Horizon Founder Launches Private-Label Organic Dairy

A new organic dairy, led by the man who launched Horizon Organic milk, will be the first in the United States to produce and sell private-label organic milk.

Aurora Organic Dairy, based in Platteville, Colo., will begin producing pasteurized and ultra-pasteurized organic milk this summer, said President and Chief Organic Officer Mark Retzloff. Target customers are ?the entire retail marketplace,? Retzloff said, along with the institutional foodservice business, including restaurants, resorts and college cafeterias.

Retzloff co-founded Horizon Organic Holding Corp. in 1991 but left in 2001. He recently returned to the milk business after a two-year stint as president of Rudi?s Organic Bakery in Boulder, Colo. He will be replaced by Gary Sebek, Rudi?s chief financial officer. Retzloff left Rudi?s to launch Aurora Organic Dairy with Marc Peperzak, a former chairman of the Horizon board and currently chairman and chief executive of Aurora Dairy Corp., one of the nation?s largest conventional dairy farms.

Peperzak raised $18.5 million in investment capital from Charlesbank Capital Partners of Boston to fund Aurora Organic Dairy. The money will be used to expand the Aurora dairy farm, convert the 5,000-cow herd to certified organic milk production and build a processing plant.

Retzloff said the dairy farm was certified organic in December, and the processing plant should be operational by mid-summer. More than 30,000 acres of pasture and cropland in northeastern Colorado are being converted to organic to produce feed for the cattle.

By keeping feed production and milk processing in the same state, Aurora will have virtually no transportation costs, which will allow it to keep costs low, Retzloff said.

?If we?re not the lowest [priced], we?ll be one of the lowest in the organic milk industry.? Investors believe a private-label organic dairy will succeed. ?Unlike numerous organic-industry business deals this year, Aurora Organic Dairy is neither a merger nor an acquisition,? said Phil Seefried, managing partner of Headwaters MB, a Denver banking firm that brokered the deal and is also an investor. ?Instead, it represents one of the most significant growth initiatives by an organic foods business in the United States.?

Organic milk had annual sales growth of more than 25 percent between 2000 and 2002, according to Information Resources Inc. Couple that with a Natural Marketing Institute study that found that 92 percent of the general population bought organic store-brand foods or beverages in 2002, and Retzloff believes he has a formula for success for an organic private-label dairy

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?The majority of all milk sold [in stores] is private label,? said Fred Arnal, managing partner with Tyler Creek Associates, a Chicago-based firm that specializes in private labeling.

Aurora may be able to experience ?a little bit of a coattail effect? from Horizon and Organic Valley?s marketing efforts designed to raise customer awareness of organic milk, Arnal said. Retzloff agrees: ?We want Horizon and Organic Valley to succeed, because if they succeed, we succeed.?

Vicky Uhland is a Denver-based freelance writer.

Natural Foods Merchandiser volume XXV/number 2/p. 17