milk money

Farm Crest Milk Stores gives its dairy doors the royal treatment. While some retailers skim by with a few facings of milk, Farm Crest serves its customer base of ’diggers’ with no fewer than five doors of all-natural dairy products.

Denver’s Farm Crest stores compete in today’s modern convenience retailing arena by employing a 1950s-style game plan. This chain of “milk stores” still provides home delivery, offers refunds on returnable bottles and utilizes blue milk crates that seem like they should be found only on an eBay auction of “retro” paraphernalia. In more ways than one, the look of the chain’s 18 stores is decidedly Rockwellian.

“We have very much an oldfashioned look to our stores,” says Grady Cleckler, vice president of retail sales and marketing. “Our logos have a barn theme, and we even have a mascot—a big old plastic cow on top of one of our stores. Her name is Crestabelle.

“We have a mascot uniform that goes out for public events,” Cleckler continues.”Any time we have a public relations event for the dairy or the stores, she’sthere. We also do it so people get an understanding that we’re a milk store.A typical c-store has a door to a door-and-a-half of milk. We have five doors.”

Our story begins
Any good milk story should start with the cow.

“Part of what makes our milk so popular is the fact that it’s all-natural,”Cleckler says. “We don’t allow our farmers—who are all in Colorado—touse synthetic hormones to increase milk production out of their cows. Our cowshave never hit 70 home runs. Even though they’ve never proven that any additionalhormones show up in the end product, it certainly isn’t humane for the animal.”

For the lactose intolerant and the animal rights crowd, Farm Crest carriesSilk Soymilk.

“About one out of five people are lactose intolerant,” Cleckler says. “That’swhy Silk sales are going through the roof.”

Cleckler and his colleagues are sticklers when it comes to the quality of theraw milk their farmers provide.

“When the tankers come from the dairy farm, we test the milk to make sure it meets standards so we can call it ‘all natural,'” he says. “We know for a fact that milk consumers will buy milk based on these things: taste, expiration date and, thirdly, price.”

Consumers are right, he insists, to be focused primarily on taste and freshness rather than price.

“It surprised us to know that there are that many ‘diggers,'” he says.

“When you walk down the aisle, you see two legs sticking out of the case [from customers leaning in to find the freshest bottle]. Milk tastes better the closer to the time it was processed. It’s still good 12 days later, but it doesn’t necessarily have the same taste profile as when it was first processed.”

Going gangbusters
Farm Crest Milk Stores processes its milk in a state-of-the-artplant at Royal Crest Dairy.

“It’s only five years old and we just added a second filler line,” Cleckler says. “That means we can fill milk bottles on two lines rather one primary line.”

The returnable bottles are a highdensity plastic made by Quintex. The chain also has a single-trip throwaway bottle under the Farmer’s label.

“We also have one-of-a-kind bottlewashing machines that are engineering marvels,”Cleckler says. “Picture eight Zambonis put together and that’s how big thesethings are. They have chemical and photocell detectors that test each bottlefor cleanliness.”

In addition to half-gallons and gallons, Farm Crest added plastic quarts just in the last 90 days.

“Most quarts are in the traditional paper container, but ours—which looklike old-fashioned bottles—are going gangbusters,” Cleckler says. “Becauseit’s a plastic quart and not paper, it ices better and lasts longer.”

Once the milk is ready to ship, Farm Crest handles the transportation.

“We deliver three times per week,” Cleckler says. “That way, customers receive milk that was processed the day before, which also impacts the end product.”

The equipment is split among Royal Crest’s three divisions: wholesale, retailand home delivery. Farmer’s All Natural Milk is delivered to Royal Crest’s 400wholesale/retail customers. The in-store milk is called Farm Crest, and thehome-delivery brand bears the name Royal Crest.

“One of the reasons we have three separate names is to protect each brand’s value,” says Cleckler. “For instance, we have to run specials on Farm Crest in the stores if another store is discounting. At the same time, though, we don’t want to devalue Royal Crest.”

Returning the investment
Returnables account for 80% of Farm Crest’smilk sales.

“The returnables are something people have taken to over the years,” Cleckler says. “They get $1 when they return [a bottle]. When it comes to home delivery, customers aren’t charged a deposit.”

The return process is simple. Farm Crest has a “bottle return tray” at every store, so customers bring in their empty bottles and place them in the trays, which hold up to 12 bottles. The blue dairy crates are kept behind the counter, and employees simply snag the bottles off the tray and place them in the crates. Based on the number of doors in its stores and the sheer volume of milk sold, the trays must fill up pretty quickly.

“We have five doors of milk,” Cleckler says. “Two doors for 2%, one door for 1%, one door for non-fat, and one door for whole milk. Then we have a sixth door that has products like butter, cheese, half & half, orange juice, eggs and whipped cream.”

In addition to the milk and the dairy “plus” products, Farm Crest sells loads of ice cream. Larger stores have four full doors of half-gallons and some pints. In addition, stores have “novelty bunkers” near the checkout counter.

Still, milk is king at Farm Crest. Stores sell several hundred gallons per day, which is equivalent to the volume of an average grocery store in Colorado. Depending on the market, a gallon of milk can range anywhere from $2.99 to $4.29 per gallon. Whole milk is the highest in cost, and then it decreases as the butterfat decreases. The top sellers at Farm Crest rank as follows: 2%; skim; 1%; whole (anywhere between 3.25% to 3.35% butterfat); and extra rich whole, which is 3.8% butterfat or more. (“We also put a trial-size Lipitor on the neck of that,” Cleckler jokes.) The extra rich whole crowd ranges from moms who have kids who need more calories to older folks who prefer the rich taste.

“We also see a spike in whole and extra rich whole among the Hispanic population,” Cleckler says. “Any time we have a store in a neighborhood with a large Hispanic population, the whole milk sales go up about 50%.” To capitalize on that growing trend, the company recently introduced a new bi-lingual Farmer’s label.

Engendering loyalty
Since a “garden variety” Farm Crest store measuresabout 3,000 square feet, carrying all of that milk doesn’t leave a ton of legroomfor other packaged beverages.

“Where we run into difficulties is our alternative beverage, pop and water placement,” Cleckler says. “We have a 12-door set in most of our stores, so that becomes a challenge.”

Another space challenge was born out of Farm Crest’s own innovation.

“In the past year, we also have created single-trip plastic bottles,” Clecklersays “They are for those consumers who prefer that singleserve package but stilllove the taste of our milk.”

That new addition has enabled Farm Crest to introduce chocolate milk for the first time.

“We have literally thousands of customers who are addictedto our chocolatemilk,” Cleckler says. “In our chocolate milk, we use real vanilla and doublethe chocolate of what most dairies use. Among all three divisions, we sell tensof thousands of gallons of chocolate milk every week.”

Line extensions and new products aren’t the o
nly ways that Farm Crest tries to spur sales. The Farm Crest Milk Loyalty Card allows customers to collect “punches” for milk and other dairy items like butter, cheese and ice cream, as well as gasoline.

“There are different values based on what they’re purchasing,” Cleckler says. “They can redeem after 50 punches for a free gallon of milk. It’s a paper card, and we literally punch their little ‘F’ into the card.”

Cleckler is also fond of promotions linking milk and complementary items like cookies, snack cakes and cereal. Most times, milk promotions do very well. But there have been a few clunkers throughout the years.

“We had this whole root beer float idea that just tanked,” says Cleckler. “Itwas a two-liter bottle of root beer with a half-gallon of vanilla ice cream.It was horrible. We didn’t do well at all on that promotion and we’ve neverrepeated it. People like root beer floats, but perhaps they want people to make[the floats] for them.”

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