The late author Jack Kerouac was best known for his novel On the Road that helped define the beat movement in the middle of the last century. But some of his lesser-known works recall a boyhood spent in the hardscrabble town of Lowell, Mass.

The late author Jack Kerouac was best known for his novel On the Road that helped define the beat movement in the middle of the last century. But some of his lesser-known works recall a boyhood spent in the hardscrabble town of Lowell, Mass.

In these works Kerouac takes readers to the banks of the Merrimack River, which he describes allegorically as both a mysterious animal lurking in the shadows, and the life-giving bloodstream of the town. In fact, the Merrimack and Lowell are (not so uncommonly) linked like mother and son. In the century before Kerouac, the former frontier outpost was chosen by a group of Bostonian businessmen as the site for textile mills. The river drove those mills and helped fuel the industrialization and urbanization of the area about 50 miles northwest of Boston.

The Merrimack begins in the White Mountains in Central New Hampshire. It flows south and then east through rural farmland and mill towns like Lowell and Manchester before slipping into the Atlantic just north of Massachusetts Bay. Kerouac grew up in Lowell during the great depression. He wrote virtually all of his novels in a brilliant flash that spanned the 1950s.

Some fifty years later, another man born and raised upstream across the New Hampshire line recalls how the river and the mountains that frame it inspired him to build a company that would help save the earth. The fact that it turned out to be a yogurt company was almost completely incidental.

The 2003 Processor of the Year feature is sponsored by Orafti Active Food Ingredients. A key partner for Stonyfield Farm, Orafti supplies the yogurt maker with the prebitoic inulin, and helped Stonyfield develop its related nutrition claim.
"When I was a teenager I did a lot of ski racing in the mountains," says Gary Hirshberg, President and CEO of Stonyfield Farm. "I really became concerned with what industrialization was doing to the environment in New Hampshire. As an example, when I was 10 you could see the Atlantic Ocean from the top of Mount Washington, and when I was 20 you couldn't."

The 49-year-old Hirshberg is the first to admit that he is a man of his generation. Like many who grew up in the 60s and 70s he talks about doing things differently from prior generations.

"My father managed several of the shoe mills around New Hampshire," he says. "So I realized growing up, that he and his father helped contribute to the problems that were destroying the environment. When I started my own company, I wanted it to be a company that would save the earth."

Perhaps more than most businesses, Stonyfield Farm is a reflection of its president.

The Londonderry, N.H. company, Dairy Foods' Processor of the Year for 2003, manufactures nothing but natural and organic yogurt, but it's now the fourth largest yogurt company in the U.S., doing over $150 million a year.

Hirshberg is an environmentalist at heart. He strongly believes in organic food, rails against GMOs and he steers Stonyfield's social missions, which include a 10% return of profits to environmental causes. But lately he spends a lot of time in Paris, working with his newest business partner, which happens to be the 13th largest food company in the world. Groupe Danone purchased 40% of Stonyfield in 2001, and next month it will acquire all non-employee stock.

Stonyfield uses simple, pure ingredients to make outrageously innovative products. Hirshberg is simply an entrepreneur who's building a fast-growing company. And by the way, he hopes to help reinvent the American diet and save the earth in the process. And if that means working with a $12.7 billion a year company in France, so be it.

But will Stonyfield be able to maintain its identity and its mission under a corporate ownership? Hirshberg insists that won't be a problem.

Keeping perspective

After a recent trip to Paris, Hirshberg spent a Monday working at home, and talking toDairy Foodsabout Stonyfield Farm.

"I've had the good fortune of pulling together a really good team. And sometimes my most important contribution is keeping out of the way," he says, while preparing an all-organic breakfast of eggs, potatoes and yogurt in his kitchen.

"My role is one of looking over the horizon and looking into the future. We'll add 30 people this year, and as you get bigger, there are stages where all of a sudden you are confronting all new layers of complexity. Sometimes I feel if I'm too deep into the fray, I'll lose perspective."

If this is really the formula behind Stonyfield, then other entrepreneurs might want to work from home now and then, too. Stonyfield is the #1 organic and natural brand in the United States. The company has grown at an annual average rate of more than 20%. Last year Stonyfield went from No. 93 to No. 88 in Dairy Foods' Dairy 100. Next year it should leapfrog to around No. 70, having made its first major acquisition this February, that being Brown Cow of Antioch, Calif.

Hirshberg credits a leadership team that includes veterans from other yogurt companies including Kasi Reddy, v.p. of R&D, quality assurance and contract manufacturing, and John Daigle, v.p. of operations. Reddy, who's department has developed a stable of innovative healthful products, returns the favor, saying Hirshberg gives the R&D department the freedom and the resources to think big.

"About nine years ago we were embarked on a total reformulation of our yogurt products," Reddy says. "We knew that the majority of American consumers liked sweet and dessert-type products and did not like typically very tart-tasting yogurts. Therefore, we set out to reformulate all our products to be very mild and less tart so that we can lure non-yogurt consumers to healthy and mild-tasting yogurt products.

"This required the careful selection and application of yogurt and probiotic cultures and reformulation of the product compositions as well. This was a very radical and rather risky approach from R&D and total company standpoint and it was the boldest decision a CEO could make. That to me is the foundation and cornerstone of our success, and it lead to several other innovations such as symbiotic yogurt products, dessert-like tasting chocolate and caramel-based flavors and refreshing adult and baby drinkable yogurts."

As with any company, the hard work of many people combined with great ideas and a bit of luck to bring about success in Londonderry.

From a product development standpoint, Stonyfield is juggernaut. It has developed products targeted to women, introduced soy-based cultured products and worked to make its products as healthful as possible. YoBaby, which was introduced in 1999, is the first yogurt specially formulated for babies as young as a year old. The development was fast tracked and took less than four months from concept to cooler.

Drinkable yogurt smoothies were introduced in 2002 and in 2003, babies got their own smoothies with drinkable YoBaby.

The company has two distinct customers-natural food stores like Whole Foods and Wild Oats, and conventional grocery stores, which are carrying an ever-widening variety of natural and organic foods. The sales and marketing team can use the natural food stores as incubators before rolling out products to a wider audience. More recently, mass merchandisers like Wal-Mart and Costco have added Stonyfield products to their cases.

From a production standpoint, Stonyfield faces a number of unique challenges. John Daigle, v.p. of operations, says the company's culture fosters innovation and allows the production staff to meet those challenges.

"It's not just No. 1 and No. 2 going neck and neck, like Coke and Pepsi," he says. "You have the freedom to try things without a cookie-cutter approach. It's more challenging, it can be difficult, it takes more energy, and you may fail more often, but that's OK."

The yogurt and the mission

The three-story Hirshberg house is big, but still cozy. It sits on an impressive, heavily-wooded lot just up a hill from a small pond.

"The wood beams in the ceiling came from trees that grew right on this lot," Hirshberg notes as he finishes his breakfast.

His wife Meg comes home with their youngest son, who's left school for the day feeling a bit under the weather. Something to do with playing soccer in the rain, his father suspects, or a case of homework-itus.

Gary and Meg met at an organic farming conference. She is an expert in organic gardening and has written books about cooking with yogurt. They have three beautiful children ages 11-15.

After a walk around the property, Stonyfield's CEO settles into the living room to talk about the company's roots, and its place in the dairy industry and the organic foods movement.

V.P. of Operations John Daigle (top) and V.P. of R&D Quality Assurance and Contract Manufacturing, Kasi Reddy, are industry veterans.
"We've been less active in dairy politics," he says. "We've never really felt there's much of an understanding in the conventional dairy world about what we are trying to do here. Milk has always been seen as a wholesome commodity and I think people have said ‘gee, Stonyfield is challenging the healthfulness of milk.'" We tend to have more in common with companies like Odwalla or Horizon Organic than with conventional dairies."

That said, he also sees the benefits of building a stronger relationship with the dairy industry. Hirshberg notes that Chuck Marcy, president of Horizon Dairy in Longmont, Colo., has gotten more involved with IDFA, and he hints that he might like to take Stonyfield in the same direction.

From the outset, Stonyfield has worked to make a difference while making

great yogurt.

Yogurt lids and packages have been used as mini-billboards to promote social change. Stonyfield works harder than most companies to recycle the waste generated by its manufacturing and packaging, and its manufacturing and office complex has special features that reduce energy consumption.

Then and Now: Stonyfield was started in 1983 in Wilton N.H. In a barn attached to an 1852 house, tubs were filled by hand. Today, at a modern plant and visitors center in Londonderry, high speed automated machinery is operated by a skilled staff.
These efforts have led to national recognition and awards including the Green Cross Millennium Award for Corporate Environmental Leadership, the President's Council on Sustainable Development National Award for Sustainability, EPA's Water Wise and Climate Wise Awards and Renew America's National Award for Sustainability.

This mission began, of course, with the young ski racer who took it to heart when it was discovered that the Merrimack was too polluted to swim in. His concerns about the deterioration of New Hampshire's natural resources led Hirshberg to study environmental science as one of the first students of Hampshire College in Amherst, Mass. He did a thesis on the causes of Alpine Tree line. His earliest professional endeavors included stints as an educator for the U.S. Fish and Wildlife Service, and as a manager of environmental tours in the Peoples Republic of China.

After joining the board of the Rural Education Center, an organic teaching farm, he soon became the organization's executive director and discovered that it was a financial disaster. He and the farm's founder Samuel Kaymen needed to find a profitable business to fund the school.

"Samuel made this really incredible yogurt. It was really the best yogurt I had ever eaten," he recalls. "So we were all sitting around talking about how we were going to make some money and somebody said ‘why don't we sell the yogurt?' We all kind of laughed. He also made wonderful beer and pickles, but eventually we decided to go with the yogurt."

A $35,000 loan from a group of nuns led to the purchase of some kitchen-sized equipment, and in 1983, Stonyfield was launched. The humble beginnings are now part of Stonyfield lore: "Two families, Seven Jersey Cows, One Great Yogurt Recipe."After 20 years, the company is still on a mission.

Stonyfield Facts: Founded in 1983; Market is National; 230 Employees; Plant Size is 135,000 sq ft; Production Output is 2.5 million lbs weekly; 130 Production Employees; Products are Natural and Organic Yogurt; Sales Channels are Supermarkets (74%), Natural Food Stores (26%).

Business and food in the 21st century

In Dec. 2001, Fortune Small Business ran an article about the Danone deal. Hirshberg is pictured on the cover lying in the grass at the edge of a farm field. The cover text asks: "Did the Yogurt King Sell His Soul?"

In the article, Hirshberg admitted to having mixed feelings about selling to Danone, but he needed to find a way to return some equity to the 292 private shareholders who had helped him build the company.

"It's like selling your child," he told the magazine.

The article describes a two-year process in which Hirshberg wrestled with his doubts and convictions, before accepting more than $100 million for what will ultimately be a majority stake in the company.

It's late afternoon, and Hirshberg is holed up in an office on the top floor of the family home. He works the computer and the phone, and nearby there's a single bed, which gives testament to the long hours that have gone into building the company.

It's been two years since the deal with Danone was forged, and Hirshberg seems more confident that he made the right decision. He contends that he has not lost control of the company, and that its unique character is infecting Danone rather than being swept away in the bustle of synergy building and growth.

Two products introduced in 2003, YoBaby drinkable and Moo-la-la, are made from whole milk.
"I saw the Danone deal as an opportunity to take our mission to a larger arena," he says. "I still appoint the majority of board members, so I'll still be directing the company."

"After we signed the deal, this reporter from the Wall Street Journal was asking Danone's President Franck Riboud lots of questions about our financial details. Franck interrupted him and said: ‘Look, you are missing the real story here. I assure you that Stonyfield's numbers will hold up to any scrutiny.' But, he said, ‘Stonyfield is much more than just what is on the balance sheet. Stonyfield represents an ethic and it's an ethic that we at Groupe Danone have to adopt if we're going to be successful in the 21st century.'"

Hirshberg jokes about being around to run the company for another 50 years-thanks, of course, to the yogurt. It's a cute joke, but then he mentions having had dinner recently with the founder of Danone who is 98.

While they share the same corporate parent, don't expect to see Stonyfield and Dannon USA getting cuddly on the cooler shelves. They are still two distinct, separately-managed companies. In fact, the recent reduction in single serve package size was purely coincidental, Hirshberg says.

The smaller transaction of Stonyfield buying Brown Cow will, however give Stonyfield greater market saturation in the western states. The 15,000 sq ft western plant will allow for continued growth, and the Brown Cow brand will join the Stonyfield portfolio.

Products like YoBaby and Squeezers are formulated specifically for different aged children. Like all Stonyfield products, they are free of artificial flavors and colors.
Stonyfield's ethic will blossom in the 21st century and companies like Danone and Unilever (which purchased Ben & Jerry's in 2000) will embrace corporate responsibility as consumers continue to embrace organic food, Hirshberg says. To emphasize his convictions about organic food, he refers to a study earlier this year which monitored a group of pre-school children in Seattle. It found that those children in the group on a conventional diet had three to six times the amount of organophosphorus pesticides in their urine compared to children from the same pre-school class on strict organic diets.

"Regardless of your position on the issue, we are all conscious that something is going on out there. We all know someone who has had cancer." Hirshberg says. "People can't discount the possibility that having six times the amount of pesticides in your urine cannot be good for you."

Sidebar: Stonyfield's Mission

  • To provide the very highest quality; best-tasting all natural and certified organic products.
  • To educate consumers and producers about the value of protecting the environment and of supporting family farmers and sustainable farming methods.
  • To serve as a model that environmentally and socially responsible businesses can also be profitable.
  • To provide a healthful, productive and enjoyable work place for all employees, with opportunities to gain new skills and advance personal career goals.
  • To recognize our obligations to stockholders and lenders by providing an excellent return on their investment.


Sidebar: Stonyfield's Strong Women Summit Off to a Great Start

The Stonyfield Farm Strong Women Summit got off to a rousing start last month, with a sold-out event in Mohonk Mountain House in Upstate New York.

The event was the first in what is expected to become a series of events and activities celebrating, educating, and motivating women about how positive thinking and activism begins with good health, nutrition, exercise and attitude.

Stonyfield's CEO Gary Hirshberg says the Nov. 14-16 event which included speakers such as internationally renowned activist Erin Brockovich and Miriam Nelson, Ph.D., author of the New York Times best-selling Strong Women book series, was an overwhelming success.

"It was astonishing. We always knew this kind of confluence of interests in health and nutrition and wellness and empowering women and activism was resonating with our primarily women consumer-base, but we were stunned by the results that it rendered," Hirshberg says. "It's clear we will run at least three summits next year, and maybe more."

More than 400 attended the summit, including many mother-daughter pairs, and more than 19,000 people have contacted the organizers for information. Sponsors include Silk Soymilk, Organic Valley, and Odwalla Inc.

Hirshberg says the idea started with a discussion about inulin and its effects on women's health, and blossomed. The organizers hope that through the Strong Women Summit, women will gain a wide range of tools to help combat stress, build strength and personal power, and enhance wellness and self-esteem.

Hirshberg says too, that it's an ideal-if unconventional-way for a company like Stonyfield to promote itself and build brand loyalty.

The first 2004 summit will be held June 4-6 at The Hayes Mansion Conference Center in San Jose, Calif. For more info visit www.stonyfield.com/StrongWomen