Vast Lands
by Pamela Accetta Smith
Regional playgrounds drive growth in the dairy
industry.
The United States is
dynamic and adaptive to new changes in the marketplace. But transformations
in consumer preferences and manufacturing technologies are resulting in new
challenges for the dairy industry.
Demand for a wider array of quality dairy products is
at an all-time high. Processors are responding to this trend by introducing
new flavors, providing ultrapasteurization and organic options, and
creating unique packaging. Additionally, U.S. food manufacturers are
requesting that processors provide dairy fractions such as milk protein
concentrate (MPC) and other ingredients for nutritional products and
different formulations.
U.S. dairy production has also been in a rapid phase of
expansion for quite some time now. And some of the industry’s most
successful regional powerhouses are responsible for producing an abundance
of some of the country’s finest dairy products.
There are many factors that contribute to the success
of regional processors in this country. For one thing, these companies have
done a tremendous amount of work in capital investments in new plants,
distribution and marketing. They have also grown in sophistication and
power. And by the looks of it, they’ll continue to do so.
Deep in the Heart of Texas
Texas Pastures, the first organic milk to be produced
and bottled in the state of Texas, is being introduced by Organic Valley
Family of Farms, the nation’s leading cooperative of organic farmers.
Texas Pastures is made by a dedicated pool of organic
dairy farmers in the Sulphur Springs region of Texas, and bottled locally
at SouthWest Dairy in Tyler, Texas.
“Organic Valley is proud to bring our Texas
neighbors delicious organic milk made right here in our own home
state,” says Harry Lewis, one of the Organic Valley farmers who is
pioneering organic dairy in the Lone Star State. Texas Pastures organic
milk is traditionally pasteurized and produced without antibiotics,
synthetic hormones or pesticides. Animals are raised humanely with access
to pasture and certified organic feed; all Organic Valley pastures are
certified organic.
Texas Pastures can be found in the dairy aisle at
Brookshire Grocery (which owns SouthWest Dairy), Central Market (HEB),
Whole Foods Market, United Supermarkets and other leading Texas retailers.
Once known as the “Dairy Capital of Texas,”
Hopkins County — where Sulphur Springs is located — has
experienced a significant decline in its dairy industry over the past
decade. It had 60,000 dairy cows in 1994; only 33,500 remained in 2004,
according to the U.S. Department of Agriculture.
Lewis says organic agriculture is providing a stable
price and a sustainable living to the members of the Organic Valley
cooperative. “It’s a lifeline,” he says. “We can
even see the day when our region is known as the ‘Organic Dairy
Capital of Texas.’”
2005 Production Highlights | |
Total cheese output (excluding cottage cheese) | 764.0 million pounds |
American-type cheese production | 331.0 million pounds |
Butter production | 115.0 million pounds |
Ice cream, regular (hard) | 77.7 million gallons |
Ice cream, lowfat (total) | 36.1 million gallons |
Ice cream, nonfat (hard) | 1.6 million gallons |
Sherbet (hard) | 4.9 million gallons |
Frozen yogurt (total) | 5.4 million gallons |
Nonfat dry milk for human food | 109.0 million pounds |
Dry whey (human) | 83.7 million pounds |
Dry whey (animal) | 6.8 million pounds |
Dry whey (total) | 90.4 million pounds |
Source: The National Agricultural Statistics Service (NASS), Agricultural Statistics Board,U.S. Department of Agriculture. Highlights as of April 2005. |
Pat Tolson, an Organic Valley farmer who runs a 240-cow
organic dairy in Sulphur Springs, agrees. “Bringing organic dairy to
Texas is win-win. We’re delivering farm-fresh organic milk to local
families who want a quality, local organic milk option, and we’re
helping to revitalize the embattled Texas dairy industry. Organic is here
in Texas to stay.”
Sulphur Springs Organic Valley dairy farmer Frances
Charlton runs a 200-cow dairy farm and raises four children with her
husband Barry. “As an organic farmer and parent, I know we’re
farming for future generations. We’re protecting the health of our
earth, our food and one another,” she says.
Deeply committed to their roots in Texas, the farmers
in the Organic Valley Texas dairy pool are members of the Texas Department
of Agriculture’s “Go Texan” program. They will be taking
part in sampling initiatives at retail and consumer events throughout the
state. Additional educational activities are also part of the effort.
Making Magic
The Southern Idaho Economic Development Organization
(SIEDO), a joint venture of public and private sectors in the cities of
Twin Falls and Jerome, was formed to help diversify and strengthen the
local economy by retaining and attracting business to the Southern Idaho
region.
According to the organization’s Web site, www.southernidaho.org,
SIEDO works closely with each of these communities to promote economic
development through expansion of existing business and to implement a
focused consistent program to attract new businesses to the region.
It must be working, since Idaho has grown as a major
force in the industry, now ranking third behind Wisconsin and California in
top production.
SIEDO boasts that Southern Idaho is home to two of the
largest cheese processors in the Northwest — Glanbia Foods and Jerome
Cheese. It also has the largest population of dairy cows in the state
— more than 278,000. Two neighboring counties in southern Idaho
— Minidoka and Cassia, collectively known as Mini-Cassia — are
uniquely set up to offer land, space, water and wastewater treatment for
any dairy or food processor looking to establish a presence in the
Intermountain West. Minidoka County includes the cities of Rupert, Paul and
Heyburn. Cities in Cassia County include Burley, Albion, Declo and Oakley.
Mini-Cassia is unique in that all the elements required
to open a dairy or food processing operation are in place and established.
Because of the rural setting, many areas that have numerous large farm
parcels are in less populated areas, thereby available for large dairy
operations.
Twin Falls, Jerome and Mini-Cassia are in an area known
as the Magic Valley. Canals were built to carry water from the Snake River
to Milner Dam in 1905. Shortly thereafter, productive farmland and the town
of Twin Falls seemed to spring up out of nowhere on the sagebrush-covered
southern Idaho desert, giving rise to the “Magic Valley”
moniker.
Twin Falls, Jerome and Mini-Cassia have long been
agricultural centers with several of the largest employers involved in
growing and processing food.
While each county has specific CAFO (concentrated
animal feeding operation) rules and regulations in place, the more
neighborhood-isolated land areas allow for easier compliance with CAFO
regulations. As an added benefit, the land areas are still only 10 miles
from town. And the land parcels are plentiful. In just one local real
estate office, for example, they have 10 to 15 farm lots large enough to
support 5,000 to 10,000 cows each. The city of Burley has a major
wastewater treatment plant strictly for industrial use that will serve
large processing operations in the Burley-Heyburn Industrial Park. The
wastewater treatment plant can handle the waste of 12 to 15 million pounds
of milk every day.
Gossner Foods Inc. will be opening a 90,000-square-foot
cheese manufacturing operation in Burley in the fall. “One other
cheese manufacturer is close to confirming a move and another is strongly
considering a new plant here,” says Jan Rogers, executive director
for SIEDO.
As Gossner has discovered, says Rogers, the Mini-Cassia
area offers numerous advantages for any dairy or food processing operation.
“The area has an experienced workforce, fully developed
infrastructure for dairy and processing industries, relatively low-cost
electricity, plenty of available natural gas, nearby rail access, most
areas are situated just a few miles from a main interstate highway, large
parcels of highly productive agricultural land good for growing alfalfa,
corn, grains and many other similar crops that would provide feed to the
numerous surrounding dairies and numerous land areas are in need of manure
fertilization,” she says.
According to Rogers, Southern Idaho is one of the best
areas in the country for dairy or food processing operations.
“Businesses will find a proactive approach to helping facilitate
their relocation or expansion into our region,” she says.
Twin Falls , Idaho-based Glanbia Foods Inc. is the
largest cheese producer in the Northwest with two cheese processing sites
in Idaho that process 9.8 million pounds of milk every day, generating 360
million pounds of cheese annually. Glanbia’s current and most popular
products include cheddar, mozzarella, Monterey jack, colby, colby jack and
pepper jack.
The company recently won three gold Best of Class
Awards and one silver award at the U.S. Championship Cheese Contest, hosted
by the Wisconsin Cheese Makers Association in March. Glanbia cheeses
selected as Best of Class were colby, Monterey jack and pepper jack. Pepper
Jack also received a second place finish. Glanbia’s cheeses won their
categories from over 1,000 entries from 25 states.
The company has 500 employees working in the Magic
Valley. In addition to cheese processing, Glanbia also processes whey and
has two plants solely dedicated to this process. “The company’s
whey processing facilities in Richfield and Gooding are two of the most
technically advanced in the United States,” says Shawn Athay,
director of human resources and organizational development. “The
Richfield facility addresses a burgeoning global marketplace in
nutritionals.”
Glanbia Nutritionals Inc., a sister company to Glanbia
Foods, markets the whey products manufactured by Glanbia Foods. “They
are the result of Glanbia’s sustained investment in R&D,
cutting-edge production facilities and human resources,” says Athay.
“They are a world-class supplier to a broad and growing range of
nutrition-based industries including functional and processed foods, sports
nutrition, infant and adult foods, animal nutrition, health products and
nutritional supplements such as whey protein.
“Recently, at the Richfield facility, a whey
protein product that is low fat and high in protein has been developed. The
product, Provon, will be marketed to nutrition companies for use in sports
bars and nutrition drinks. Another product, TruCal, is a powdered milk
calcium product that can also be put into capsules, drinks or bars. Glanbia
is working to patent a product that combines Provon and TruCal that may
revolutionize the diet industry with a highly effective, natural appetite
suppressant/weight-loss product.”
Glanbia says its natural and gentle extraction process
results in a product with excellent nutritional qualities, extremely high
levels of indentured protein and significant levels of biologically active
glycomacropeptides. The company adds that CFM® Whey Protein is the
purest whey protein isolate available for muscle regeneration and growth.
This past May, Glanbia announced plans to expand its
cheese-processing facility in nearby Gooding for the second time in 18
months. A smaller expansion is already underway at the Twin Falls plant to
also meet increased demand for its quality cheese, says Athay. In
Gooding, Glanbia will add two new cheesemaking vats, extend its cheese belt
system, add barrel-forming cheese towers, extend their cooler section,
increase receiving bay space and erect new raw milk storage silos.
“The Gooding facility already processes a
staggering 7.1 million pounds of milk daily from over 100,000 local cows
each day,” says Athay. “This expansion will increase production
an additional 20 percent, requiring milk from 20,000 more cows. Once this
expansion is completed, Glanbia’s Gooding cheese factory will
manufacture approximately 900,000 pounds of cheese every day.”
The Twin Falls plant is adding an ultrafiltration
system to process milk from 1,500 more cows and will produce an additional
100,000 pounds of cheese every week. “There continues to be a
tremendous demand for quality-produced barrel cheese from our customer
base,” says Jeff Williams, president and chief executive officer of
Glanbia Foods. “The expansion at both of these facilities will allow
us to work toward meeting this extra demand. Thanks to the outstanding
dairy farmers here, as our demand for high quality milk increases, they are
able to grow with us and supply premium milk to meet our production needs. We
value our long-term relationships with Southern Idaho dairy farmers. We
wouldn’t be able to expand without them.”
The $13 million expansion in Gooding is expected to be
completed in May 2006. Twin Falls’ $280,000 expansion is under way
and is scheduled to be completed in June 2005. Glanbia is also close to
completing the construction of a wastewater pre-treatment plant in Gooding,
the first ever built by a cheese processor in the state of Idaho. This $13
million project will be initially operational this July and fully
operational by November 2005. “Future expansions at our Gooding
facility were all designed into the processing capabilities of this
wastewater treatment plant,” Williams explains. “It will easily
handle any additional waste generated as a result of this expansion.”
When one thinks of major food processing regions in the
country, says Athay, Southern Idaho usually doesn’t come to mind. “Yet
this region is one of America’s most diverse food baskets, with food
processing a leading industry in the area,” Athay says. “Agriculture
and food/cheese processing serve as the economic foundation for southern
Idaho. Southern Idaho has a tremendous diversity in the number and types of
food processing workers to support this growing economy.”
Numerous area processors can attest to the continued
growth in the region to support their growing operations. “Southern
Idaho boasts tremendous growth in dairy and is No. 1 in Idaho,” says
Athay. “The area also has the largest population of dairy cows in the
state at 278,000. As a result, several cheese processors have set up shop
here — the largest cheese manufacturer being Glanbia.”
Athay says Southern Idaho offers numerous advantages
for any dairy or food processing operation. For example, the area has an
experienced workforce, a fully developed infrastructure for dairy and
processing industry, relatively low-cost electricity, plenty of available
natural gas, nearby rail access, dairy facilities situated just a few miles
from a main interstate highway, large parcels of highly productive
agricultural land good for growing alfalfa, corn, grains and many other
similar crops that would provide feed to the numerous surrounding dairies,
and numerous land areas that are in need of manure for fertilization.
“Southern Idaho is one of the best areas in the
country for dairy or food processing operations,” says Athay.
Midwest Momentum
Lifeway Foods Inc., Morton Grove, Ill., develops
specialty functional dairy foods for health-conscious consumers, producing
a series of distinctive probiotic products based on unique ingredients and
proprietary formulations.
The company’s main product is kefir, a milk-based
cultured drink Lifeway says is more nutritional than yogurt. Lifeway
markets 12 flavors of kefir through U.S. retailers and does a successful
business exporting products to Canada. The company also participates in the
organic and soy markets with its Lifeway Organic brand, the
company’s line of organic kefir and kefir cheese, cream cheese and
America’s first soy kefir, SoyTreat®.
Lifeway’s kefir is a milk-based beverage that
contains 10 types of “friendly,” active probiotic cultures.
While normal yogurt only contains two or three of these cultures, Lifeway
says its kefir products offer more nutritional benefits and are ideal
additions to the diets of pregnant women, nursing mothers, the elderly and
children. The company also produces La Fruta Drinkable Yogurt, a line of
products marketed in U.S. Hispanic communities.
Lifeway also manufactures a variety of cheese products.
Recently, the company introduced a new line of all-natural,
certified-organic pudding under the name It’s Pudding! Sold in a
variety of flavors such as chocolate, vanilla, rice, tapioca and banana,
the company says the pudding is a great addition to its growing product
line and is confident it will grow tremendously in both natural foods
stores and supermarkets nationwide.
In May, the company’s kefir drink was recognized
by the Food Marketing Institute (FMI), receiving the 2005 Retailer Choice
Award. The FMI’s retailer and wholesaler attendees chose the
company’s Kefir drink as a winner from among a number of different
entrants in the New Product beverage category.
“Receiving the FMI’s Retailer Choice Award
is a very important event in our company’s history,” says
Julie Smolyansky, president and chief executive officer. “That
our kefir received the award from among such stiff competition speaks to
the appeal of the product, which is already widely enjoyed by a diverse and
growing group of consumers. We are very pleased to have received the
Retailer Choice Award, and will continue to serve both our customers and
the retailers themselves by providing nutritious, quality
products.”
While Lifeway has been producing its kefir beverages
for a number of years, the company continuously expands its product line,
changing flavors or repackaging its distinctive 32-ounce bottles to make
them more appealing to a growing customer base. Lifeway recently reported
record first-quarter revenues of $4.66 million. “In the first quarter
we rolled out our full line of new packaging, and the results have been
great as evident in our sales growth,” says Smolyansky. “We
feel very confident of the continued market penetration of Lifeway Kefir,
Lifeway La Fruta, and our other products.”
The company appears firmly at the forefront of
specialty dairy and functional foods. The distinctiveness of its products
and further broadening of product lines have led to rapid market
penetration and expanded distribution.
Expanding Reach
What does it take for a regional company to become a
national player? The Yofarm Co., Naugatuck, Conn., knows exactly what it
takes.
Yofarm is a leading manufacturer and distributor of
refrigerated yogurt products with one of the fastest-growing yogurt brands
in the United States. Under its signature YoCrunch® brand, the company
produces premium lowfat yogurt with mix-in toppings such all-natural
granola, Oreo® cookie pieces, Nestlé Crunch® candy pieces,
Reese’s® Mini Pieces and chocolate crunchies.
Yofarm introduced its fourth co-branded YoCrunch
product, Vanilla with M&M’s® Minis®, in 2004 and a new
Apple Cinnamon YoCrunch product in 2005. The company also manufactures
whole milk yogurt, recently re-branded YoSmooth, which sells in
select markets under the Yofarm name.
Driven by the success of the YoCrunch brand, the
company has increased net sales from $13.6 million in 1998 to approximately
$54.1 million in 2004. “The brand has grown at a compound annual
growth rate of 34.6 percent since 1998 with the addition of only four new
items,” says Griff Dixcy, president and chief executive officer.
Although Yofarm’s core markets are in the
Northeast, YoCrunch is distributed throughout the United States. So just
how did this regional company become a major national force to be reckoned
with? “When we bought the company, it had many product lines and was
oriented on providing a wide range of products to regional customers. We
discontinued all but two of the lines to focus on the line that we felt had
the most national appeal and equity that we felt we could grow and leverage
nationally — YoCrunch,” says Dixcy. “We invested in
high-quality packaging and sales presentation materials that were as
polished as any of the national brands. Yofarm then hired a seasoned sales
team with experience rolling out a product nationally and formed a strong
brand.”
As sales grew, Dixcy says the company augmented
the brand with top-flight co-branding efforts which helped gain additional
distribution and enhanced consumer trial of the entire Yofarm product
line. “As the brand grew, we continued to invest in the
plant to ensure quality and improve efficiencies,” he says. “To
maintain customer support, Yofarm has developed and maintained a culture of
the highest level of customer service. We have also utilized our Gold
Effie-winning advertising in certain markets where appropriate and have a
tremendous sales lift from doing so.”
Although there are no significant SKUs in regional
product sales, Dixcy says the company’s Peach yogurt is predictably
stronger in southern areas. Strawberry with Granola and Yofarm’s four
co-branded flavors are the company’s most popular products, says
Dixcy. “Since 2004, the company has introduced three new product
lines, YoCrunch Vanilla with M&M’s Minis, YoCrunch with Apple
Cinnamon Crunchies and a variety pack that contains six individual cups,
each pack featuring two YoCrunch flavors.”
Dixcy says the company’s future goals include
growth from existing and new customers, Club Store penetration and other
potential line extensions.
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