Swiss Valley Farms, Davenport, Iowa, is the 2016 Tom Camerlo Exporter of the Year. The award goes to a dairy supplier that exemplifies leadership in advancing U.S. dairy exports, demonstrates commitment to export market development and makes exports an integral part of its overall growth strategy. It is presented by Dairy Foods and sponsored by the U.S. Dairy Export Council, Arlington, Va.
“Swiss Valley Farms illustrates the power of careful planning and perseverance,” said USDEC President Tom Suber. “Its distance from most coastal shipping ports can present a challenging supply chain. Like all exporters, the company has encountered a difficult global dairy market slowdown the past two years.”
But Swiss Valley Farms has not only endured, it has grown. The 2016 Exporter of the Year award is validation that a small-to-medium-sized dairy company in the Midwest can, in fact, build a thriving global business, Suber said.
The year 2008 was the 50th anniversary of the cooperative that is owned by dairy farmers in Iowa, Wisconsin, Minnesota and Illinois. U.S. dairy exports had risen steadily for several years and presented an obvious growth opportunity, but questions remained. For example: Could a small Midwest dairy company far from shipping ports succeed against much bigger players on foreign soil? Was there a viable global market for its products and ingredients? Could the company adapt to the unique requirements and specifications of customers in other countries?
Swiss Valley Farms CEO Chris Hoeger, then in sales, was about to find out. He boarded a flight to Mexico City armed with product samples. One of his first meetings in Mexico took place in a former jailhouse converted into an office. A stocky 6-foot-3, Hoeger is hardly tiny, but the distributor he met that day cut an imposing figure, enhanced by a gruff, opinionated demeanor. Hoeger offered samples of Gouda cheese and cream cheese then waited for a reaction. Instead of being complimentary, the distributor made a rude comment, refusing to take the company or its products seriously.
Persistence pays off
Hoeger and his team could have packed their bags and returned to Iowa after that startling and misguided assessment, but they pressed on to find other customers in Mexico who liked and bought their products. One customer is still with the co-op today.
Swiss Valley Farms now exports to the Americas, the Caribbean, Asia/Pacific, Africa and the Middle East. Besides Mexico, customers are in Canada, Colombia, Chile, Panama, Puerto Rico, the Dominican Republic, Taiwan, China, Hong Kong, Japan, Singapore, Malaysia, Indonesia, the Philippines, Vietnam, South Korea, Australia, South Africa, Morocco, Saudi Arabia, Dubai and Iraq.
The co-op operates five cheese plants in Iowa, Minnesota and Wisconsin. The flagship cheese plant is in Luana, Iowa, surrounded by fields of corn and soybeans. The peacefulness of the surrounding countryside belies the vibrant activity inside the plant. On one recent afternoon, workers busily moved cream cheese packets from a conveyor belt into shipping boxes. Forklifts made determined progress to and from the inventory room, their characteristic beeping sounds reverberating throughout.
On the opposite end of the plant from the loading dock, helmeted construction workers with welding equipment were building a new 49,000-square-foot space to accommodate production. The $20.6 million expansion project attests to the fact Swiss Valley Farms is bullish on exports.
Growth in the Luana plant’s production capacity will be on the cheese side, which will “significantly add more whey available to be exported and sold domestically,” said Hoeger.
The Midwest locations do pose a challenge of getting product to shipping ports located more than 1,500 miles away. Swiss Valley Farms has developed its own method. Outside the plant in Luana, trucks were readied to transport cream cheese and whey to Chicago, where the dairy products would be re-routed to various ports along the East Coast, West Coast and southern United States.
In just eight years, the dairy cooperative can cite these accomplishments:
- An ability to maintain export volume, despite the downturn in the broader global dairy export market. There may have been a month or two in that time when sales were soft, Hoeger said, but overall “our export sales have remained pretty solid and consistent.”
- A focused effort on its global business, starting in 2008. Exports have since grown to $36 million, 9% of total company sales.
- An impressive uptick in cream cheese and whey powder exports, including 58% growth over the past three years.
- A solid network of sales contacts, including customers, distributors and brokers.
- A strong commitment to quality, including award-winning cheeses, whey and dairy ingredients. For example, Swiss Valley’s cream cheese recently won second place at the 2016 World Championship Cheese Contest.
Small company, smart strategy
With annual sales of $400 million (exports plus domestic), Swiss Valley Farms ranks No. 60 on the Dairy 100, this magazine’s annual report of the largest dairy processors in North America. Still, it isn’t as large as some previous Exporter of the Year recipients that have billions of dollars in revenue.
Like any small company that competes with the big guys, the David vs. Goliath approach works as long as there is the right business strategy. For Swiss Valley Farms, it includes marketing a premium product with a high level of customer service.
“That’s been our strategic sales direction: to stay in the upper shelf of high quality and higher value where the customer is looking for more than just product in commodity-type pricing,” Hoeger said.
He credits the co-op’s employees and the strong support provided by the U.S. Dairy Export Council. Without them, “it wouldn’t be possible for a company of our size even to think about exporting to 23 countries,” he said, adding that a majority of the sales contacts came through USDEC.
The co-op also taps into USDEC staff expertise and resources and takes advantage of marketing opportunities. This year, Swiss Valley Farms exhibited in the USDEC booth at both the Gulfood Show in Dubai and the Seoul Food Show in South Korea.
Swiss Valley Farms has a dedicated export division with sales representatives who represent the company around the world. The customer service department is trained and equipped to handle any customer issues, export paperwork and documentation.
Building global relationships
Positive relationships have developed with international customers. For example, one customer in Mexico credits Swiss Valley Farms for its attention in meeting Mexico’s labeling requirements, health certificates and other documentation.
Swiss Valley Farms invested in a packaging redesign of Swiss, blue cheese, gorgonzola and cream cheese products distributed through a major Mexican cheese company. The products had to comply with Mexican labeling regulations that took effect in 2011. The project required detailed translation efforts between Swiss Valley Farm’s quality and marketing departments and customers. Swiss Valley Farms also reached out to a third-party verification unit to ensure there would be no issues at the border.
The co-op’s approach to exports impresses Kevin Stiles, former senior vice president of business development and partnerships at the Midwest Dairy Association.
“The company can be admired for the progress it has made in a short period of time, developing the market for their products while overcoming challenges in transportation distance, packaging and consumer preferences,” Stiles said.
That gruff Mexican cheese distributor Hoeger met eight years ago is now an amusing anecdote and distant memory in the company’s success story. Sales reached $2.3 million in Mexico last year, built on personal connections that began on Hoeger’s first sales trip there.
“We are more than partners,” one customer in Mexico told Swiss Valley. “We have developed not just business relations, but friendship relations.”
- 2015 California Dairies Inc.
- 2014 Dairy Farmers of America
- 2013 Agri-Mark
- 2012 Glanbia USA
- 2011 Leprino Foods
- 2010 United Dairymen of Arizona
- 2009 Hilmar Cheese Co. and Hilmar Ingredients
- 2008 Schreiber Foods
- 2007 Darigold
- 2006 Davisco Foods
All photos courtesy of the U.S. Dairy Export Council