CURRENT ISSUE
| Cover Story |
| Columns |
| The Big Cheese |
| Profile | |
| By Chris Petersen | |
| Tuesday, 01 May 2007 | |
 Dairy Food Products leads the dairy industry in innovation and strong branding with the support of the nation's largest dairy co-op, the organization says. Dairy Food Products President Mark Korsmeyer says the company has earned its place among the most successful in the dairy industry by continually striving to top its products, engaging in successful branding and maintaining a close bond with its suppliers. Some of its brands have histories dating back more than 100 years. Dairy Food Products provides cheese, butter and other dairy products through three commercial channels: retail, foodservice and institutional, and contract manufacturing. The company has 15 plants across the country and manages such respected and well-known brands as Borden, Breakstone’s and Keller’s Creamery. Coming Together In 1996, the leaders of the nation’s four largest dairy co-ops began discussing how to bolster their individual strengths to benefit dairy farmers and help each other effectively market dairy products in a marketplace becoming increasingly crowded with competition. Leaders from Associated Milk Producers Inc., Mid-America Dairymen Inc., Milk Marketing Inc. and Western Dairymen Cooperative Inc. founded DFA in 1998. The co-op says the purpose of the new organization is to “give dairy farmers control over their destiny in a rapidly changing global business environment.” Approximately 20,000 dairy farmers make up the DFA, according to the co-op. “We are proud to be a cooperative, owned and operated by the dairy farmers whom we serve,” the co-op says. “We are one of the country’s most diversified [domestic] manufacturers of dairy products, food components and ingredients.” Before the formation of DFA, each of the four co-ops had invested in commercial operations in an effort to provide markets and greater returns to members. Korsmeyer says one of the DFA’s goals was “to drive more synergies and more efficiencies in our businesses.” It united those operations as Dairy Food Products in 2002. The key advantages to consolidation are a consistent vision and easier communication, Korsmeyer says. “It definitely gives a consistency of direction,” he says. “It allows for continuity of communication and information.” Before the co-op consolidated its members’ commercial enterprises, Korsmeyer explains, the retail, foodservice and contract manufacturing operations were separate and each had different leadership, which made communication among them laborious. “Right now, since we’ve put them all together under one common vision, we can sit around the same table day in and day out,” he says. “Everybody’s on the same page.” Deep Connection Being a wholly owned subsidiary of DFA means that Dairy Food Products is deeply connected to its suppliers, the co-op’s dairy farmers. Korsmeyer says this gives the company a knowledge base and investment in its products that competitors can’t match. That type of commitment is not often found among the competition, he says. “One of the things that truly is a large differentiator that we have is we’re vertically integrated to farmers in the dairy industry,” he says. “That gives us credibility when we talk about our products.” The relationship works both ways as well because the success of Dairy Food Products has a direct connection to farmers. “The reality of it is that the proceeds, the profitability of our products, go back to dairy farmers,” Korsmeyer says. “They’re the people that feed the country, feed the world. Many other organizations don’t have that.” Last year, the company’s sales topped $2.5 billion, he says. In addition to providing revenue to dairy farmers through Dairy Food Products, DFA also provides insurance programs, a 401(k) and informational services on topics, including farm security. Korsmeyer says the co-op’s leverage due to its size also helps farmers drive down costs on certain programs and services that would be more expensive if they purchased them on their own. The company’s size also helps it in the development of new products, Korsmeyer says. Because Dairy Food Products isn’t as large as its major competitors, the company has a quickness and responsiveness that bigger organizations can’t match. He says the company’s size allows it to bring products to market much faster than its competition, and it can respond faster to market trends without the need to send decisions through a long chain of command. Big Names Korsmeyer says the company has been able to put together an impressive collection of brands, many of which have long-standing recognition. In particular, the acquisition of the Borden brand rights for cheese has been successful for the company, he says. DFA acquired the brand rights in 1998, and continues to produce cheese products with the familiar face of Elsie the Cow on them. Elsie the Cow has been an American icon for generations, and the character and the brand recently received an honor befitting an icon. This May, the Borden brand celebrated its 150th anniversary, and in June the company presented Borden memorabilia to the Smithsonian Institute in Washington, D.C. Korsmeyer says the brand’s history creates a strong selling point with consumers by giving them a familiar face to associate with the products and the farmers who produce them. “The longevity of the brand has given confidence to consumers, it has given linkage to the dairy farmers in various products [and] it demonstrates the quality of the farmers,” Korsmeyer says. Another brand under Dairy Food Products, Keller’s Creamery, celebrated its 100th anniversary in 2006. Keller’s Creamery is the second-largest manufacturer of butter for retail, foodservice and industrial use, according to the company. Butter brands within Keller’s Creamery include Keller’s, Borden, Breakstone’s, Plugra, Hotel Bar, Falfurria’s and Mid-America Farms. Cream of the Crop DFA is proud of the history of its brands, and yet Dairy Food Products continues to keep one eye to the future. The company conducts its own research into consumer trends and develops new products out of its own facility. “We have what was called the Research and Development and Technical Center in Springfield, Mo., and in that facility we have pilot labs and small-scale equipment to run trial products and short runs,” Korsmeyer says. He says the company also depends on information from its member farmers for research on trends and potential new products. The company must continue to focus on anticipating consumer trends, he says, because the dairy industry as a whole is typically not proactive when it comes to meeting consumers’ needs. “We have to drive innovation at a pace greater than the industry,” Korsmeyer says. “We are working with dairy organizations to become more of a dairy innovator.” The biggest trend currently driving product development is the American family’s increased mobility. Korsmeyer says more families spend more time on the move between work, school and activities than ever before. This means consumers are looking more frequently for food that can keep up with their lifestyles. “It’s all about consumers’ willingness to eat on the go,” Korsmeyer says. To this end, Dairy Food Products has developed products such as single-serve milk bottles that are made of plastic and have sporty designs. Korsmeyer notes that drinkable yogurt blends have also increased in popularity, along with string cheese and individual-sized cheese bars. “The whole snacking category on cheese has just exploded,” he says. Snacking Healthier Another trend is growing nutritional awareness. Korsmeyer says the company has responded to this trend with new products that are more health-conscious, focused especially on children. These products have not only met consumer demand for snacking cheese, but have also met their demand for healthier options for children’s snacks and lunches. “One of the things we have on the cheese side is fortification,” he says. For example, the company’s Borden Kid Builder line of cheeses contains added calcium as well as vitamins. The extra health benefits for children are a “huge driver for mothers,” Korsmeyer says. The company has also taken a cue from cookies and crackers, which have begun appearing on store shelves in diet-friendly 100-calorie packages that allow consumers to better regulate their calories. Korsmeyer says 100-calorie packages of Borden snacking cheese have been introduced recently. “We’re following the suit of the industry trends on that,” Korsmeyer says. A Sprinkle of Creativity One product that creates an innovative take on an old standard is the company’s Shred Medleys. The product, introduced last fall, combines shredded cheese with seasoning packets that add a new dimension to the category. “If you think about the shredded cheese category, there aren’t a lot of ways that you can shred or cube cheese,” Korsmeyer says. The answer to being creative with the product, he says, was found in looking outside the product. The flavoring packets add a new dimension to what was until now a very predictable product, and allow consumers to become more creative in the kitchen without a lot of extra effort, he says. Shred Medleys come in varieties such as Tuscan Herb Italian and Southwestern Cheddar & Monterey Jack. The simple idea has become popular with consumers, Korsmeyer says. “It allows consumers to take that typical shredded cheddar and flavor their dish or entrée at home and create a whole new entrée just by putting a little seasoning on top,” he says. Going Sour? Rising milk prices have been a boon for farmers. However, cost structures have been rising almost at the same pace, and Korsmeyer fears farmers could see their profits disappear. As America continues to search for alternative energy sources, ethanol has emerged as a viable candidate for fueling the nation’s highways. However, Korsmeyer says, the focus on ethanol has made things more difficult for dairy farmers by raising the prices of one of their most important resources through increased demand. “Corn is a huge component of feeding cows, and with all the focus on ethanol, all the corn is going to ethanol and the price of corn has doubled in the last six months,” Korsmeyer says. “That’s just a margin squeeze, there.” Although costs are increasing, Korsmeyer says additional sales generated by the company’s new products have helped it stay ahead of them. He says this is one of the reasons the company needs to continue focusing on developing new products and leading the industry in that regard. Churning Out Skilled Employees Competing in the food industry requires high standards, and Korsmeyer says the company continually strives to ensure that its employees and systems are up to the challenge. Korsmeyer says the company has recently streamlined its internal training and employee development process. The key to this new approach, he says, has been communication. The company now solicits direct feedback from employees on a regular basis to determine not only how to improve their skills, but also improve the company as a whole. Korsmeyer says this information is reviewed periodically and is used to help tailor its new, more-focused training system. Dairy Food Products has rebuilt its human resources department to be more specialized. This means the department now customizes its approach to training and development for each specific department, rather than having one standard approach across the company. Under the new training system, Dairy Food Products has specialized programs that fit each department. Korsmeyer says this bolsters the company’s commitment to preparing its employees to excel, which is a commitment that has been a constant presence for it. “We’ve had a historic focus on training and development,” he says. “It’s been there, but we’re just taking it up a notch.” Milking It Korsmeyer says the strengths of Dairy Food Products will continue to drive it to success in the future. He says the company anticipates being in a leadership position in the marketplace for the foreseeable future, especially in the area of developing innovative products. “One of the things I see is I see us positioning new products at a pace greater than our competition,” he says. The company’s experience in managing respected brands successfully will also continue to be a strength for Dairy Food Products, he says. “Secondarily, as I look in the mirror and see what we know how to do, we know how to handle brands, whether they are regional in scope or nationally based,” Korsmeyer says. |
|
| < Previous Story | Next Story > |
|---|
