“People see that passion, they feel it. They don’t have to see it on a commercial on TV,” says Jeff Kleinpeter, president of Baton Rouge, La.-based Kleinpeter Farms Dairy.
Kleinpeter took the helm as fourth-generation leader in 2004, joined by his sister Sue Anne Kleinpeter Cox as CFO. Subsequent initiatives to market milk as rBGH-free, launch premium ice cream and expand distribution have positioned the company for growth. Sales of $39 million in 2009 captured the final slot on the annual Dairy Foods Dairy 100 ranking of North America’s largest processors. Volume growth is up 12 percent vs. 2008, and has gained nearly 40 percent over three years.
The family-owned and operated dairy was founded in 1913 as an on-farm creamery. Today it is the larger of only two independent Louisiana dairies. It remains vertically integrated, but has expanded operations to encompass 230 employees, state-of-the-art fluid processing and distribution operations, the state’s only ice cream plant and Louisiana’s largest dairy farm.
Kleinpeter Farms Dairy directly serves 3,000-plus retail, foodservice and institutional facilities in a 150-mile radius of Baton Rouge. The mix includes large independent stores as well as national accounts including Winn Dixie, Whole Foods, Albertsons and select Wal-Mart stores. Distribution of Kleinpeter products grew statewide this year via Whole Foods, Albertsons and Kroger retail outlets.
Louisiana-local
Long-known for high-quality milk, Kleinpeter Farms Dairy is gaining recognition for Louisiana-local ice cream. The only ice cream processor in the state further taps consumer pride with use of local agricultural and branded products. “When you think about Louisiana, you think of cuisine. The importance of being local is growing,” Kleinpeter says.Ice cream production started in the company’s newly-built $5.5 million processing facility in 2008 with two half-gallon flavors: chocolate and vanilla. The line now showcases 24 varieties in half-gallons, pints, 3-ounce cup multi-packs and 3-gallon institutional sizes.
Louisiana-sourced milk and sugar cane create the base for state-grown products including sweet potatoes, pralines, pecans, honey, strawberries and peaches. Flavors are also created with popular regional branded candy, syrup, nut and coffee products. Use of local ingredients provides authentic taste and flavor inspiration.
For instance, Bananas Foster is a tribute to the baked dessert that originated in New Orleans. Other local co-branded flavor favorites include Gold Brick made with namesake seasonal chocolate egg candy from Elmer’s Candy Corp., Ponchatoula, Sweet Potato Pie made with Bruce’s sweet potatoes, Pralines & Cream made with Aunt Sally’s Pralines, Homemade Ponchatoula Strawberry made with regional strawberries and Café au Lait made with Community Coffee, a Baton Rouge coffee purveyor. Five new flavors introduced include French Vanilla, Vanilla Bean, Homemade Honey Pecan Vanilla made with Bergeron’s pecans and Louisiana honey, Ginger Snap made with Steen’s Syrup and Homemade Bread Pudding made with a custom inclusion by a local supplier.
Use of locally-sourced ice cream ingredients is prioritized to bolster Louisiana agriculture and business communities in a market impacted by hurricane recovery, the overall poor economy and the recent oil spill disaster. “It stems from being engaged, helping those in your community to prosper and grow,” Cox says.
The brand’s freezer competition includes national ice cream brands such as Blue Bell, Edy’s, Breyer’s, Blue Bunny as well as New Orleans’ Brown’s Velvet Dairy label line (packaged outside the state).
Kleinpeter Farms Dairy management quickly learned about the category’s creative discounts and promotions. Kleinpeter pints were featured this summer in what Gary Clement, sales director-eastern division, calls the best deal and sampling opportunity yet: 10 pints for $10. “It gave the shopper the option to buy everyone in the family their favorite ice cream, or to try a new flavor,” he says.
Louisiana test marketing with a national chain has potential to lead to five-state ice cream distribution in the near future. While use of local ingredients in the ice cream line drew the initial interest, wider slotting of the dairy’s fluid line may also be in the works, Kleinpeter says.
“At a basic level, ice cream has opened doors into stores or customers that we otherwise wouldn’t be doing business with,” Cox says.
Naturally good
Ice cream is opening new doors, but rBGH-free milk remains the foundation of Kleinpeter Farms Dairy sales. The line of rBGH-free milks includes chocolate and strawberry varieties as well as K+ acidophilus milk; other fluid products include orange juice and drink items. Kleinpeter dips, cottage cheeses, butter, margarine and eggs are co-packed and distributed by the dairy along with licensed products such as N.O. Brew chilled coffee beverage from Orleans Beverage & Extract Company, New Orleans, and Naked Juice shipped from California.Kleinpeter Farms Dairy added rBGH-free to its milk labels in 2005 and launched the new look with advertising and marketing support. The campaign’s tagline, “We treat our cows with love, not rBGH,” garnered publicity in local and national publications. At the same time, the Whole Foods retail chain arrived in Baton Rouge and created new brand visibility: it slotted Kleinpeter rBGH-free products and now carries the company’s rBGH-free milk and ice cream products statewide.
Consideration of organic dairy product feasibility and demand led Kleinpeter Farms Dairy to instead focus on rBGH-free marketing and labeling. Market research found area consumer interest in organic milk was directly linked to the lack of rBGH.
It was an ‘ah-ha’ moment, particularly given the analysis of costs to ship organic feed and convert farm operations versus consumer desires. “Growth hormone free, that made sense with us. We never used rBGH on our farm. We didn’t think it was right. But we didn’t know it was important to people,” Kleinpeter says.
The hormone-free marketing fits with the dairy’s environmentally-conscious operations, which extend from the dairy farm to processing to customer delivery. The dairy’s products also carry the Sustainable Business Institute Seal of Sustainability, awarded to companies with a continuous commitment to sustainable practices.
The company runs the largest dairy farm in Louisiana, with 1,300 head of cattle. The environmental impact of operation is minimized by irrigating crops with treated wastewater and various other measures. Accolades for dedication to the environment include the Louisiana Wildlife Federation’s Louisiana’s 2007 Conservation Corporation of the Year; the 2010 Achievement Award for Pollution Prevention from the Department of Environmental Quality (DEQ) and the farm’s ongoing designation as American Humane Certified by the American Humane Association.
“It feels special to be ‘certified.’ It’s even more special to know we are taking care of our cows. That’s what it is all about. It comes from the generations of care and concern for the animals,” Kleinpeter says.
Attention to environmental concerns is found throughout operations. In-house recycling programs demand accountability for waste and encourage employees to bring in hard-to-recycle items like fluorescent light bulbs. The processing facility captures refrigeration process heat to preheat boiler water, and houses a non-mandated wastewater treatment plant. Freezer panels insulate the entire ice cream plant, which is lit with high-efficiency light bulbs. The dairy added pouch packaging to serve school customers’ recycling needs, and teams with retailers and the community to promote recycling.
Heart-felt messaging
Kleinpeter Farms Dairy’s traditional local fluid milk markets have grown to encompass the entire southern portion of the state. Marketing highlights product quality and service as well as the company’s four generations of local business and community leadership. “The other guys can’t claim family-owned, fourth generation,” Kleinpeter says.The company’s stylized heart logo has received occasional updates over the years. The current version increases products’ shelf-appeal and visibility, but remains symbolic of the family’s love of community, environment and making quality, healthy products.
“The marketing message is ‘We pour our hearts into what we do. We love our cows, we love the environment, we love our products, and we love our customers.’ It’s a thread, no matter what we’re talking about,” says Melinda Walsh, a long-term Kleinpeter Farms Dairy communications consultant.
The birth of a calf with a heart-shaped forehead mark captured the imagination of Kleinpeter consumers. A photo posted to the company’s Facebook page shared the natural presence of the dairy’s logo on the calf, and created an interactive “name our new mascot” contest that gained national media attention. Thousands of entries were submitted, with the ultimate winner “Sweetie Pie” edging out other contenders, a play on the calf’s sweet disposition and the introduction of Kleinpeter Sweet Potato Pie ice cream.
The ice cream line is supported with marketing, promotional spending and sampling at events and grocery stores. “We’re creative in getting our name out there,” Kleinpeter says, noting the efforts often serve to support the community. At an American Cancer Relay for Life event, the dairy teamed with the local Coca-Cola distributor to sell Kleinpeter ice cream floats, netting a $2,500 donation to the cause.
Morning talk show appearances, newspaper interviews and mentions in national publications along with investments in television, radio and print advertising and charitable giving reinforce the branding messages, Kleinpeter says. “If we don’t talk about why we’re special, about how good our product is, how do we expect the consumers to know? They don’t have ESP. We have to tell them in our advertising, and in our actions, and through stories about Kleinpeter.”
Specific territories receive targeted marketing with the help of data from hand-held route sales devices. But the volume of complementary phone calls, emails, 2,000-plus followers on Facebook and demands to dairy case managers to ‘bring in Kleinpeter’ reflect consumers’ bond with the brand.
Consumer emails are handled directly by Kleinpeter. He treats each consumer with care and concern and “makes things right” with replacement products and samples. In the process, he deftly creates brand advocates. “You might think that one day my goal would be to have somebody else open those emails. That would be the exact opposite of what my values are,” he says. While “95 percent” of complaints can be traced back to faulty in-home refrigerators, the brand’s reputation is at stake. “If I start getting too many email complaints to answer, I go back there in the plant and I start taking names.”
Kleinpeter Farms Dairy’s community involvement originated a century ago with a land donation for a Baton Rouge church and cemetery. “Our family has always been kind to people in need, generous to good causes,” Kleinpeter says.
The company is on track to support nearly 400 organizations in 2010 with funds, product donations and reduced-priced product. Recipients include programs that feed the hungry, protect the abused and the battered, assist the homeless and support children and educational efforts, as well health-oriented organizations including the American Cancer Society and the American Heart Association.
Quality and community service meet in a unique program that pulls milk from retailer shelves five days before code date, then donates it to local food banks. The program ensures consumers can purchase the freshest Kleinpeter milk possible and provides a much-needed community resource. “It’s still fine product; the food banks need it,” Kleinpeter says.
Community involvement is a consumer and retail engagement draw in new markets, says Joseph Silvio, sales director-central division. Expanded distribution to Lafayette, Lake Charles and Alexandria areas is also growing opportunities to support charitable causes. Silvio aims to bolster the brand’s community support in new service areas to “Baton Rouge levels” within five years.
Hurricane helpers
Annual hurricane anticipation is part of the scenery at Kleinpeter Farms Dairy, where preparedness procedures include diesel fuel generator checks for potential power outages, “button down” of crates and other outside objects to avoid wind-blown damage or loss and removal of all trucks from low-lying areas to avoid flooding. “Hurricanes are not that rare here. We know what’s coming, we know what to expect,” he says, citing 12- to 18-hour advance warning. “Normally these things blow through and are over with.”Then in 2005, Hurricane Katrina battered the region and breached New Orleans levees. “With Katrina, we learned sometimes the results and damages from the storm can be long lasting,” Kleinpeter says. Then, only days into Katrina rescues and damage assessments, Hurricane Rita paid a call. Suddenly both major regional competitors were closed, and for what the executive team describes as an “incredible, crazy” six weeks, Kleinpeter was the region’s sole milk brand.
Processing and distribution moved to a 24-hour operation. Raw milk receiving volume increased exponentially, as Kleinpeter Farms Dairy accepted deliveries for competitors. The dairy ran on generator power the first eight post-Katrina days. The company made every delivery, including to a New Orleans hospital surrounded by floodwaters. At the same time, it supplied milk to first-responder stations and the shelters for 300,000 evacuees in Baton Rouge. Supermarkets without power sold Kleinpeter milk from parking lots, straight out of the dairy’s refrigerated trucks. Likewise, hospitals borrowed trucks to store milk shipments and heat sensitive medications and supplies.
“When you have an emergency situation, you do what you have to do. It’s not a matter of convenience. Our customers need us after a crisis,” Kleinpeter says. Gesturing toward the plant facility, he notes the “spectacular job” by employees, who worked double and triple shifts.
Post-Katrina, fluid operations ran nonstop on a 475 kilowatt generator. The addition of the ice cream plant and freezer required additional emergency power needs; an upgrade to a 1,500 kilowatt generator can run both facilities with 40 percent excess generator capacity. It was tested five days straight in 2008 when the high winds of Hurricane Gustav devastated Baton Rouge’s power grid. The post-hurricane need to take filled refrigerated trucks out of service for retailer and hospital distribution and to ease alternative location distribution also led the company to augment its fleet. Crisis distribution planning is eased by the new post-Katrina state police relationship, which provides the dairy with travel advisories and passes to enter closed areas.
As evacuees returned home to New Orleans, the dairy’s milk volume there experienced a lift that “leveled off” at a long-term tripling of fluid milk sales. “People who might not have normally tried Kleinpeter milk were exposed to it,” Walsh notes. “The taste of Kleinpeter milk is so distinctive, and it is really good. A lot of people switched over because it was available, and then stayed with the brand.”
Sound structure
The dairy’s executives are used to hurricanes, but competing with mega-dairies’ buying power and pricing focus is considered among the biggest challenges moving forward.Kleinpeter Farms Dairy enters new areas strategically, building consumer demand and the personnel to service all new accounts “properly, the way all of our accounts are managed,” says Ricky Lato, general sales director.
“There is so much passion, there is so much pride that we have the best product, that we do whatever it takes to take care of our customers. It’s coming from the heart, that’s the way it is over here,” Lato says. “People have heard of us, and they ask for us, and they’re happy when we get there.”
Consumer demand is behind Kleinpeter milk slotting in 22 of 80 Louisiana Wal-Mart stores. “How could any grocery store chain say ‘no’ to customers and still exist?” Kleinpeter asks.
The dairy offers customers a one-price, quality-service-value proposition, which it does not discount – even to accommodate large retail chain requests for special volume-based pricing, Kleinpeter says. “It’s not about price. It’s about the value we deliver,” he says. “We could be in many more stores right now if we were willing to compromise our values, but we won’t sacrifice our long-term customers’ trust. Everyone is charged the same price.”
With some of the fifth Kleinpeter generation in school, serving in the military or just entering the workforce, both siblings in their early 50s and their father Ben Kleinpeter a vital part of the board of directors, succession plans are as yet undefined. This generation is just getting started.
New ice cream flavors are certain to be on the horizon. Jeff Kleinpeter is plotting a five-year path to national ice cream distribution and considering longer-range national milk distribution opportunities. The next major capital expenditure prepares for ice cream business growth by streamlining ice cream package storage in a new warehouse designed to meet the company’s needs for the next 20 years. Meantime, Cox is researching the potential for further diversification to include frozen yogurt and cheese.
The family legacy is top of mind at Kleinpeter Farms Dairy. “We have an obligation to perform for our next generation, one that executives at many companies don’t feel,” Kleinpeter says. “As part of that obligation, we should feel passionate about what we’re doing, or we should get out of the way and let someone else do it.”
History
The family behind Kleinpeter Farms Dairy learned the art of service, quality and adaptation over the course of a century of dairy processing. The family landed in Baton Rouge, La., in 1774 and has worked to shape the business and the region ever since.Sebastian ‘Sib’ Kleinpeter created early agriculture operations including farming, grocery stores and processing operations that ultimately became Kleinpeter Farms Dairy.
The Kleinpeters pioneered sugar cane crops in the region, owned a sweet potato dehydration plant and were the first in the state to own a steam-powered cotton gin. The cotton gin ultimately shifted the family’s entrepreneurial focus.
A Louisiana State University professor noticed seed waste from the cotton gin and planted an idea: dairy cattle fed a mix of corn silage and high-protein cotton seeds create “the best milk in the country.”
The family’s mixed-breed ‘woods cattle’ were rounded up, fed and milked daily by Sib Kleinpeter and his son Leon ‘Papa’ Kleinpeter, Sr. In 1913, the Kleinpeters bought Guernsey and other high fat solid dairy cows. The cows were shipped by rail from Wisconsin, and Kleinpeter Farms Dairy was officially incorporated.
Leon ‘Papa’ Kleinpeter took over as president in 1920 and grew the dairy operation with the help of five of his sons: Leon ‘Big Boy’ Kleinpeter, Jr.; Thomas ‘Tom’ Kleinpeter, Sr.; Vincent ‘BoBo’ Kleinpeter, Sr.; F. Michael ‘Mike’ Kleinpeter, Sr.; and D. Benjamin ‘Ben’ Kleinpeter, Sr. Extended family support also came from Leon’s wife, five daughters and his sixth son, Dr. Lawrence “Larry” Kleinpeter, Sr.
Attention to quality was critical, including twice-daily washdown of the dairy barn. Milk was bottled on the farm by hand and kept on ice for delivery until the 1927 generator-run milk filler addition; electricity was added in 1933.
The reputation for quality and service grew along with sales. Kleinpeter Farms Dairy moved bottling from the farm to its Baton Rouge processing facility in 1955. The processing facility has expanded from its initial 550 square feet to 44,000 square feet, and also added a separate ice cream facility. While Baton Rouge development lead to the closure of the family farm operations in 1982, the dairy re-opened in Montpelier, La., in 1997. The 1,300-head farm is the largest in the state and features innovative dairy science, agriculture and conservation practices.
The business continues to shift with the generations. In 1960, Leon ‘Big Boy’ Kleinpeter, Jr., took over the presidency from his father. In 1977, the fourth generation arrived; Ben Kleinpeter’s daughter Sue Anne Kleinpeter Cox joined the accounting department. Following the 1987 retirement of his brothers, Ben Kleinpeter became president and his son Jeff Kleinpeter joined the family firm. His daughter had taken time off in 1985 to bring forth the fifth generation, but he convinced Cox to return to modernize accounting through technology implementation; she currently serves as CFO. Thomas ‘Mr. Zic’ Zicarelli joined the company in 1989 as general manager, and became president in 1992 when Ben Kleinpeter became chairman of the board. Zicarelli was instrumental in rebuilding the business while mentoring the fourth generation prior to his death in 2004. Jeff Kleinpeter assumed the presidency in 2004, and is leading the company to new growth opportunities.
Various family members remain the sole stockholders of the business, but defer to the experienced dairy hands in the family. Employee/family members on staff include: Jerry Kleinpeter, fluid plant/operations manager; Bud Kleinpeter, assistant fluid plant manager; James Cox (Sue Anne’s husband) in the information technology department, and fifth-generation representative Stanford Ponson in the accounting department.
Kleinpeter Farms Dairy has outlasted 27 former Baton Rouge creameries, and will remain dedicated to future opportunities, says Ben Kleinpeter. “People know us, they trust us. They know our philosophy. They like our quality product and our excellent service, and we sure do appreciate them.”
