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Tuesday, December 30, 2003 - Page updated at 12:00 A.M.
Nancy's Yogurt, organic Oregon dairy hits it big
By Rosemary Camozzi
EUGENE, Ore. Six days a week, hundreds of cases of Nancy's Yogurt emerge from refrigerated trucks onto the sidewalks of New York City, then are whisked into dairy cases of tiny Greenwich Village natural-food shops and swank Upper West Side supermarkets.
Many of these stores order daily from the Nancy's line, says Wright Polak, a New York-based natural-foods broker who has worked with the Springfield Creamery, makers of the Nancy's line, for three years.
"They do an amazing amount of volume," Polak says.
It hasn't always been thus.
When the creamery began shipping to the East Coast a few years ago, distribution was on again, off again, Polak says. Store buyers grew faithful only after getting many customer requests.
"Once there's a devoted customer base, the retailers will continue stocking it, come hell or high water," Polak says.
Several years ago, the creamery set itself a goal of becoming a nationwide retailer. That's no easy task in the cutthroat food-wholesaling business.
But this past September, the creamery passed an important milepost, offering its products for sale in all 50 states.
Distribution is through regional warehouses of United Natural Foods International (UNFI), the leading U.S. distributor of natural and organic foods. UNFI supplies more than 14,000 stores, including large natural-foods chains, independent natural-products retailers and conventional supermarkets.
Reaching a deal with UNFI was key, says Sue Kesey, co-owner of the creamery with her husband, Chuck, brother of late author and '60s icon Ken Kesey. Via UNFI, the creamery can maintain a strong presence in big natural-food chains such as Whole Foods and Wild Oats.
But like the cultured products the creamery makes, the expansion is taking a long time.
"We've made a commitment to do this, but it's a slow build," Kesey says. "That's what we do best."
This is a great time for the business to enlarge its distribution, says Jerry Dryer, an independent dairy-industry analyst and newsletter publisher based in Chicago.
"I see a lot of momentum going in the food business for 'small is better,' " Dryer says, adding that the East Coast has few companies that resemble Springfield.
"The customer is looking for small, innovative manufacturers."
Yogurt sales have surged in the past 20 years. In 1982, U.S. consumers bought 600 million pounds of yogurt, says James Miller, a dairy analyst for the U.S. Department of Agriculture. By 2002, that had risen to 2.1 billion pounds.
The purity of the Springfield Creamery line sets it apart from many rivals, Dryer says. "People are opting for a higher-quality product," he says, noting that Nancy's has no cornstarch, pectin or fillers and uses only real fruit.
He also says that products containing probiotics and prebiotics (the live cultures found in Nancy's products and some others) are big sellers.
According to the U.S. Agriculture Department, organic dairy was the fastest-growing segment of the organic-food industry in the 1990s, with sales up more than 500 percent between 1994 and 1999.
"Organic is a godsend to dairy farmers," Sue Kesey notes. "It has enabled them to feel like they are getting paid for what they are doing."
Springfield Creamery, which has about 50 employees, makes conventional and organic yogurt, cottage cheese, sour cream, cream cheese and kefir. About 20 Oregon farms supply milk to the creamery.
The Nancy's line has been available in natural-foods stores on the West Coast for more than 30 years and in Fred Meyer stores for 20 years. It can also be found in Safeway stores in Oregon and Northern California and in some independent chains.
During their first years in business, the Keseys were able to expand their distribution through their friendship with two young entrepreneurs: a University of Oregon graduate named Gilbert Rosborne and his partner, Huey Lewis, later of musical fame.
The two distributed underground comic books to natural-foods stores in San Francisco, and it was easy to add Nancy's Yogurt. Once a week, they rented a truck and drove a load of yogurt, wrapped in ice and blankets, to San Francisco.
Later, Kesey says, the company used other distributors, some of which went bankrupt. When Mountain People's Warehouse came into existence, Nancy's West Coast distribution finally stabilized.
The creamery began shipping products eastward about three years ago, but without consistency. Local consumers who moved away requested Nancy's in their new homes. Also, visitors to the West went home and asked their local stores to stock Nancy's.
"We started getting a tremendous number of calls and e-mails from people who were visiting and wanted to have Nancy's back home," says Sandi Zimmerman, East Coast sales manager for the creamery.
East Coast consumers seem especially taken by the creamery's organic and cultured soy products, Kesey says.
To make its products more recognizable, the creamery recently updated all its labels and containers with bright graphics that are consistent across all lines.
The company also hired a new brokerage on the East Coast, and Zimmerman has spent time on the road, educating brokers and accompanying them to in-store product demonstrations.
Publicity is important now that the creamery is moving into the territory of its biggest competitor, Stonyfield Farm, a New Hampshire company that began making organic yogurt 20 years ago. After becoming the nation's largest organic yogurt brand, Stonyfield sold a 40 percent stake in itself for an estimated $125 million to Group Danone, the French food and beverage giant that makes Dannon Yogurt.
Stonyfield has been busy establishing a presence on the West Coast, and bought Brown Cow West, an Antioch, Calif., organic-yogurt maker, earlier this year.
"They definitely own the East Coast, and rightfully so," Kesey says, conceding that Nancy's will always play second fiddle in that region. "You know you can't take over the East Coast market, and you don't want to."
But she has no plans to cede the West Coast. "They can't bump us around out here," she says. "We are the standard of the industry on the West Coast."
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