Turner Dairy Farms’ strategies help it buck sour industry trends

Turner Dairy Farms Inc. was once a dairy farm, its origins dating back to 1930. Today it’s a dairy processor that processes milk for some 40 area dairy farmers, some of whom have had a relationship with Turner since before Chuck Turner, the company’s president, was born.

“Some of them I know three generations working and living on the farm, and they’ve known three generations of our family,” Turner says.

The company is still building relationships with dairy farmers who understand quality, work hard and give attention to detail. However, many dairy farms are struggling, and that’s leading to consolidation and overcapacity. And that’s not a dairy processor’s only challenge. Turner says in the fluid milk business, industrywide sales have been dropping between 2 and 3 percent a year, every year since 2010 across the nation.

“When you start compounding losses like 2 and 3 percent a year — one year it’s a bad thing, a couple years it’s a hardship — but when you start getting into decades of it, you start looking at having lost 15 percent of the market, 20 percent of the market,” he says. “There are a lot of companies like us out there struggling right now, and we’ve been blessed to be able to grow in that environment.”

That slow and steady growth at Turner Dairy is happening through a mix of strategies such as adding automation and generating excitement through new product introductions, both of which have helped the family business buck the broader, mostly sour, trends.

Building efficiencies

Dairy farmers have increasingly used automation to overcome their struggles. When that happens, growth exceeds the pace of consolidation.

“What you’ll find is that the 40 farms that we have are making more milk this year than they did last year, and they’re making more than they did the year before that,” Turner says.” They can actually grow faster than we can grow, usually.”

And much like its dairy farmer suppliers, automation’s role has been significant at Turner Dairy, leading it to reinvest into its plant every year.

“Growth isn’t by just having more people do the same thing — we’re actually adding headcount — but the people that are working are also able to do it more efficiently, and we’re getting more throughput per hour,” he says.

Just last winter, Turner Dairy began a project to get more capacity and capability to produce its flavored milks. It’s also increasing its physical space to accommodate growth, as well as bolstering its distribution force, a job that can’t be automated. And it recently broke ground on a loading dock, which is going to help the company load trucks more efficiently.

“As you grow, that’s the thing that automation really doesn’t help you with,” Turner says. “You can load the trucks better, you can make things faster, but ultimately, you have a driver/salesman in a truck and the truck is full.”

Turner Dairy didn’t lay off any workers during last year’s COVID outbreak, something Turner thinks is helping the company now as it reaches out into the market and adds help.

“I think we have a good reputation as a good place to work,” he says. “(We get) a lot of references and referrals. So we’ve been able to hire, we’ve been able to fill spots. We have lost some people, a couple that we might not have normally lost, but we’ve been able to replace them with good people.”

Generating excitement

While the industry has its struggles, the sector is still competitive. Turner says there are several processing plants in the Western Pennsylvania and Eastern Ohio markets, all competing to buy milk from farmers at the same cost.

Despite that, Turner Dairy experienced modest volume growth six out of the last eight years. That growth is coming because of new customers, existing customers that are selling more, a continued solid showing in food service and growth in retail.

Food service has always been a strong customer segment for Turner Dairy. It includes primary and secondary schools, businesses, colleges, restaurants and hotels. These customers care primarily about the quality of the product, while the chief concern of retail is price. Turner says Turner Dairy has been able to leverage that quality and its high level of service to win food service business to grow its retail business. An emphasis on quality and service at retail also keeps Turner Dairy from needing to use lower prices to drive interest.

“Our stronghold was in food service, but retail is the biggest part of our industry,” he says. “So, as we’ve been able to grow into retail and demonstrate value in retail, we’ve been able to grow into that without having to increase our footprint.”

For a business such as Turner Dairy, differentiation is another critical strategy.

“We’ll try to keep some excitement in the dairy case,” Turner says. “When you go to a convenience store, if you’re like me, you walk past 12 doors of beverages and you’re bored. Nothing excites you. You’re just trying to get a person to stop and look. When they get to the dairy door, if everything is always the same, why are you going to stop?”

Getting consumers’ attention with the introduction of new products and limited-time offers has been shown to boost sales of other standard offerings. For instance, sales of chocolate milk went up when the company sold Turner’s Cookies & Cream milk — something he refers to as the halo effect.

“We got the person to make that investment in stopping and opening the door,” he says. “And if, in that time, they decide they don’t want our Cookies & Cream, they’ll grab the chocolate milk because we got their attention.”

The company is also generating interest through product partnerships, such as with Eat’n Park, which produces a limited-edition Turner’s Smiley Cookie milk, an arrangement that leverages the popularity of the restaurant brand in Western Pennsylvania. And when possible, the limited-time offerings are paired with holidays to boost novelty sales and take advantage of consumers’ willingness to spend a few more cents on items meant for family gatherings.

“The original idea was to start with holidays, because when people have family over — if you have your grandkids over or if you have family coming from out of town — what is it to spend $3 on a half-gallon of milk. It isn’t even really a decision for most people,” Turner says. “So the idea is to get those special times a year when you’re going to have guests or family.”

Still, there are tradeoffs to consider. He says these new introductions cost more and can be more challenging to execute.

“But it’s a reason to be interested in Turner’s, in dairy in general,” he says. “We’re an industry that’s been boring for a long time. And we’re trying to put some interest it.”

Family matters

The external challenges for a modern dairy processer are many and varied. But as a family business, there are also unique internal challenges to reckon with. Turner Dairy has 10 family members active in the company today, ranging from the second to fourth generation. So, one of the areas Turner has been working to address is the company’s management and organizational structure, looking for a framework that will allow the business to grow while not undoing the family atmosphere that fosters loyalty. While there has been progress, work at the 205-employee company is ongoing.

“The goal is to make this not a CEO-driven or a president-driven company but a company that, as we grow, we still want to have the same founder’s philosophy or understanding of business as my grandfather did,” Turner says. “But I see people a lot less than my grandfather did when there were only 12 people, or that my dad saw when there were 100. So, it’s a challenge. But I feel like we’re doing it.”

He says in a family business, family members tend not to have what would be considered a normal job. Rather, they’re given a collection of tasks and responsibilities that may change from time to time. Their role, then, is tough to put a title on.

That can make it difficult to replace someone when they retire or otherwise leave their role or the company.

“I feel comfortable that, when I leave here, the family will all have normal jobs that will have definitions,” Turner says. “We still have family meetings regularly. We still talk about philosophy. We’re having a company picnic at our farm next month to try to keep the family feel and my dad’s management by walking around. So, it’s a challenge, but we’ve been fighting the fight, and I think we’re winning.”

TAKEAWAYS

  • Differentiation is key.
  • Automation builds critical efficiencies.
  • Relationships drive business.