Bottle Bigger ProfitsA California Farmer's Quest to Add Value to His Milk
When you arrive at Top O’ The Morn farms, it looks just like any other dairy in California. First glance shows cows in freestall barns, and a feed mixing area in the distance. As an eye catches the farm’s iconic milk delivery truck it clicks that something more than making and shipping milk happens at this place.
Ron Locke and his wife Evie are among a small group of farmers who also process the milk produced on their farm. Bottling several varieties of milk products, plus making butter, the couple seeks to add value to the milk produced by their 2,000 cows. Accord-
ing to USDA, in 2015 there were only 450 milk plants in the U.S. In
2012, the Lockes joined that elite club. A solid marketing plan has brought them a long way in the past four years, allowing them to take their business to the next level.
After a career in construction, Ron caved and decided to join Evie in pursuit of owning a dairy. So, in 2004 they purchased the farm they now own and operate and started Top O’ The Morn farms. But the story of their brand didn’t start there. “In 1962 Fred DeBoer [Evie’s father] bought Top O’ The Morn farms in Ontario, California,” explains Ron. “It was a cash and carry milk business and they were milking 150 to 200 cows.” DeBoer ran that business for nearly four years before giving up the bottling part of the business to focus on cows. As such, the Top O’ The Morn name died out in the late 60s.
Then the name came back when the pair started the dairy, milking around 1,500 cows near Tulare. They pieced together the herd one or two sale-barn cows at a time and then developed genetics over the course of a few years. But in 2007, they decided to be proactive about finding
solutions to their low milk price. “We were frustrated with the milk price and wanted to bring some value back to the dairy,” Ron says. “Nobody was selling conventional milk in glass bottles [at the time].” So they dived in headfirst and in
2010 started building the milk processing plant that is on-site today. It wouldn’t be until late 2012 that they started bottling their own milk.
To make any business successful there must be a plan. The First part of that plan? Product development. “You have to make a product that sells itself,” says Alec Winmill of Fargo-based Flint Marketing. “Even Coca-Cola, arguably the best marketers in the world, can’t market a product that’s terrible.” Lockes developed a line of products including: skim milk, 2% milk, whole milk, chocolate milk, strawberry milk, coffee milk, root beer milk, half and half, heavy cream and later, farmstead-style butter.
“We’ve really just focused on quality ingredients,” Locke says. “We participate in the World Dairy Expo dairy products competition. We submit four or five items to them,
the university does all the judging and tasting and then you get a real detailed scoring of your product. It’s really helpful to get a good gauge of your product.” Customers notice a good product, and that’s why Winmill says developing an irresistible one is the best starting place for any marketer. Once Locke tried to switch to a sugar that would be more user friendly in the plant. His customers noticed the taste difference right away so he immediately switched back and now uses nothing but one sugar brand.
Once they had a good product developed, the next step was figuring out a distribution plan. Because their original goal was to have a more direct relationship with their consumers, Lockes decided their first
launch into the market would be with a home delivery service.
While it’s still their favorite part of the business, it wasn’t enough to make them profitable.
“The mistake I made is that we’re so rural, we didn’t have the popula-
tion base to sustain the business right away,” he says. “We knew we’d have to get into wholesale to pay the bills.”
So they did. They stuck true to their roots though, never wavering from their marketing themes of sustainability, family and that little iconic delivery truck that’s always included in their branding. Locke’s prior career in construction taught him the most about branding. “I worked for a company called Monrovia Nursery,” he explains. “They went through a rebranding process while I was there.”
Through those rebranding meetings which included marketers from Nike and Coca-Cola, he learned to pick a direction and stick with it. “Keep pushing your quality, keep getting your story out there and then pick a mascot and always focus on that,” he explains. “If you think of Nike it’s the swish, Coke it’s the colors. Ours is the delivery truck.”
When they first started the bottling plant, the goal was to determine a break even cost and figure out what it would take to cash flow after three years and be profitable after five years.
“We determined 5,000 gallons processed a week would be our break-even point,” he says. “So our second goal would be 7,000 gallons a week, and then when we got to 10,000 we’d look at expanding our facility.”
At the start of their business they were bottling roughly 2% of the milk they produced on their 2,000-
cow dairy. Today, they are bottling around 8%. The fluid milk business is notable in that there aren’t written contracts. “You just have grocery store commitments,” Locke says, “So you’re constantly going after more business.” The upside of that is that any one of the contracts Locke is currently working on could bump their processing volume to 16% or higher.
Today, Top O’ The Morn farms is quite diversified with a storefront on the farm, home delivery service, wholesale business and F.O.B. “We’re learning,” he says. “We don’t have any formal training or anything, it’s just trial by error.”
Well-managed grocery stores are where their products do the best. “It’s like selling tomatoes, it’s fragile,” Locke says. “You’ve got to keep it cold and take care of it. If the grocery stores don’t take care of it, it will affect sales.”
Throughout the past six years the Lockes have been bottling milk, they’ve learned balance is key. “We’ve been pushing really hard for four years and it’s taken a lot,” Locke says. “There was a time where I focused really hard on the bottling and dairy suffered, so then I had to go back and focus on the dairy and balance both of them.” Currently, Ron manages the cows and the processing plant, and Evie makes the business work on the office side. To continue to grow, Lockes are looking to add a plant manager to their team. "I like product development and marketing," Locke says, "but on distribution and processing, we need help to take it to the next level."