Land O’Lakes announced it has acquired artisanal cheese and butter maker Vermont Creamery for an undisclosed amount. Under the terms of the deal, Vermont Creamery will become an independently operated subsidiary of Land O’Lakes and will continue its operations in Websterville, Vermont.
Founded by co-founders Bob Reese and Allison Hooper in 1984, Vermont Creamery has seen significant growth over the years. Over the past 35 years, the company has grown its brand to be recognized as a pioneer of the artisanal cheese segment, and as a premium producer of fresh and aged goat cheese, crème fraiche, and cultured butter – all of which is distributed throughout a national distribution network. Additionally, the company was only the second cheesemaker in the world to secure B Corp certification from the nonprofit, B Lab, meaning that the company meets rigorous standards of social and environmental performance, accountability, and transparency.
“Vermont Creamery’s heritage mirrors our own here at Land O’Lakes—a company founded by people who care about bringing the highest quality products from farm to fork,” said Beth Ford, Land O’Lakes group EVP and COO. “We are excited about the culture of product innovation they have built in addition to the category itself and the opportunities for even more expansion.”
The funds from the transaction, and the new partnership with Land O’Lakes, will support Vermont Creamery as it strives to reach its full growth potential.
“We have always taken seriously our commitment to our farmers, employees and Vermont’s working landscape—these values are at the core of our decision to sell the business,” said co-founder Allison Hooper. “As we experience unprecedented growth, we need a partner who can bring the resources and expertise necessary to help us realize our vision and the potential of our business.”
Totes Ma’Goats
While the acquisition will provide Vermont Creamery with the resources and backing it needs to drive growth, for Land O’Lakes, the deal offers diversification away from milk and into product lines that offer higher-margin revenue streams.
“Vermont Creamery markets cheeses and specialty dairy products in attractive high margin, fast growing segments and into channels that give Land O’Lakes opportunities to access new customers, channels and growth,” said the company in a recent statement.
Hit by a barrage of negative press, reduced export volumes due to economic slowdowns in foreign markets, and the rising popularity of non-dairy alternatives, the cow milk industry has seen challenging times in recent years. Sales of dairy milk on the U.S. market declined by 7 percent, or $17.8 billion in 2015, and are expected to fall by another 11 percent through 2020, according to new findings from Mintel.
“Consumers are also less likely to drink dairy milk by itself, instead adding it to food or as an ingredient, undoubtedly contributing to the category’s steady decline in consumption,” said Elizabeth Sisel, beverage analyst with Mintel.
Meanwhile, as consumers also are increasingly turning away from processed foods in favor of more natural, transparent options, the ‘artisanal’ moniker is drawing their attention more and more.
“A review of our MenuMonitor shows that in the past two years (2012-2014), there has been a 33 percent increase in the use of the words ‘artisan’ and ‘artisanal’ to describe menu items,” said Mary Chapman, senior director of product innovation at Technomic, Inc., in a recent interview by Cargill Salt. “While that term is most often used to describe bread, it’s also increasingly used to describe cheese at higher-end restaurants, in such items as cheese plates.”
These trends are reflected in the numbers. The Atlantic reported last year that between 2006 and 2012, the number of licensed artisan cheese producers in the U.S. doubled to reach 825 producers making more than 300 varieties of cheese. Looking forward, sales of artisanal cheese are expected to top $19 billion by 2018, with goat cheese expected to play a key role in this growth.
Goat cheese has a reputation for having lower levels of lactose, fat, and cholesterol than cow milk, while goats are not treated with artificial growth hormones to raise output as many cow herds are.
“We are now experiencing a renaissance in goat farming in this country,” Paul Kindstedt, a cheese historian and professor at the University of Vermont told The Atlantic.
Positioning for the Future
Under the framework of the deal, Reese and Hooper will be retained as advisors and brand ambassadors for the business, while the leadership team already in place, including company President Adeline Druart, as well as all Vermont Creamery employees will remain in their positions.
The Ayers Brook Goat Dairy is not included in the transaction, and will remain owned by the Hooper family who will continue to operate the farm as a supplier of goat milk to the creamery.
“Bob and Allison have been such incredible entrepreneurs building Vermont Creamery’s success and mentoring the team on their vision and values for the business,” said Adeline Druart. “Partnering with Land O’Lakes adds the next key ingredients for our growth: additional resources and dairy expertise. This transaction positions Vermont Creamery for continued success in the future.”
-Lynda Kiernan
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.
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