When Land O'Lakes Chief Operating Officer Beth Ford tells people where she works, they tend to think of it as “the butter company.”
“The one thing I always want people to understand is Land O’Lakes is more than butter,” she told Food Dive. “We of course have a great deal of pride in our heritage and being a butter company, but Land O’Lakes has transformed over the last number of years and is a Fortune 200 business that has a unique view from farm to fork.”
Land O’Lakes produces butter, spreads, cheese, eggs, whipping cream, cocoa and cappuccino mixes, sour cream and more.
“We plant the seed that is used for the feed, that goes into the cow, that makes the milk, that makes the butter, that goes onto the store shelf,” Ford said. “Connecting the farm to the retail shelf gives Land O’Lakes a more direct route to its customer.”
Ford talked with Food Dive last month about the connections her company is planting with farmers, consumers and retailers.
Food Dive: At the end of March, the company announced the acquisition of Vermont Creamery. What does this deal mean for Land O’Lakes?
Ford: We’re very excited about that acquisition. It’s [on] artisan cheese, it’s [on] goat cheese and they have the No. 1 crème fraiche. It’s a very high-end cheese maker. It’s amazing to me that this is so aligned with the heritage of Land O’Lakes. This company was started in 1984 with $2,500, and it started on the farm level. They wanted to really push the opportunity for goat milk and goat cheese, and they’ve done a beautiful job.
Food Dive: Why were you interested in the company? What can Vermont Creamery add to Land O’Lakes?
Ford: We were interested because it’s value-added, it’s branded and really reflects and is consistent with the character of our company. There’s still a tremendous opportunity to release their products more broadly in the U.S., and to do that, we can use the support of our bigger platform and introduce additional products to consumers. We love the products and think they are very innovative, and there’s much more room for growth.
Food Dive: Where are you seeing growth in the dairy industry today?
Ford: Land O’Lakes isn’t in the drinking milk business, we license a brand for that. Rather, we are all into the butter, cheese and refrigerated desserts. ...We see growth occurring in dairy in retail in the cheese sector. Refrigerated desserts as part of the yogurt category is also a busy aisle. We see growth in those areas.
We’ve also seen tremendous growth in butter. Our brand is 96 years old and we’re the No. 1 player in the category. Our shipped volume is up 15%, so folks have moved to the simple ingredient deck. It’s on target to where consumers are right now. We’re not in front of the store. We’re in the outside aisles, and this fresh, simple ingredient is right down the middle of the fairway, so we’re seeing growth in that area from the dairy industry. Cheese and butter have lifted the dairy sector.
Food Dive: Looking at the dairy sector as a whole, what is the company excited about for 2017?
Ford: We have a very nice looking innovation platform. It’s not like butter is a new concept, but we started the spreads category and that’s seen tremendous growth. We’ve been doing some in-and-out things like pumpkin spice butter. We have a low-sodium product. I see some innovation coming forward here in the next two years.
...In our other businesses—Purina and others—we are continuing to focus on innovation. One of the things that I think is unique about Land O’Lakes is we can literally go back to the cow and we have a research forum starting with different animal feeds that we can work with, and [we can] make different investments in feed quality and different areas that would allow for a different type of product to be developed for the store shelf. I’m excited about what I see in the pipeline.
Food Dive: How has the rise of online grocery affected the company? What challenges does this create?
Ford: We’ve just become a supplier to Amazon Fresh. This transition in retail is fascinating to me. There’s a lot of contention going on there. We’ve pulled aside a couple of resources to focus on new channel development. If you are in consumer goods right now, you’re smart to focus your attention on the product portfolio and the different distribution strategies that you can put together to align with this changing dynamic. Amazon Fresh is all about quick delivery so dairy might not be the first thing that people are ordering, but it’s moving so dramatically and so quickly, so making sure you are in front of that or partnering with key customers as we are, is crucial. It’s all about how can you make sure the work you are doing on positioning your products so that when someone is online and ordering, your product comes to the top of the list and are top of mind when a consumer is making a purchasing decision.
Food Dive: What can you offer your retail partners to better get the word out about your products and help them sell better in the stores?
Ford: We have very good relationships with our partners. We go out and show them what new innovations are occurring. We had a customer once—I believe it was Wal-Mart—who told us their customers really wanted a large 24-ounce tub of butter. And what happened is we launched it with expectations of selling a certain number, but boy, did it connect. That shows the power of partnership. We may bring in our information about the trends we see with consumers, but at the same time, we listen to our retail partners about what they see. That has been very effective for us.
Food Dive: What have recent labeling laws meant to the company?
Ford: Our CEO is the chair for GMA [the Grocery Manufacturers Association] this year, and with that, and the expertise we have, we have a number of folks who are talking with or dealing with industry organizations to look at labeling requirements. We’re trying to be in position to make sure the labeling requirements make sense for retailers. Given that visibility, we’re trying to make sure we’re not only meeting regulatory requirements, but also ensuring we are messaging to the consumer appropriately [about] what the quality of the products are.
Food Dive: How important is sustainability to the company? What are your efforts there?
Ford: In July, we introduced a new business unit, Land O’Lakes SUSTAIN, and we just hired Jason Weller, the former head of the USDA as our senior director of sustainability. We’ve hired a number of experts in the field. Wal-Mart has been pushing their customers to sustainability, and has been pointing in the direction of Land O’Lakes.
We literally work on the acres with different farmers. We can use our satellite technology and our technical platform to optimize production on the acres. We leverage that information to understand what strategy could be used to improve sustainable production. This is one of the things that is right down the plate for people right now, but we have been doing this for years and [are] putting a greater focus on it now with our team.
Food Dive: Land O’Lakes has committed to “feeding human progress.” How does this fit into the company philosophy?
Ford: Our foundation is on strengthening rural communities and on hunger issues. We also have a development division where we work across multiple countries in emerging markets, and develop products and programs with various constituents. It’s not just about setting up a co-op, it can be looking at farm practices, it could be looking at quality expanders, and we’ve been doing that for about 35 years. That has been central to our focus on hunger issues.
Food Dive: How is social media used to help the company grow?
Ford: We’ve been more working more aggressively in that area. One of the major shifts we’ve been undertaking is we have made a change in our marketing agency, and a lot of our new creative and new programs are being pushed out on digital. It gives us an opportunity to target consumers directly. We’re able to target our digital advertising much more directly and circling that with more active engagement with consumers. We can see how consumers are reacting to different programs, we can see what issues are out there, what trends, and [that] ensures we are paying attention to consumers.