2018 Processor of the Year: Land O’Lakes is a cooperative powerhouse
The accomplishments of our 2018 Processor of the Year, Land O’Lakes Inc., go well beyond continued growth and financial success.
When 320 dairy farmers came together in St. Paul, Minn., back in 1921 to form the Minnesota Cooperative Creameries Association, they likely didn’t have big dreams of becoming a cooperative powerhouse. They simply wanted to market their milk effectively.
But almost 100 years later, that small operation — rechristened as Land O’Lakes Inc. in 1949 — has grown to almost 4,000 member-owners (almost 2,000 of which are individual dairy producers or other dairy cooperatives).
And Land O’Lakes now has 10,000 employees working across all 50 states and more than 50 different countries — within four business units that include Land O Lakes Dairy Foods, Purina Animal Nutrition, WinField United and Land O’Lakes SUSTAIN. For fiscal year 2017, the Arden Hills, Minn.-based cooperative posted a record $364.8 million in net earnings on $13.7 billion in sales.
But Land O’Lakes’ recent accomplishments go well beyond continued growth and financial success. The company has been engaging in cutting-edge dairy-industry-mentorship, sustainability, employee and product-innovation initiatives. And it also has new leadership to oversee those initiatives: Beth Ford stepped into the president and CEO position on Aug. 1 (see the sidebar, page 36).
Mentor to dairy startups
In 2017, the cooperative launched the Land O’Lakes Dairy Accelerator program with the goal of providing support and mentorship to dairy entrepreneurs. Selected participants receive a $25,000 stipend to attend and contribute to the three-month program, which is held in the Minneapolis-
St. Paul metro area.
The program focuses on several areas, including finance, brand-building, manufacturing, sales and leadership development. At the conclusion of the program, participants are able to present their proposals and new business ideas to Land O’Lakes’ leadership.
“As the competitive landscape of the food industry continues to change rapidly, we wanted to show our commitment to supporting the growth of dairy food companies and the dairy industry as a whole,” explained Chris Roberts, president, Dairy Foods, and executive vice president, Land O’Lakes. “We created our accelerator program to help equip dairy entrepreneurs to scale up their operations and achieve meaningful growth.”
In addition to addressing white space opportunities, DFA’s product innovation efforts include a focus on new product formats and refreshes to the look of legacy brands.
The program is one way the organization can elevate innovative ideas that stand to benefit the entire dairy industry, he said, calling it a “win-win” situation for everyone.
“One of the key benefits to Land O’Lakes is simply in helping to drive demand for dairy,” Roberts added.
“As a farmer-owned cooperative, we know that growth in the dairy industry, whether it comes directly from one of our lines of businesses or from small, innovative dairy brands, is good for our members. This program also exposes our employees to a more entrepreneurial mindset, one that is focused on agility, creativity and taking smart risks.”
During its first year, the Land O’Lakes Dairy Accelerator showed that consumers are interested in “new and novel” products that offer an indulgent, an artisanal or a heightened moment, noted Raquel Melo, vice president, innovation and new business development.
“It also showed us there is an incredible amount of energy and passion among innovators and entrepreneurs,” she said, “but that many of these entrepreneurs want the guidance and expertise that a large, experienced consumer company like Land O’Lakes offers.”
Participants in the 2018 program, announced in September, include Blue Marble Ice Cream, Darling Pickle Dips, Norr Skyr, Numa Foods, SmashPack and Tulip Tree Creamery.
“Like last year, our goals are to offer participants hands-on experience in finance, brand-building, manufacturing, sales, distribution and leadership development from experts at Land O’Lakes,” Melo said. “We also hope this opportunity offers a way for innovators to gain exposure, both to Land O’Lakes leadership and across the dairy industry.”
A sustainability standout
Land O’Lakes is no slouch on the sustainability front, either. For example, in June, it entered into a partnership with Visalia, Calif.-based California Bioenergy LLC (CalBio) to launch a first-of-its-kind collaboration to support the financing, installation and management of on-farm methane digesters to generate renewable compressed natural gas fuel in California. The partnership creates an innovative farmer-led model for “barn to biogas” that could shape nationwide solutions to agricultural methane emissions and unlock new revenue streams for dairy farmers, the company noted.
The partnership with CalBio will also help Land O’Lakes’ member-owners in California meet new state standards that call for a 40% reduction in dairy and livestock manure-related methane emissions from 2013 levels by 2030.
And in May, Land O’Lakes’ SUSTAIN business unit was recognized by Environmental Initiative for its on-farm water quality and conservation work.
“Land O’Lakes SUSTAIN is all about leveraging the best in agricultural technology and on-farm business management to help lift up farmer-led stewardship and drive sustainability across the food system,” Roberts explained. “In addition to helping farmers continuously improve their work, we’re able to help them quantify their progress in a way that’s meaningful for food companies and consumers.”
New tools are helping the SUSTAIN business unit in that quest. Back in July, Land O’Lakes said it acquired substantially all assets of Agren Inc., an Iowa-based software company with soil health and conservation planning software designed for innovative conservation stewardship.
And most recently — this fall — Land O’Lakes SUSTAIN introduced the Truterra brand and the Truterra Insights Engine, Roberts noted. The engine is an interactive on-farm digital platform intended to help farmers achieve their stewardship goals and returns on investments “in real time, acre by acre,” as well as measure their sustainability progress, Roberts said.
“Across the board, Land O’Lakes SUSTAIN is focused on helping farmers continuously improve their stewardship,” he said. “We’re working hard this fall to get the word out about Truterra and encourage anyone in the food industry to visit www.truterrainsights.com to learn more.”
On the employee front, Land O’Lakes prides itself on its inclusive environment. As Roberts explained, the cooperative’s employee and member community not only was built on inclusion, but also embraces teamwork.
Philomena Morrisey Satre, director of diversity and inclusion, is tasked with elevating the voice of every employee and member and coming up with ways to integrate diversity and inclusion into Land O’Lakes’ culture, he noted. Working with a cross-functional team at headquarters and in the company’s remote locations across the country, she supports and champions the work of all employees.
Land O’Lakes recognizes that it needs to continue to transform when it comes to how it thinks about its business and how it works with its customers, said Greg Somerville, vice president, Dairy Foods sales (pictured at left). Chris Roberts, president, Dairy Foods, and executive vice president, Land O’Lakes (pictured at right), said the cooperative is continually evolving its approach “to win in a rapidly transforming marketplace.”
Land O’Lakes’ diversity and inclusion strategy has two focus areas, Roberts added: workforce and marketplace. The workforce area focuses on how and whom the company recruits, as well as on the feel of the work environment, while the marketplace area focuses on engaging with partners, customers and communities. In addition, Land O’Lakes has eight employee resource groups (ERGs) that support the company in fostering a diverse and inclusive workplace: African Ancestry, Asian Affinity Connection, LOL Amigos, Pride Alliance, Veterans Enablement and Troop Support (VETS), the Women’s Leadership Network, the Young Professionals Network and Disability Awareness.
The company’s efforts here haven’t gone unnoticed. In fact, the Minnesota Department of Military Affairs’ Beyond the Yellow Ribbon program recently named Land O’Lakes a Yellow Ribbon Company for fostering a workplace culture that supports veterans.
“Our VETS ERG is focused on recruitment and retention and works closely with a dedicated HR recruiter to make sure we are reaching veterans for our positions at our headquarters and in facilities across the U.S.,” Roberts said. “Within the workplace, the VETS ERG provides support, guidance and networking for our military employees both home and abroad. Called Land O’Lakes Veteran Connection, the program allows new hires and retained employees to reach out to other employee veterans from their same — or different — branch, either at headquarters or in the field.”
Innovation has also been a strong suit for Land O’Lakes in recent years.
“The dairy foods industry is faced with a key growth challenge: to defend and grow with our current consumer base while also engaging up-and-coming generations,” Roberts noted. “To do that, we’re evolving our approach to win in a rapidly transforming marketplace.”
Land O’Lakes currently is focused on bringing to market the products and messaging that are important to both customers and consumers, he added. For example, in 2018, the company launched Land O Lakes Soft Squeeze spread, Land O Lakes butter with canola oil plus calcium and vitamin D, and Land O Lakes family-size light butter with canola oil. It also has been investing in product development under its Vermont Creamery and Philia Foods specialty brands. And outside the product arena, the cooperative introduced the All Together Better Initiative (https://tinyurl.com/yc5vkj5v), which celebrates its farmer-owners.
“When you live in a world where disruption of entire industries can happen over very short periods of time, product and technology innovations are the lifeblood of any company,” Joana Montenegro, vice president of research and development, explained. “Consumers today have an expectation that innovation will be transformational and solve real issues for them. At Land O’Lakes and within Dairy Foods, we look for inspiration everywhere.”
Because innovation calls for “frame-breaking mindsets,” Land O’Lakes draws inspiration from some unlikely companies, Montenegro said — including Uber, which essentially transformed the taxi business by deciding it didn’t need its own cars to compete and win.
“It’s time we look at dairy in that way and work to unlock its full potential,” she said.
Such thinking resulted in the launch of the Land O Lakes Soft Squeeze spread, noted Catherine Fox, senior marketing director, retail butter and spreads. The butter and canola oil blend is said to deliver “the great taste of Land O Lakes butter” in any easy-to-use squeeze bottle.
“We were literally thinking outside of the box, striving to deliver a new level of convenience for the ways consumers use butter,” she said. “This product makes adding butter so easy for cooking, sautéing or simply adding butter to vegetables and baked goods.”
Today’s consumers do not subscribe to a one-size-fits-all approach, so innovation and more choices are critical in the dairy category, Fox added.
“Consumers are demanding products that meet their nutritional and dietary needs like added calcium,” she said. “They want higher-fat premium products and products with clean, natural ingredients. They want different sizes, flavors and packages to meet their needs for portability, convenience and higher taste.”
Consumers aren’t the only focus when it comes to innovation, of course. Retail and other customers matter, too, and Land O’Lakes recognizes that it needs to continue to transform when it comes to how it thinks about its business and how it works with its customers, said Greg Somerville, vice president, U.S. Dairy Foods sales.
“Our focus is on insight-driven approaches that drive incremental category growth,” he said. “We develop many of those category-building ideas jointly with our top customers.
“We always seek to leverage the entire Land O’Lakes enterprise and connect those resources across the breadth of our customers’ operations,” Somerville added. “Listening to our customers and intently focusing on solution development is the key.”
Preparing for the future
To help ensure continued success in the years to come, Land O’Lakes has been investing in plant-level expansions and improvements, too. For example, it recently increased the annual manufacturing capacity at its Kiel, Wis., cheese plant by 50%, noted Yone Dewberry, senior vice president and chief supply chain officer. The expansion also allows the facility to package cheese in 640-pound blocks, opening up another avenue of growth.
Land O’Lakes is also investing in product development outside of its flagship Land O Lakes brand.
And the company upped the capacity of its milk silo at its Tulare, Calif., dairy plant by 40%. According to Dewberry, the plant is now able to store up to 24 hours’ worth of milk, giving it flexibility in managing supply and demand fluctuations.
“Our members’ milk pickups are less impacted by small disruptions in the plant, also giving us additional segregation capabilities for specific milk components,” he said.
Land O’Lakes also recently acquired a four-packaging-line facility in Hillsboro, Ohio, that will enable the company to increase its butter capacity by as much as 50 million pounds per year, Dewberry added.
Its farmer-owners also factor large in Land O’Lakes’ equation for continued success. The cooperative is working hard to connect those members with consumers, Somerville said.
“This philosophy is incredibly powerful in the marketplace as we provide value-added solutions through our customers to our end consumers,” he explained. “Knowing that we are providing a value-added output for our cooperative members’ milk in a sustainable way gives our team members a sense of purpose that may not be felt in publicly traded companies.”
Land O’Lakes works with its farmer-members, too, to make sure its operations continue to align with their goals. Every three years, members complete a three-year business plan, which they refresh every year with the cooperative’s staff, Dewberry said.
“This helps both Land O’Lakes and our members plan for the future and align our goals,” he noted. “We have a market-back strategy that ensures we align our market opportunities with the milk production goals of our members.”
Going forward, the cooperative also will continue to build on the strengths for which it’s become known and admired.
“Land O’Lakes Inc. has always leveraged our unique insight-driven, value-added strategy, which differentiates us within the areas we compete,” Roberts stressed. “We’ll continue to rely on that, along with the opportunities and advantages inherent in our cooperative model. Beyond that, we’ll continue to lean heavily into new product innovation, supply chain optimization and e-commerce to set the trajectory for the future.”