Organic Valley’s business built with staying power in mind
Organic Valley is not your typical corporation. In fact, the people at the La Farge, Wis.-based company view themselves as an “un-corporation.” While other competitors focus on profits and finding more ways to cut costs, Organic Valley is a cooperative of more than 2,000 small family farms scattered across the country, each striving to offer retailers and consumers a healthier, organic choice when seeking products across five different food segments.
“The message we are trying to get out to our retailers and to the consumer is that we are a cooperative group that is centered on offering them a quality product produced by our family farms,” said Lewis Goldstein, the company’s vice president of marketing. “We like to view ourselves as a social experiment disguised as a business. We focus on three things: our family farms, sustainability and the humane treatment of our animals. And, our core mission is not to make gobs of money, but to support our family farmers.”
Making more money? Well that is not the No. 1 priority at Organic Valley. The company, founded by seven farmers in 1988, is much more intent on offering quality and innovation, and living by its founding tenets than raking in the big bucks. In fact, Goldstein said company officials are simply looking for a 2%-to-3% annual profit growth rate and are more fixated on sustainability than anything else. He said that annual sales hover around the $1.2 billion mark, with more than half coming from the branded side and the rest coming from ingredients, bulk sales and private label.
“We are steeped in our core mission to preserve the family farm through organic agriculture,” he said. “About 40%of our farmers are Amish or Mennonites and their cultures are all about cooperation with others and leaving the earth in better shape for future generations. Our goal is not to make money for the company, but to support our family farmers and allow them to continue to operate the way this was originally set up.”
The company’s website also talks about its other goals. One big one is to change the way consumers think about food, and focusing on higher standards. “We set high organic standards for ourselves — standards that eventually served as framework for the USDA’s organic rules,” according to the website. “We started with organic vegetables and pooled our crops to sell in local communities. Before a year had passed, we started selling organic dairy. And people could tell the difference. Our local communities began choosing our premium, organic milk over other options, and we realized that we were certainly right about one thing — people wanted quality food.”
That emphasis on producing the best products in five segments — milk, eggs, butter, cheese and produce — should help Organic Valley’s retail partners register more sales and profits, as well as set themselves apart from the competition. The company currently offers around 250 SKUs. “We emphasize our premium brand, and it helps those retailers who carry our products to attract a more educated and affluent consumer, who is looking for better items for their families,” Goldstein said. “I should also add that their basket size is also larger than the typical consumer, which benefits the retailer too.”
While the Organic Valley story is a great one, it takes much more to convince consumers to try the brand. Goldstein emphasized that company leaders are focused on innovation and expanding out their line of products to consistently include new items. For example, Goldstein said that in the milk category, Organic Valley focuses on such on-the-go products as Organic Fuel, an 11.5-oz. shelf-stable product that has 26 g of protein to entice shoppers.
In the snack kit market, the company offers an organic summer sausage, cheese and crackers for $4.99, as well as such 100% grass-fed products as Grassmilk. “The higher the grass intake for cows the higher the healthy fat content,” Goldstein said. “We started with half-gallon milk. Now we are expanding to include cheese, yogurt and half-and-half products. This resonates very well with both retailers and consumers. If the animal eats well, consumers feel it is better for their families.”
Educating the consumer and the retailer is part of the process, too, for Organic Valley and any company involved in the organic and natural segment. Goldstein said that Organic Valley spends a lot of time and other resources educating retailers about their brand and products. That includes bringing an average of about 10,000 people per year to visit its farms and to witness the process firsthand. “For a category like organic, it is vital that we teach our retail partners and the consumers about the benefits of what we sell,” he said. “We believe that it is extremely important that we make the whole retail organization aware of what organic products are, their value to consumers and the best way to merchandise them.”
He also emphasized the importance of dietitians to the category and noted that Organic Valley teaches a course for dietitians to make them more knowledgeable about organic products. “The dietitian makes all the difference in the world to consumers,” he said. “There are so many claims being made, and it is confusing for the shopper. An educated teacher in-store can add a tremendous amount of value for retailers.”
By offering a large assortment of organic products, Goldstein said that retailers also can build loyalty with consumers, especially those hard-to-attract and harder-to-keep millennials. Younger shoppers, he said, are much more open to organic products than older generations, which means they also are willing to pay more for these products.
“We strongly suggest that retailers offer a wide choice to consumers,” he said. “If the products they want are not at the store, they are more likely to go to another retailer to find them and, eventually, change shopping patterns.”
So, what does the future hold for Organic Valley? Goldstein said it looks quite bright, especially since organic foods make up only about 5%of the current food supply, a number that is certain to double and triple in coming years.
“We are extremely excited about what is ahead,” he said. “I hope in five years to be a $2 billion company. To get there we intend to keep adding new products to our lines and to focus on a number of retail areas beyond just grocery. Those include drug stores, convenience stores and college campuses.”
“But,“we are not going to move away from our values as we get larger,” Goldstein said. “Sure, we want to make money — but we put our farmers, their animals and our consumers first.”
“The message we are trying to get out to our retailers and to the consumer is that we are a cooperative group that is centered on offering them a quality product produced by our family farms,” said Lewis Goldstein, the company’s vice president of marketing. “We like to view ourselves as a social experiment disguised as a business. We focus on three things: our family farms, sustainability and the humane treatment of our animals. And, our core mission is not to make gobs of money, but to support our family farmers.”
Making more money? Well that is not the No. 1 priority at Organic Valley. The company, founded by seven farmers in 1988, is much more intent on offering quality and innovation, and living by its founding tenets than raking in the big bucks. In fact, Goldstein said company officials are simply looking for a 2%-to-3% annual profit growth rate and are more fixated on sustainability than anything else. He said that annual sales hover around the $1.2 billion mark, with more than half coming from the branded side and the rest coming from ingredients, bulk sales and private label.
“We are steeped in our core mission to preserve the family farm through organic agriculture,” he said. “About 40%of our farmers are Amish or Mennonites and their cultures are all about cooperation with others and leaving the earth in better shape for future generations. Our goal is not to make money for the company, but to support our family farmers and allow them to continue to operate the way this was originally set up.”
The company’s website also talks about its other goals. One big one is to change the way consumers think about food, and focusing on higher standards. “We set high organic standards for ourselves — standards that eventually served as framework for the USDA’s organic rules,” according to the website. “We started with organic vegetables and pooled our crops to sell in local communities. Before a year had passed, we started selling organic dairy. And people could tell the difference. Our local communities began choosing our premium, organic milk over other options, and we realized that we were certainly right about one thing — people wanted quality food.”
That emphasis on producing the best products in five segments — milk, eggs, butter, cheese and produce — should help Organic Valley’s retail partners register more sales and profits, as well as set themselves apart from the competition. The company currently offers around 250 SKUs. “We emphasize our premium brand, and it helps those retailers who carry our products to attract a more educated and affluent consumer, who is looking for better items for their families,” Goldstein said. “I should also add that their basket size is also larger than the typical consumer, which benefits the retailer too.”
While the Organic Valley story is a great one, it takes much more to convince consumers to try the brand. Goldstein emphasized that company leaders are focused on innovation and expanding out their line of products to consistently include new items. For example, Goldstein said that in the milk category, Organic Valley focuses on such on-the-go products as Organic Fuel, an 11.5-oz. shelf-stable product that has 26 g of protein to entice shoppers.
In the snack kit market, the company offers an organic summer sausage, cheese and crackers for $4.99, as well as such 100% grass-fed products as Grassmilk. “The higher the grass intake for cows the higher the healthy fat content,” Goldstein said. “We started with half-gallon milk. Now we are expanding to include cheese, yogurt and half-and-half products. This resonates very well with both retailers and consumers. If the animal eats well, consumers feel it is better for their families.”
Educating the consumer and the retailer is part of the process, too, for Organic Valley and any company involved in the organic and natural segment. Goldstein said that Organic Valley spends a lot of time and other resources educating retailers about their brand and products. That includes bringing an average of about 10,000 people per year to visit its farms and to witness the process firsthand. “For a category like organic, it is vital that we teach our retail partners and the consumers about the benefits of what we sell,” he said. “We believe that it is extremely important that we make the whole retail organization aware of what organic products are, their value to consumers and the best way to merchandise them.”
He also emphasized the importance of dietitians to the category and noted that Organic Valley teaches a course for dietitians to make them more knowledgeable about organic products. “The dietitian makes all the difference in the world to consumers,” he said. “There are so many claims being made, and it is confusing for the shopper. An educated teacher in-store can add a tremendous amount of value for retailers.”
By offering a large assortment of organic products, Goldstein said that retailers also can build loyalty with consumers, especially those hard-to-attract and harder-to-keep millennials. Younger shoppers, he said, are much more open to organic products than older generations, which means they also are willing to pay more for these products.
“We strongly suggest that retailers offer a wide choice to consumers,” he said. “If the products they want are not at the store, they are more likely to go to another retailer to find them and, eventually, change shopping patterns.”
So, what does the future hold for Organic Valley? Goldstein said it looks quite bright, especially since organic foods make up only about 5%of the current food supply, a number that is certain to double and triple in coming years.
“We are extremely excited about what is ahead,” he said. “I hope in five years to be a $2 billion company. To get there we intend to keep adding new products to our lines and to focus on a number of retail areas beyond just grocery. Those include drug stores, convenience stores and college campuses.”
“But,“we are not going to move away from our values as we get larger,” Goldstein said. “Sure, we want to make money — but we put our farmers, their animals and our consumers first.”