Independently Wealthy

by Pamela Accetta Smith
Major regional players dominate East Coast dairy production.
As the transformation of American agriculture from family farms to agribusiness conglomerates continues, a question mark looms over the future of independent dairy operations. What lies ahead for these regional companies as industry giants systematically buy up smaller businesses, turning the archetypal family dairy into a fading epoch in U.S. history?
More specifically, what will come of the Northeastern dairy market as a result of Chelsea, Mass.-based HP Hood’s recent acquisition of Crowley Foods and Marigold Foods from National Dairy Holdings. The new company, to be known as HP Hood LLC, will be led by John Kaneb, president and chairman. The acquired companies will continue to be led by their existing management teams. Hood, Crowley and Marigold will continue to manufacture and distribute their branded and licensed products as they did before the acquisition, Hood reports.
Based in Binghamton, N.Y., Crowley manufactures fluid milk, juices and drinks, cultured products, frozen desserts and extended-shelf-life products under various brand names including Crowley, Heluva Good, PennMaid, Green’s and Hagan. Crowley boasts annual sales of some $600 million.
Minneapolis-based Marigold sells products under the Kemps brand name, including fluid milk, frozen desserts and cultured products. With annual sales of $550 million, the company also produces private label products for retailers and foodservice.
The Acquisition Bumps Hood From a Billion-dollar-sales Company to a $2.5 Billion Sales Company. With the Purchase, Hood Also Acquired Several Hundred Direct-store-delivery Routes the two Companies Possess, Making it a True Force to be Reckoned With in the Industry.
This acquisition will undoubtedly affect processors in the region and influence the dairy market as a whole. How much exactly, remains to be seen. Still, area processors are enthusiastic about the future of business.
Due to quality brands steeped in family tradition, the region’s independent players remain stronger than ever.
Guida’s Milk & Ice Cream New Britain, Conn.
In New England, where few independents remain, resisting the temptation to consolidate, while capitalizing on the advantages inherent to a family-owned and operated firm, is the cornerstone of this company’s success.
Guida’s Milk & Ice Cream — a regional processor of fluid milk, cream, ice cream and ice cream mixes, fruit juices and fruit drinks, water and a variety of other dairy products — is one of the largest independent dairies in New England.
The company has experienced remarkable growth over the years. Expansion by maintaining a conservative and solid approach has been key to its development for more than 118 years.
Guida’s Milk & Ice Cream attributes this business surge to numerous factors, but insists the most important ingredient in the company’s recipe for success can be traced back to its founders, brothers Frank Guida and Alexander Guida Jr. The latter, Al Guida III’s father and one of 13 children, grew up on a working dairy farm and was selling milk in New Britain by 1932 at the height of the Depression. During World War II, HP Hood Co. bought Guida Dairy’s supplier with plans of ultimately eliminating its sub-dealers. Rather than sell, Alexander and Frank purchased the milk plant and business — Seibert Dairy, founded in 1886 at the company’s present location — from Arthur Seibert in 1947.
Compact Conundrum
Unique to New England processors has been the Northeast Dairy Compact, which regulated Class I
fluid milk prices in Connecticut,
Massachusetts, Maine, New Hampshire, Rhode Island and Vermont. Established in 1997 to protect dairy farmers and assure an adequate local supply of fresh milk, the compact expired in September 2001 when it was not renewed by Congress.
Industry organizations like the International Dairy Foods Association (IDFA) have denounced compacts as price controls that hurt consumers. IDFA is emphatically opposed to legislation that imposes new milk taxes on consumers like milk price fixing compacts or setting national milk
pricing “floors” around the country. Although the compact has expired, some pro-compact members of Congress would like to see it revived and even spread to more than half the country, says IDFA.
According to the association,
compacts and other policies like them are proven policy failures. “Dairy compact advocates fallaciously argue, among other things, that dairy compacts do not drive up retail milk prices; preserve dairy farmland by keeping dairy farmers on the land; do not harm low income consumers; cost taxpayers nothing; and allow for the free flow of milk from non-compact dairy farms into the compact region,” IDFA declares on its Web site.
But the alleged consumer, environmental and industry-wide benefits of compacts, when scrutinized, IDFA says, turn out to be nonexistent or
exaggerated.


Hershey Fast Facts

Founded in 1894 by Jacob N. Hershey (no relation to the Hershey Food Corp. family).
nOperated today by the Holder family who have been involved in the company since the mid-1920s.
nSteady growth for more than 106 years has made Hershey Creamery Co. one of the foremost premium ice cream companies in the eastern United States.
nHershey’s Premium Ice Cream is now sold in more than 25,000 retail outlets in 20 states.
nHershey’s unique network of company-owned distribution centers and company-owned trucks, keeps its retailers in stock and helps ensure total quality control.
nHershey’s modern production and new storage facilities are examples of its dedication to continued profitable growth and expansion.
Since then, Guida’s Milk & Ice Cream says it has had the reputation of supplying the finest products and service to its large customer base.
With a fleet of over 200 vehicles, the company delivers products throughout Southern New England. Guida’s Milk & Ice Cream’s service area includes Connecticut, Rhode Island, Massa­­chusetts, Long Island, Northern New Jersey, New York City and Eastern New York.
The company says its emphasis on quality control cannot be overstated. In fact, with an 18-day code on all of its fluid milk products, Guida’s Milk & Ice Cream says it guarantees the utmost integrity of its product line.
The company is continually striving to develop and cultivate its presence as a viable force in the dairy industry.
Oakhurst Dairy Portland, Maine
Oakhurst Dairy is one of the few family-owned dairy processors in the Northeast, competing against big players such as Hood and the eastern properties of Dean Foods.
Founded in 1921, the company with $85.5 million in annual sales has made a name for itself in Maine with unique business practices: only accepting milk from local farmers that don’t use artificial growth hormones, featuring family members in its advertising and routinely donating 10 percent of pre-tax profits to local charities. Last year, Oakhurst garnered national attention when it was sued by synthetic hormone manufacturer Monsanto to stop using on-package messaging that inferred its milk was superior because it was rBST-free.
Monsanto and Oakhurst came to an agreement that allows the processor to use its banner, “Our Farmers Pledge: No Artificial Growth Hormone Used,” with the disclaimer, “FDA states: No significant difference in milk from cows treated with artificial growth hormones.”
“We were able to settle and continue our program that all our milk is not treated with artificial growth hormones,” says Stanley Bennett II, Oakhurst president and chief executive officer, and grandson of the company’s founder. “This will be used on packaging in the future. This is a very important part of our marketing.”
In the Northeast market, Oakhurst positions itself an independent choice for consumers in a sea of consolidation. “There are only two dairy processors left of any significance in the area,” says Bennett. “There are fewer choices for consumers and retailers. Frankly, the potential benefit is consumers can look for choices and they look to a small regional dairy. When those folks call, we jump.”
Oakhurst caters to regional tastes with four varieties of chocolate and coffee-flavored milk, which are popular in the Northeast. The company sells its product lines throughout Maine and into southeast Massachusetts and Rhode Island, and offers products for foodservice in Rhode Island, Connecticut and upstate New York. A joint venture with a family-owned ice cream processor to make superpremium ice cream was discontinued in recent years because “we were not able to compete with Ben & Jerry’s,” says Bennett.
One area Oakhurst hopes to enter is the low-carbohydrate arena, and plans to develop products that fit this profile. “It’s had a negative impact on consumption,” says Bennett. “Because of the Atkins diet, we’re looking at low-carb product offerings now.”
Like many processors, Oakhurst is interested in the industry’s new weight-loss claim licensing. The processor already has carved out a niche with its Nu-trish milk. “It’s a good value-added product that’s popular with lactose-intolerant people, who have what we call a ‘bum gut‚’” says Bennett. The Nu-trish 11/2% Light and Fat Free Skim varieties have acidophilus cultures similar to yogurt. Oakhurst’s complete product line comprises white and flavored milks, buttermilk, eggnog, half and half, heavy cream, creamers, cottage cheese, sour cream and juice.
This year, Oakhurst will embark on a $7 million capital expansion project, “the most ambitious project we’ve undertaken in the past 10 years,” Bennett says. Planned are new fillers, two remote cold-storage depots and more raw receiving, refrigerator and loadout space.
Bennett and his corporate team — brother William Bennett, vice president of operations; sister Althea Bennett McGirr, director of customer relations; and brother John Bennett, who is new to the company — is committed to keeping the company independent. As Stanley Bennett told Dairy Field in 2000: “Oakhurst will stay independent as long as it’s profitable to do so. Where will Oakhurst be in five years? The answer is here. And that kind of says a lot.”
Hershey Creamery Co. Harrisburg, Pa.
A full-line ice cream manufacturer and distributor, Hershey Creamery Co. celebrates its 110th anniversary this year. The self-distributing company has a sales reach that includes more than 21,000 retail customers in 28 states.
The Holder family has owned the company since the 1920s, when their business, Meyer Dairy Co. of Bethlehem, Pa., merged with Hershey Creamery. And the family remains involved with the business today — George Holder serves as president and Walter and Thomas Holder as vice presidents. The ice cream company and its founder, Jacob N. Hershey, are in no way connected to Milton S. Hershey of the chocolate company fame, though both companies started in 1894 in Pennsylvania.
In those early days the ice cream was produced and packed in metal-lined wooden containers originally built by the Hershey brothers. Route salesmen packed ice around the containers to guarantee the freshness and quality of the product and set off on their daily deliveries to ice cream parlors around Central Pennsylvania. Hershey Creamery started then what the company says has become tradition over the past 10 decades: quality ice cream, superior service for the dealers and a real value for the consumers.
As the Great Depression saw the birth of a new era, Hershey Creamery became the first manufacturer to offer pre-packaged pints of ice cream. Likewise, as convenience and ease became household words following World War II, the company responded with their “on-a-stick” desserts — Popsicles, ice cream sandwiches and SkiHi’s.
Today, Hershey’s ice cream is mixed at the creamery’s plant on Cameron Street in Harrisburg. The liquid mix is sent to the Lower Swatara Township facility for hardening and packaging, then distributed regionally.
Hershey Creamery expanded its sales reach in 2001 from North Carolina to the Florida panhandle, while the company’s western front extended to Illinois, according to a 2003 Associated Press (AP) report.
Changes in transportation and refrigeration have helped the company grow. Ice cream is shipped in truck trailers equipped with the latest refrigeration systems, keeping the product frozen for longer periods of time, which in turn extends the reach of the creamery beyond Pennsylvania.
Hershey Creamery has also been growing with the military resale business over the past 20 years. According to the company’s Web site, Hershey Creamery’s wide range of novelty and pre-packaged take-home products are sold through AAFES, NEXCOM, MCCS, DECA, VCS and MWR facilities. The types of business the company supports include commissaries, shoppettes, recreational facilities, snack bars, clubs and base ice cream parlors, and Hershey Creamery says it hopes to use its strong brand recognition and quality product to expand even further in the military market.
The company initiated its hand-dipped program on the USS Saipan just before its deployment from Norfolk, Va., by supplying it with small dipping freezers similar to what those found in ice cream parlors.
The company is known to rely on its reputation much more than advertising dollars to get the message out about its quality product. Even without its famous name, Hershey Creamery would be a success, the AP report suggests. But it doesn’t hurt the company’s bottom line whenever anyone confuses it with the much larger Hershey Foods Corp. In fact, consumer confusion and corporate litigation have reigned over much of the 109-year history of the two companies, AP says. For example, Hershey Foods began using the Hershey name on its products in 1894 and obtained the Hershey’s trademark in 1906. In 1921, Hershey Chocolate Co. sued Jacob Hershey and his brothers for trademark infringement, claiming they used the Hershey’s name improperly when selling milk-chocolate products.
In 1926, the creamery agreed to refrain from using the trademark or the Hershey’s name in connection with chocolate, cocoa or candy products.
Freelance journalist Shonda Talerico Dudlicek contributed to this report.