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Restaurant Daily News Marketplace Saturday, May 21, 2016 F DAIRY FARMERS TAKE MILK FROM COMMODITY TO DELICACY By Jorge González-García Two California dairy farmers are finding a new way to turn the fluid milk they produce from a product they can sell at commodity prices into a gourmet prod- uct that commands a premium price from consumers eager to enhance their experience of food. Noel Rosa and his brother, Rolland, own and operate Rosa Brothers Milk Co., based in Tulare, in the heart of the nation's richest agricultural area. Rosa Brothers is very much a family opera- tion, with seven members actively involved. The farm employs 35 workers, covers 600 acres, and manages a herd of about 1,000 Holstein dairy cows. The Rosa family connection to this rich farmland goes back seven decades. "The farm was started by my grandfather in 1953, continued by my father, and now by my brother and I," says the 47- year-old Rosa. "That's a span of more than three generations that our family has been here working the farm and pro- ducing dairy products." In the fall of 2012, Noel and his brother took a big chance and built a creamery to produce and distribute spe- cialty products like whole milk and fla- vored milk in glass, and premium ice cream. The idea was to distribute the products to local retailers. A small store was added next to the creamery for local visibility and direct sales. The brothers made the move for a couple of reasons. One was in response to severe swings in commodity prices in 2009. "They can be very tough financial- ly for a medium-sized dairy farm like ours," Noel explains. "We needed to cre- ate more stability in terms of product, pricing and sales revenue." The other reason was the growth of the local food movement in his area. Rosa saw that it was picking up steam. "Our research showed that consumers preferred milk in glass bottles," Rosa says. "They love the taste, they like that it comes from a local farm, and they sup- port bottle recycling. What we're doing is a natural extension of the growth of the farm to table movement right in our own area." A hundred miles to the northwest, in a small valley next to the river Merced near the town of Winton, lies PH Ranch, home of Top Line Milk Company. It used to be a working cattle ranch. Now it's the dairy farm owned and operated by Paul van Warmerdam and his wife Sonya. They farm 860 acres, have 55 employees, and manage a herd of about 2,500 Holstein cows. Top Line Milk is brand new to the specialty milk products business, having launched at the recent Natural Products West Expo 2016 show in Anaheim this past March. "I can't really point to our specialty milk sales because we're just starting out," says the 51-year-old van Warmerdam. "But people at the show loved our milk, and our low and slow pasteurization method. They told us it reminded them of the taste of milk when they were kids, and milk came right off a local farm." Van Warmerdam and his wife had talked about expanding into premium dairy products in years past. Then came 2009, with wild swings in commodity prices. "2009 was a bad year," he says. "We had record low milk prices and high feed prices, and a lot of people left the business." That experience reinforced their goal of building a successful dairy business that could withstand fluctua- tions in the commodity market, and that they could leave to their children. Moving into specialty milk seemed like a creative way to do that. They also considered glass bottles for their milk, but opted instead for white plastic bottles to reduce ultraviolet light exposure and extend shelf life. "We made that decision for a number of rea- sons," says van Warmerdam. "We didn't want to be the third or fourth glass milk bottle company. Also, we wanted to be able to sell into smaller convenience stores. The extra space needed to handle glass returns can be an issue. So those were all factors." Top Line Milk emphasizes its low and slow pasteurization process. "Low and slow is our slogan," says van Warmerdam. "The milk comes out of our cow, we add the minimum of heat to meet pasteurization standards, and it goes into the bottle. It cannot be any fresher or tastier than that. And that was our goal from the beginning." Van Warmerdam is now looking to build out his distribution network. "We would like to grow regionally to the Bay Area, and then Sacramento and Fresno," he says. "We're in a niche market, so our rollout will be slow and strategic." Closer to home, he plans to take advan- tage of traffic passing by his place by setting up a drive-through window for a couple of hours a day so customers can buy directly. For Noel Rosa, wholesale growth has been solid. "In our first full year of creamery operations, we grew from zero to 70 retail outlets," he says. "And we won new product of the year in 2013 at the Fresno Food Expo. That gave our sales a boost." This year Rosa Brothers is selling product in 225 stores in its area. Industry insiders do not see explo- sive growth for the specialty milk mar- ket, and they caution against unrealistic expectations. "We project slow, steady growth for this segment of the market," says Murray Bain, Vice-President for Marketing at Stanpac, the large Canadian container manufacturer which supplies bottles to premium milk pro- ducers. A California Dairy Advisory Board report for 2015 shows that milk in glass bottles amounted to less than two percent of total sales for the entire state. Noel Rosa understands the chal- lenge of operating profitably in a niche market. And he takes the long view that as long as there are customers who pre- fer milk in glass, support the farm to table movement, and are willing to pay a little more for premium quality, he will have buyers for his products. OLIVE OIL INDUSTRY FIGHTS LABEL FRAUD By Lorrie Baumann Olive oil industry experts are enlisting retailers to improve the quality of the olive oil assortment on their shelves and to edu- cate consumers that the low-price olive oil they can buy on some retailers' shelves isn't a quality extra-virgin olive oil, regardless of what it says on the label. While it's not nec- essarily easy for the average consumer to know if the olive oil they're buying is truly a high-quality oil, it is very easy to identify a very cheap oil as a fraud, says David Neuman, CEO of Gaea North America, a subsidiary of Greek olive oil maker Gaea. "When you're selling as a retailer a liter of extra-virgin olive oil for $7, that's not possible. Organic extra-virgin olive oil being sold for $5.99 a liter. It isn't possible. You can't make it for that," he said. "You could ask, how do they do it? How do they sell an EV for $4.99?" adds Alexandra Devarenne, Co Founder of Extra Virgin Alliance, a nonprofit trade associa- tion representing producers of extra virgin olive oil from around the world. "It's not really an extra virgin olive oil," she said. The product in that bottle is very likely all olive oil, since the presence of other oils, such as canola or soybean oil, is easily detected. Although other oils can be mixed into olive oil and then sold as pure extra-vir- gin olive oil, the relative ease of detection and clear illegality has discouraged that par- ticular fraud in U.S. retail, she says. The fraud that's more often perpetrated on American retailers and consumers involves the adulteration of extra-virgin olive oil with lower grades of olive oil to produce a mix- ture of inferior oils that's then labeled and sold as extra virgin. "That's possible, and it's undercutting the market for true extra virgin," Devarenne said. Widescale fraud is made possible because olive oil as a category is worth more than $1 billion a year in U.S. sales, and of that, more than 98 percent is import- ed, Neuman said. "With olive oils, there are a lot of foreign entities labeling things extra virgin that don't meet the standards. The rest of the world is sending whatever they want to America. Grocers are selling what they need to to meet the demand," he said. That leaves the producers of genuine high-quality extra virgin olive oils – the kind that have been shown actually to have the health benefits and flavor that Americans are often seeking when they choose to buy olive oils, struggling to com- pete in a marketplace in which their oils, which have to sell at prices that reflect what it actually costs to produce them, sit on the shelf next to commodity-grade oils with much lower prices. Retailers are in a similar bind, according to Maria Reyes, Director, Vendor Management at KeHE Distributors. "It's a business and we all have to make money including the retailers. There are a lot of oils out there and consumers are con- fused or simply don't know the right olive oil to buy. The challenge is how we get the consumers to be educated about olive oil so that they are able to make the right decision as to what they're buying off the shelf," she said. KeHE is getting more and more requests every year from over-stressed retailers who are asking for help with cate- gory reviews and product tastings, partly because they're finding it more difficult to find the time to educate themselves about a product that's often regarded as a commod- ity instead of as a specialty category like wine or cheese, Reyes says. "The challenge is that they're requesting the information, they give us the time, and they listen," she said, "But then, 'How do we do this? How do all of us find the time to do this?'" "They think of olive oil as an everyday food, but it's as technical as wine – it has a standard of identity; it's regulated," Neuman added. "But grocers generally just don't have the time to investigate. One buyer may be buying half the center store. They sometimes do two reviews a year for each category. Plus, they go to trade shows, etc." They'd like retailers to regard olive oil as a category more similar to wine, for which many specialty markets have a som- melier who has invested a significant amount of time to learn about the products their store is selling. But short of that, they'd like to see grocery retailers support- ing their buyers in gaining some training about olive oils. "Anyone who cares enough to learn can learn. It's not necessary for a buyer to go to multiple trainings to make a big difference. It's enough to want to learn and to taste and to seek out people who are experienced," Devarenne said. "You may not become an expert taster – that takes years – but you can become a competent taster pretty quickly." "It's not super-easy, but it's also not rocket science," she added. "And it really is important. Otherwise, you're just at the mercy of the person who comes in and says it was done the way his grandfather did it, and then you taste the product, and if you know nothing, then you still know nothing. Do the same research you'd put into other purchases. We need to convince people that there's information out there, and there's good unbiased information out there. They just have to care enough to look for it." The investment is worthwhile for retailers because specialty food consumers are looking for premium products. Americans are not using a lot of olive oil now, especially in comparison to con- sumers in European olive-oil producing countries, but as they learn more about the value of high-quality oils and their range of flavors and varieties, there's a lot of room for American consumption to increase, according to Neuman. "There's nothing else in the grocery story that costs $17 per unit and drives a 40 percent to 50 percent gross margin," he said. "Retailers win when they're selling a better product at a higher price. The producers win because we can afford to pay farmers premium prices. And the specialty consumer wants to be taught how to use good product.... There is a lot of room for premium brands."