Sunrise Family Farms: Tasting ‘organic’ growth

NORWICH — The first goat was domesticated in Mesopotamia 5,000 years ago. The warm climate formed a curd in stored milk, which one adventurous soul discovered was tasty. Thus began the making of yogurt.

Fast forward 5,000 years. In 2000, America boasted 80 yogurt plants producing 2 billion pounds of the dairy product. A dozen years later, the number of plants spiked to 131 and Americans imbibed 4.5 billion pounds. In New York state, the amount of milk used to produce yogurt jumped from 158 million pounds in 2005 to about 1.2 billion pounds in 2011. Driving this explosive growth is America’s craving for Greek-style yogurt, which requires three times as much milk as conventional yogurt. By volume, Greek yogurt represented just 1 percent of total yogurt sales in 2007; today, Greek-yogurt sales account for more than half (52 percent) of all yogurt sales.

“Chobani created the Greek-yogurt industry in America,” says David Evans, president of Sunrise Family Farms, Inc., a co-packer (contract manufacturer) of quality, cultured dairy products, located in the town of Norwich (just east of the city of Norwich). 

“Hamdi [Ulukaya, who founded Chobani in 2005,] educated the public to the taste of Greek yogurt, and our business rode along on his coattails. The big manufacturers like Chobani, Fage, Dannon, General Mills, and now Pepsi (which joined with The Theo Muller Group) are all fighting for market share as the demand for yogurt is expected to continue growing,” Evans explains. “Ignored in the yogurt wars is the rising demand for organic, all-natural, and gluten-free yogurt products. That’s where Sunrise steps in. We are a hometown creamery able to focus on the needs of entrepreneurs with new ideas and not just a processor of commodity products.”

Evans, a fourth-generation dairy farmer, decided in 1999 to expand the business, when he created the name Evans Farm House. In 2004, he added Sunrise as the marketing arm of the business, before renaming the company Sunrise Family Farms in 2010. 

“The co-packaging operation has expanded dramatically,” notes Evans. “In 2010, this was a $3 million to $4 million business; today it’s a $12 million to $15 million business. We employ 50 people and expect to grow to 100 within a few years. There are three equal partners who own the company: Charlie Reinshagen, vice president and secretary; Sandy Grant, who is the treasurer and oversees the quality control; and myself. Sunrise has eight packaging lines producing mostly yogurt (80-85 percent), but also organic fluid milk and cream and even a dairy facial cream.”

Sunrise Family Farms currently has 12 active customers. “We have accounts across the country and also in Canada,” continues Evans. “We have a unique niche, because we are small enough to make batches of only 30 gallons and still large enough to make batches of a few thousand gallons. We work with a lot of entrepreneurs who have a dream but little knowledge of how to bring it to market. Sunrise can direct them to a company like International Food [Network, Inc.] in Ithaca to create the basic formula, and then we tweak the process to its conclusion. We also guide our customers to container and label manufacturers and advise them on transportation problems. That makes us both a co-packager and a consultant.”

The Norwich plant of Sunrise Family Farms, which comprises 11,000 square feet, is the original company site. To meet the rising demand, the private-label manufacturer has now opened a second location in Greene, about 20 miles away. 

“We bought a 25,000-square-foot building [on 35 acres] that was built in 1995 but never used … because the owners went bankrupt,” says Evans. “Work is proceeding inside the building on the floors, to create rooms, and to build coolers. The investment to date in the building is $3.5 million, and the planned improvements, which should eventually add another 46,000 square feet, will total another $6 million to $8 million. The Greene site is serviced by the municipal electric company, which charges us 3.5 cents/kwh, a real benefit to a business that consumes a lot of energy. The way things are going, Greene may handle the regular production, and Norwich will focus on the specialty business.” The property is owned by an S-corporation called Chenango Valley Processors, Inc.

Customers
How does Sunrise find its customers? The answer is: “It doesn’t; the customers find us,” Evans asserts. “We don’t advertise, we don’t market our company, we don’t worry about competitors. Customers may read about us in publications or find us on the Internet. I probably get two to three calls a week from prospects. That lets us focus on the customers,” who Evans describes as 30 to 35 years old, on average, and thinking out-of-the-box.

A typical customer is Naturi, a micro business that wants to change the Greek-yogurt industry. Aditya Dhere and Anes Dracic originally presented their idea as a Capstone project at the Carnegie Mellon Tepper School of Business. While their peers focused on high-tech business concepts, the two entrepreneurs pursued the dream of producing the creamy recipe they grew up with, only modifying the taste and flavor using organic products and artisanal ingredients. 

The company launched in February and added Jennifer Mrzlack, who brought experience from the food industry. Their biggest problem was sourcing, until they found Sunrise. To date, Naturi has raised money from family and friends, Carnegie Mellon University, and on Aug. 17 nearly $16,000 from 154 backers through Kickstarter. The Kickstarter investment funded the first production batch, which will be sold in organic and specialty-food stores as a high-protein, organic, and kosher-certified (through the Orthodox Union) yogurt.

The Sunrise management team
Sunrise Family Farms’ three partners act as its corporate management team. “Charlie and Sandy used to work at Elmhurst Dairy, where I sometimes bought equipment and containers,” notes Evans. “Charlie worked in operations and Sandy in quality control. We struck up a friendship. Charlie joined the business in 2008, and Sandy joined the following year. We work very well together.”

With consumer concern about food safety, the trio is currently pursuing SQF (Safe Quality Foods) certification. SQF is a process- and product-certification standard. It is a Hazard Analysis Critical Control Points-based food safety and quality-management system, intended to support industry or company-branded products and to offer benefits to suppliers and their customers. Products produced and manufactured under the SQF code certification retain a high degree of acceptance in global markets. “We expect to receive SQF certification by either the fourth quarter of this year or the first quarter of next year,” Evans avers.

Evans attributes some of the company’s co-packing success to vendors who offer professional advice. “The Greene expansion is funded by the Kinderhook Bank’s (Kinderhook Bank Corp.: [OTCQB: NUBK]) East Greenbush office,” notes Evans. “Our legal work is handled by Dave Sonn of Earlville, and Piaker & Lyons [P.C.] monitors the accounting from its Norwich office.”

Sunrise Family Farms is well positioned to enjoy not only the rapid growth of the yogurt industry in general, but also the growing consumer demand for more variety and for natural products. Its geographic location, proximity to millions of consumers, and unique market niche augurs well for continued success. 

“Yogurt growth is probably in a 10- to 12-year cycle,” opines Evans, “with Greek yogurt remaining strong. But the market is changing with some consumers swinging back to conventional yogurt and others looking now at drinkable yogurt. While there will be new products [forthcoming], this is not a fad.”       

Contact Poltenson at npoltenson@cnybj.com