Natural Foods Merchandiser
Sales for organic milk increase

Sales for organic milk increase

Sales for organic milk, which soured in 2009, may finally be picking up steam as milk manufacturers such as La Farge, Wis.-based Organic Valley and Broomfield, Colo.-based Horizon Organic add producers and increase volume to meet rising demand.  

Sales for organic milk, which soured in 2009, may finally be picking up steam as milk manufacturers such as La Farge, Wis.-based Organic Valley and Broomfield, Colo.-based Horizon Organic add producers and increase volume to meet rising demand.

“We’re experiencing steady strong growth, said Eric Newman, vice president of sales for CROPP Cooperative, which owns Organic Valley. “It’s good news for us, and it’s good news for farmers. I don’t think it’s ever going to get back to the double digits, but we’re OK with that.”

In January, CROPP Cooperative added 280 organic-milk producers from Wisconsin to Maine. The company reported revenue of $149.5 million for the first quarter of 2010—a 19-percent sales increase from the first quarter of 2009 and a 3-percent increase over the 2010 budget for the quarter.

Similarly, Horizon Organic asked producers in six of its seven regions to increase milk volume beginning July 1 by between 5 percent and 10 percent and added nine former Organic Choice producers in Wisconsin to its current route.

“We’ve seen a modest year of improvements with mid-single digit net sales growth,” said Ron Schnur, vice president of dairy supply and operations for the company. “I think generally consumers are starting to feel a little more comfortable about what’s going on in the marketplace, though I don’t think we’re out of the woods yet.”

One factor attributing to growth, both men said, may be the media’s recent focus on the benefits of organic. “From Michael Pollan to Food, Inc. and the recent report from the president’s cancer panel, there’s such a positive message out there right now,” Newman said. “And people may have a little more money in their pockets that they’re willing to spend on what’s important to them.”

Schnur emphasized that while the company is encouraging producers to increase volume, no penalties will be assessed for those who aren’t able to increase production. Additionally, though producers in the West were not asked to increase supply, the move is not an indicator of slow sales.

“I think we got a little bit ahead of ourselves from a milk supply perspective in the West,” Schnur said. “It’s not that we’re not seeing Horizon doing well in the West, we’re just trying to get it back into balance.”

In 2009, organic-milk sales declined 3 percent, losing $45 million, according to the Nutrition Business Journal. Organic Valley cited the recession when announcing that 2009 sales had dropped 1.3 percent from 2008, to $520 million.

Barbara Haumann, spokeswoman for the Washington, D.C.-based Organic Trade Association, said growth for organic dairy may be an indicator of growth within the industry as a whole and cited UNFI’s 15-percent sales increase over last year.

“I know reports overall for the economy still aren’t great, but this is a sign that there’s already an uptick for the demand for organic products,” Haumann said. “Certainly it’s encouraging for the dairy industry. Milk, cream, cheese, ice cream, the entire category reported negative growth in terms of dollar sales. This news is very encouraging.”

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