Oakhurst Dairy

views updated

Oakhurst Dairy

364 Forest Avenue
Portland, Maine 04101
U.S.A.
Telephone: (207) 772-7468
Fax: (207) 874-0714
Web site: http://www.oakhurstdairy.com

Private Company
Incorporated: 1921
Employees: 240
Sales: $85 million (2003 est.)
NAIC: 311511 Fluid Milk Manufacturing; 311513 Cheese Manufacturing

Oakhurst Dairy, the largest dairy in Maine and the largest independent dairy in northern New England, was founded in 1921 and has been managed by the same family for three generations. Oakhurst sells branded and private label milk, cottage cheese, dairy creams, buttermilk, juices, and flavored specialty milks to retail and food service customers in Maine, New Hampshire, Vermont, Massachusetts, and upstate New York. Between 2000 and 2001 Oakhurst grew between 20 percent and 30 percent, helping the family-run business remain competitive with larger operations. In July 2003, Monsanto Corporation, the manufacturer of the only bovine artificial growth hormone available in the United States, sued Oakhurst for deceptive business practices for the dairy's labeling, which states on their milk products: "Our Farmers' Pledge: No Artificial Growth Hormones." The lawsuit became a touchstone of debate on both the use of artificial growth hormones and the right of commercial free speech.

Origins as a Family Business

Oakhurst Dairy traces its roots to a dairy business begun by Arthur Leadbetter in Portland, Maine, in 1902. By 1918 Leadbetter had changed the name of his dairy to Oakhurst, and two years later, Oakhurst employed Stanley T. Bennett to manage the dairy. Bennett had started his career in 1913 as a driver and salesman for the Portland business Cushman Bakery. Bennett's success in sales helped him gain the attention of Cushman Bakery president, Nathan Cushman. In 1921, Cushman financed the purchase of Oakhurst for Bennett; Oakhurst Dairy was incorporated under the Cushman family and Bennett was named manager of the business. A year later, Bennett moved the dairy, which had been located near a grove of oak trees on Woodford Street, to a new location on Forest Avenue. At that time, there were 80 dairies in Portland licensed to sell milk.

When Stan Bennett began shaping the direction of Oakhurst, milk was transported by two horse-drawn milk wagons along two delivery routes, and sales were centralized. At that time, during the early 1920s, dairy products had a short shelf life, so milk had to be delivered to the customer the same day that it was bottled. Oakhurst carved its niche in the Portland area by producing high-quality milk. Oakhurst maintained its standards of quality through frequent farm inspections and hygienic plant conditions. Two years after Bennett took over operation of Oakhurst, the company had increased its number of routes to 12.

By 1929 Oakhurst had expanded its operations by adding a branch plant in Bath, Maine, and the company maintained 26 retail routes as well as two wholesale routes. Oakhurst invested in machinery to maintain a high-level of efficiency and sanitation in its plants. In 1933 the company employed 14 people in its plants and had 33 deliverymen who, through Bennett's initiation, drove trucks with their own names painted on the sides. Beginning in 1933, Oakhurst was the first dairy in the United States to require that all milk they purchased be tested for tuberculin.

During the 1940s Oakhurst grew its wholesale business, selling to such grocers as IGA and A&P, as well as to Maine General Hospital and the area's public schools. At this point, Oakhurst was the largest dairy in Portland and its environs. Since 1921, Stan Bennett had been buying control of Oakhurst from the Cushman family, which still maintained an ownership interest in the company. By 1941 the Bennett family had bought all stock interest in Oakhurst.

Stanley Bennett's son, Donald Bennett, graduated from the Rensselaer Polytechnic Institute with an architectural engineering degree in 1935. Don entered the family business in 1940, working every position at the dairy until he joined the Navy during World War II and served in the Pacific. Following his return after the war's end, Don once again joined his father and began assuming management responsibilities. After his father died in 1953, Don Bennett was named president of Oakhurst.

1950s–60s: New Leadership in a New Era

In 1954 Oakhurst completed a major plant expansion and renovation, designed in part by Donald Bennett. At the time, the plant was recognized for its state-of-the-art facilities and was featured in national publications. Following the expansion, Oakhurst tripled the plant's original size and increased production capacity to 40,000 quarts of milk per day.

Oakhurst has been active in the Maine dairy industry for decades. Stan Bennett had been a founding member of the Maine Milk Commission. At the onset, the Maine Milk Commission proposed minimum pricing for milk as a way to protect the Maine dairy industry. In 1954, 17 states carried milk control laws as a means to help small farmers stay in business.

Donald Bennett continued his father's interest in the Maine dairy industry, serving on the Maine Milk Commission, the Maine Milk Dealers Association as president, and the Maine Milk Dairy Council as a founding director. Additionally, Don Bennett was a founding member of the National Dairy Council, and he also served as director of the Milk Industry Foundation from 1961–67.

The make-up of Maine's dairy industry changed in the 1970s, and, as with other dairy processors, Oakhurst was forced to make changes to remain competitive. One major change was eliminating home delivery of milk to small customers in January 1976. The company maintained they could no longer make a profit delivering to residential customers with the increased price of gasoline and operating costs. Two years earlier, Oakhurst had added other products, such as bread, eggs, and cheese, to their home delivery line to increase route sales, but the profit margin remained low. By mid-1976, Oakhurst conceded it would eliminate all home delivery service after July 28. In addition to the high gasoline prices, the elimination of glass containers had also endangered home delivery.

In 1975 the Maine legislature revamped its Maine Milk Commission so that it no longer had any members who were directly involved in the dairy industry. New mandates from the Commission, which required processors to pay dairy farmers two cents more per quart yet lowered the minimum retail price two cents on the gallon, hurt dairy processors across Maine and caused many dairies to close. Through the direction of Don Bennett, Oakhurst continued to grow and emerged as the leading dairy processor in Maine by the late 1970s.

1970s–90s: Acquisitions, Quality Standards, and Marketing

Donald Bennett's sons, Stanley T. Bennett II and William P. Bennett, began working at Oakhurst in 1973 and 1975, respectively. Daughter Althea Bennett Allen entered the family business in 1981. Don Bennett retired as president in 1983 but would remain chairman of the board until his death in 1999. Meanwhile, Stanley T. Bennett II became Oakhurst's president, continuing the company's focus on quality and integrity.

During the 1970s and 1980s Oakhurst increased its geographic range by acquiring many small, independent dairy processors throughout Maine, including Sanford Dairy in 1977, Smiley's Dairy in 1983, and Gifford's Dairy in 1983, among others. One independent operation, Fitzpatrick Dairy, forced Oakhurst to court in an antitrust lawsuit filed in 1988. Judging in favor of Fitzpatrick Dairy, James Fitzpatrick, the dairy's former owner, was awarded $1.9 million in 1990.

From the company's beginnings in 1921, the Bennett family members who guided the business maintained exceptional standards for quality, standards that helped distinguish Oakhurst Dairy from its competitors. The founder's grandson, Stan Bennett, explained in Oakhurst Dairy: The Natural Goodness of Maine, "Our family has always been fanatical about the level of quality of our products. We buy from the highest caliber farms, and we keep our plant cooler and cleaner than others. Our standards for bacteria-counts and butterfat level, along with all other objective criteria, are always higher than government standards and higher than competitive standards."

Oakhurst management insisted that the quality of the product was only as good as the quality of the farms from which they purchased their milk. Oakhurst carried out regular, thorough inspections of all supply farms and began giving out Oakhurst Annual Quality Awards to those dairy farmers who produced the best quality milk. Oakhurst also rewarded its farmers by paying more than the farm-to-dairy price. Dating back to 1953 Oakhurst was the first dairy in Maine to install an on-site laboratory for quality testing. Over the years Oakhurst consistently scored high marks from the U.S. Food and Drug Administration (FDA) for compliance ratings, with consecutive perfect ratings from 1995 to 2001. In 2002 Oakhurst became one of the first dairies in the United States to voluntarily use a new FDA food-safety program called Hazard Analysis of Critical Control Points (HACCP). Bennett claimed in the Portland Press Herald, "HACCP provides a daily window into the food-safety process. It's just a better system for ensuring product quality and freshness."

Oakhurst built its reputation on high-quality products and leveraged this reputation through print, radio, and television advertising, spending close to two percent of sales on advertising, public relations, and community involvement. The emphasis for its ad campaigns, which often featured members of the Bennett family, always stressed a premium image that helped Oakhurst establish control of 75 percent of branded milk sales in its core market area in 2000.

Company Perspectives:

The company's mission is to be the leader throughout New England in the dairy industry by providing our customers with the highest quality dairy and related food products available; providing a safe and positive work place for our staff; being a good corporate citizen in our contributions to the communities we service, and to our environment; being profitable, and providing a competitive return on investments to our owners.

In addition to advertising efforts, Oakhurst built its brand presence through active community involvement and contributions to non-profit organizations that benefitted child welfare, education, and the environment. Stan Bennett asserted in Dairy Field in 2000 that "We have tried to position ourselves as not only the quality leader in the industry, but also as the environmental leader of the dairy companies in the region with the greatest corporate conscience." In the Casco Bay Weekly, Bennett attributed the company's interest in the environment to good business, noting that "Improving the environment here in Maine has a direct effect on maintaining the quality of life that we all enjoy so much in this state. Anything that affects the environment affects the cows that produce our milk, so we're vitally interested in doing everything we can to keep the quality level very high." Oakhurst received numerous community and industry awards, including the Eagle Feather Award in 1998 from the Maine Businesses for Social Responsibility, the Environmental Protection Agency's Environmental Merit Award in 1999, and the Vendor of the Year in 2001 from the Maine State Grocers Association.

In March 1994 in a letter to the editor of the Portland Press Herald, Stan Bennett publicly announced that Oakhurst Dairy was opposed to the use of artificial growth hormones in dairy cows. Bennett asserted that the company received written agreements from all 70 of its dairy farmers that they would not use artificial growth hormones. Farmers continued to provide notarized affidavits every six months verifying they have not used growth hormones on their cows.

In 2000, in response to consumer concerns over the use of artificial growth hormones, Oakhurst began labeling its milk products with the statement: "Our Farmers' Pledge: No Artificial Growth Hormones." The label distinguished Oakhurst products from others on the market, and sales rose 10 percent each year between 2000 and 2003.

In July 2003 Monsanto Corporation, a biotechnology giant headquartered in St. Louis, Missouri, sued Oakhurst Dairy over the company's labeling. Previously, in 1994, Monsanto had settled lawsuits out of court with a Texas dairy and an Illinois dairy on similar grounds after the dairies agreed to change their labels. Monsanto, which produced Posilac, the only bovine growth hormone (BGH) in the United States, claimed that Oakhurst's label misled consumers in suggesting that Oakhurst's products are safer than products that contained Posilac. Although the FDA approved BGH use in 1993 in the United States, both Canada and the European Union banned its use. There was no scientific evidence to suggest that products with BGH were any different from those without. Still, Bennett maintained in the New York Times that "We don't feel we need to remove that label. We ought to have the right to let people know what is and is not in our milk." Similar claims on other hormone-free products were allowed when they also included a qualifying statement that there was no difference between milk from BGH-treated and untreated cows. Oakhurst acknowledged in a statement on the Monsanto lawsuit, "While we make no claims regarding the science of artificial growth hormones, we feel strongly that keeping our customers fully informed is the right thing to do."

The lawsuit not only raised questions over the widespread use of genetically altered food, it also elicited concerns over commercial free-speech. Ralph Nader, consumer advocate and Green Party presidential candidate in 2000, joined the debate when he announced he would provide free legal assistance through his foundation that supported freedom of speech. Oakhurst also gained strong support worldwide through e-mails, letters, and phone calls, with some people even sending checks, which Oakhurst returned, to help pay legal costs.

Many observers suggested that the lawsuit represented a David versus Goliath battle, pitting Oakhurst with $85 million in sales against Monsanto with $4.7 billion in sales. Bennett stated in the Portland Press Herald, "When a company [Monsanto's] size brings a lawsuit against a little company like ours, sure I'm concerned, because who knows how much it will cost to litigate. But we feel strongly that we're doing the right thing." The trial date was originally scheduled for January 2004, but the two companies entered into settlement agreements just prior, so whether David and Goliath would ever actually do battle remained to be seen.

Key Dates:

1902:: Arthur Leadbetter establishes a dairy business in Portland, Maine.
1918:: Leadbetter's dairy name changes to Oakhurst.
1920:: Stanley T. Bennett is made manager of Oakhurst.
1921:: Nathan Cushman buys Oakhurst and incorporates company as Oakhurst Dairy; Bennett begins buying shares, becoming president and achieving full ownership by 1940s.
1922:: Oakhurst moves plant to new building on Forest Avenue in Portland.
1929:: Oakhurst opens a branch plant in Bath, Maine.
1953:: Stanley's son, Donald H. Bennett, assumes role of company president.
1954:: Company expands plant to more than triple the original size.
1970:: Oakhurst's first television advertisements air.
1974:: The Bath plant closes.
1976:: Oakhurst discontinues its home delivery service.
1977:: Oakhurst purchases assets of Sanford Dairy in Sanford, Maine.
1983:: Stanley T. Bennett II succeeds his father as president; William P. Bennett assumes role of vice-president of operations and Althea Bennett Allen is made customer service manager.
1992:: Oakhurst converts all trucks and trailers in fleet to use environmentally friendly non-CFC refrigerants.
1994:: Bennett publicly states Oakhurst's opposition to the use of artificial growth hormones.
1999:: Environmental Protection Agency gives Oakhurst an Environmental Merit Award.
2000:: Oakhurst extends retail sales to New York state.
2001:: Oakhurst celebrates its 80th year of operation.