Something to moo about - Stonyfield Farms yogurts - Company Profile

Nation's Business, August, 1995 by Roberta Reynes

From the necks down, the Stonyfield Farm billboards were largely faithful to Grant Wood's familiar "American Gothic" painting. Pictured were a stern couple standing in front of a farmhouse, the husband clutching a pitch-fork. But above the primly starched collars, the faces of a cow and a bull gazed out. The billboards told consumers that the Londonderry, N.H., yogurt maker opposes use of bovine growth hormone in cows to increase milk production. The billboards' caption: "Just Say Moo."

The 12-year-old company rented space last fall on six highway billboards in the Boston and Hartford, Conn., areas, and it also bought a few radio spots. The ad campaign--part innovation, part social conscience, part corn--exemplifies the company's marketing style.

The business was founded by two starry-eyed idealists--Samuel Kaymen and Gary Hirshberg. Kaymen, 59, grew up in Brooklyn on welfare and soon proved to be an engineering prodigy. By his late 20s he was a partner in a company supplying the defense and aerospace industry. He eventually walked away from his specialty and by 1983 was running an organic farming school and making yogurt in New Hampshire. He started Stonyfield Farm with $35,000 he had borrowed. Within months, he was joined by Hirshberg, 40, who had been running an environmental think tank.

The two oppose use of bovine growth hormone because they feel that increased milk production puts economic pressure on small family farms. They are also worried that use of the hormone is inhumane. Cows treated with the hormone have been found to have reduced pregnancy rates and increased incidence of infection of the udder. The U.S. Food and Drug Administration says such risks to cows are manageable. Other critics worry that the hormone's effects on humans who drink the milk haven't been adequately tested, but the FDA and the manufacturer of the hormone, the St. Louis-based Monsanto Co., say that no difference has been found between milk from cows that have been treated with the hormone and milk from cows that have not.

Stonyfield Farm's owners are a managerial odd couple. Kaymen--quiet, bearded, and modest--is chairman. He explains happily: "Gary thinks about the profits a lot more than I do. I'm the product guy." Hirshberg, the president and CEO, handles finance and marketing. Friendly and earnest, he was once described as "a salesman in an environmental crusader's body."

Today, the 100-employee company has carved out a growing market niche in a business dominated by giant multinational companies. It has captured 1.8 percent of the national market and 8 percent in its home territory, New England. Sales have skyrocketed from $3.6 million in fiscal year 1990 to $25 million for fiscal year 1995, which ended in March.

Stonyfield Farm has caught the attention of buyers like Ken Hanshaw, a vice president at Ralphs Grocery Co., a 174-store chain based in Los Angeles. Hanshaw says: "Smaller companies that operate where giants control the marketplace tend to move quicker, to be faster to see another small niche. That's what happened here." Hanshaw adds that policies like avoiding additives in cow feed "develop the perception in the customer's mind that this product stands out from the other brands."

Marketing and a social conscience blend seamlessly in Stonyfleld Farm's communications to customers. Yogurt packages, with their strong colors and bold graphics, emphasize the importance of recycling and supporting family farmers. A newsletter, sent to more than 50,000 people who have come to the visitors' center or written Stonyfield, carries "all the moos that's fit to print."

Hirshberg is convinced that a social conscience is a key to business success. "The buyers," he says, "know that a core number of their customers, a growing number, demand environmentally and socially responsible products."

The company gives the first 15 percent of its profits to an employee profit-sharing program, the next 10 percent to pro-earth projects, and in recent years, says Hirshberg, has "between 3 percent and 5 percent in after-tax profits" left over.

Current stability has been hard-won, however, as a result of miscalculations in fledgling efforts to balance the profit motive and social responsibility. Hirshberg recalls the worst moment: "About six years ago, we had a friend--a former organic activist--who had a small, struggling dairy plant. When we outgrew our first plant, we brought the extra business to him. We led with our hearts. This guy went under, very nearly taking us with him. For about 20 weeks, we were hemorrhaging $25,000 a week."

Since then, Stonyfield has refined its sense of "win-win." Hirshberg concludes: "In the long run, being a good citizen is what keeps consumers coming back. But if you get too deep into the 'mission' and forget the business, you are not going to be around."