined him at that time. Incorporated under the name The Guida-Seibert Dairy Co., the dairy is celebrating its 125th year anniversary in business this year.
Guida says it is important to carry on the business for the next generation. With the changes the management team has made in customer focus, customer mix and plant improvements, the company is in a good position to continue to thrive.