Wells’ Dairy, Inc.

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Wells’ Dairy, Inc.

1 Blue Bunny Drive
Le Mars, Iowa 51031
U.S.A.
Telephone: (712) 546-4000
Fax: (712) 546-1782
Web site: http://www.bluebunny.com

Private Company
Incorporated: 1917
Employees: 2,200
Sales: $530 million (1999 est.)
NAIC: 311520 Ice Cream and Frozen Dessert Manufacturing

Wells’ Dairy, Inc. is the nation’s largest family-owned dairy and ice cream company. Purchased at supermarkets, convenience stores, and vending machines, products with the Wells Blue Bunny logo include milk, ice cream, sherbert, frozen and fresh yogurt, sour cream, juice, cottage cheese, drumsticks, ice cream sandwiches, and treats such as Mickey Mouse bars, Mississippi Mud, Health Smart, The Champ, Bomb Pops, Pink Panther, and Cyberbyte. The company’s milk and other dairy products are sold in Iowa, Nebraska, South Dakota, Minnesota, Missouri, Arkansas, Kansas, Oklahoma, Wisconsin, Illinois, and Indiana. Wells Blue Bunny Ice Cream and related items are sold in all 50 states and 30 foreign countries. The company makes not only its brand-name products but also produces ice cream and other items for Con-Agra, Pillsbury’s Haagen-Dazs line, General Mills, Weight Watchers, and Walt Disney Company.

Origins As an Iowa Family Business

Though not incorporated until 1977, Wells’ Dairy traces its origins back much further. The Wells family left Chicago at the turn of the 20th century to take advantage of federal homesteading laws allowing a person to own 160 acres of federal land after living on it, or “proving it up,” for five years. In 1905 the family moved to South Dakota, where they were instrumental in founding the community of Wellsburg. In 1911 a terrible drought prompted the family to move again.

Fred Hooker Wells, Jr., one of the sons who had left Chicago with his parents, and his wife Miriam, decided to head back to Chicago. However, they ran out of adequate funds in Le Mars, Iowa, and decided to stay in that small northwestern Iowa town. Fred Wells, Jr., began raising hogs, an operation facilitated by a railroad line from Le Mars to the packing yards in Chicago. When cholera killed the hogs, Wells turned to another option.

Wells had gained some dairy experience back in Chicago, and he next decided to start a business delivering milk. On October 24, 1913, he signed a contract with Ray Bowers, who sold Wells a horse, a milk wagon, and a few milk cans and bottles. Bowers also agreed to sell Wells the milk he produced and not deliver milk himself in the same territory for five years.

All Wells family members helped in the dairy. Miriam Wells, for example, bottled the milk, and her sons helped their father deliver it to Le Mars residents. In 1918 they were able to construct a small building for business use, next to their home. The business continued to grow in the booming 1920s. During this time, the family also began making its own ice cream that was pasteurized before being frozen.

In the late 1920s the family established a plant in Sioux City, Iowa, with the help of Robert Harris and A. Paige, two employees who each invested $5,000 in the new facility. Harry Cole Wells, the brother of Fred Wells, Jr., moved from Doland, South Dakota, to manage the Sioux City business. In 1929 Fairmont Creamery bought the Wells Dairy plant in Sioux City, and the Le Mars firm agreed not to sell its products in the Sioux City region for the next five years.

Challenging the Competitors in the 1930s

In 1934 Wells Dairy resumed its Sioux City sales after the Fairmont agreement ended. The firm also expanded to smaller communities in northwest Iowa, including Remsen, Cherokee, Akron, Craig, Rock Valley, Brunsville, and Maurice. The growing firm not only challenged Fairmont but also upset members of the Farm Holiday Association. Wells Dairy continued to buy milk as prices declined to less than 25 cents a gallon, while the Association tried to get everyone to dump their milk to protest such low prices. In one episode in 1932 Association members threw rocks at a Wells Dairy vehicle carrying cans of milk. The Wells truck broke through an Association roadblock in what the family later called its historic “midnight ride.”

During the Great Depression, Wells Dairy sponsored a con-test for a new logo and name for its increasingly popular ice cream. Inspired by his son’s love of a blue bunny he had seen at Easter in a department store window, a Sioux City Journal artist named George Vanden Brink won $25 for the original Blue Bunny logo.

In 1936 the dairy added its first continuous ice cream freezer that produced 150 gallons per hour. The company also hired a few new employees as its business slowly expanded. By this time, a second generation of the Wells family began making major contributions to the business. For example, Roy Wells began serving as the Wells Dairy general and production man-ager, while Harry Lee “Mike” Wells started a route to deliver milk in Sioux City.

During both good and bad times, the Wells family and its small business paid cash and refused to incur debt. Later generations would maintain that this fiscal conservatism helped provide the foundation for a successful long-term operation.

During World War II, the Wells family continued to run the dairy, with some of the sons exempt from military duty because they worked in the essential food industry. The family also worked to improve the dairy industry as a whole. For example, in January 1944 the Association of Ice Cream Manufacturers of Iowa elected Roy Wells to serve as its new president.

Postwar Developments

After Fred H. Wells, Jr., died in 1954, his sons Harold, Mike, Roy, and Fay, and their cousin Fred D. Wells, son of Harry Cole Wells, ran the family business as a partnership. Meanwhile, new facilities were added in the postwar period. For example, the main part of what the company would call the North Plant was built in Le Mars in the 1950s for the manufacture of ice cream products. In 1963 the company constructed its Le Mars Milk Plant. The family retained ownership and management of the business when it was incorporated under Iowa law in 1977 as Wells’ Dairy, Inc.

The newly incorporated business expanded in the 1980s, a decade marked by phenomenal growth of the American economy and the addition of millions of new jobs. New corporate offices were added in 1980, and Wells’ Dairy built new facili-ties for its growing fleet of trucks used to deliver milk around Iowa and nearby states. In 1983 Wells’ Dairy purchased an Omaha plant. After being remodeled, the Omaha plant processed milk, yogurt, and fruit juice.

In the mid-1980s the firm’s North Plant in Le Mars was enlarged through the purchase of five adjacent lots. New production lines, a mix department, and a high-rise freezer helped the company double the North Plant’s capability. When completed, the expanded plant covered the equivalent of one city block, with its first floor taking up 109,000 square feet and its second floor comprising 44,000 square feet. Meanwhile, under the supervision of Doug Wells, a grandson of founder Fred Wells, Jr., a new quality control department was organized to monitor the firm’s plants in both Le Mars and Omaha. The company in the late 1980s also added a Central Receiving Warehouse and a Technical Center.

The 1990s and Beyond

When the 1990s began, the company distributed its products in 27 states and employed over 1,000 individuals. Even more growth was on the horizon. In 1991 competitor Merritt Foods went out of business, and Wells’ Dairy bought its assets and the rights to sell its products, including the frozen confection known as the Bomb Pop, originated by James S. Merritt and Doc Abernathy back in 1955. Wells’ Dairy through its acquisition of Merritt Foods entered the vending business for the first time.

In 1991, with its business expanding, Wells’ Dairy purchased 112 acres south of Le Mars where it built its new South Plant. The facility was described as “A duplication of the North Plant, but larger, faster,” by David Wells, grandson of founder Fred Wells, Jr., in the company history The Wells Spring. “Basically we do the same thing at both plants, except for a few items,” he added.

The South Plant was designed to produce a new low-fat, low-sodium dessert created jointly by Wells’ Dairy and Omaha’s ConAgra, as well as to expand Wells ice cream production by some 20 million gallons annually. The new plant was built with the aid of a $600,000 forgivable loan to Wells’ Dairy from the Iowa Department of Economic Development. Since the new plant planned to employ some 245 new workers, government officials offered the incentive to promote Iowa’s economic health. However, some critics referred to the loan derisively as a form of corporate welfare.

South Plant production crews made their first ice cream bars on July 2, 1992, using a state-of-the-art Glacier Omni 3000 ice cream machine. In the 1990s that plant was expanded to include 21 production lines. The company also built an automated storage and retrieval system that stored up to 2.8 million cubic feet of ice cream products.

Company Perspectives

Part of our success at Wells’ Dairy is that we take into account the work/life balance of our employees; that is, we give consideration to issues that affect men and women with family responsibilities. In addition, we put a premium on innovation and results rather than formal processes. This kind of focus on people and innovation has given us dynamic, productive employees. We continually benefit from the successful pioneering of the people at Wells’.

Legal entanglements cropped up for Wells’ Dairy in the late 1990s. In 1997 the company pled guilty to federal charges of fixing milk prices in contracts with Minnesota, South Dakota, and Iowa school districts from 1986 to 1992. In this case, heard in the U.S. District Court in St. Paul, the dairy accepted a $1 million criminal fine and agreed to cooperate with investigations into price fixing in the dairy industry. The company also agreed to negotiate restitution settlements with the school districts, while prosecutors agreed not to bring criminal charges against any company leaders.

Based on its 1999 revenues of $530 million, Wells’ Dairy was ranked as number 465 in Forbes magazine’s July 6, 2000 listing of the top 500 private companies. New products and marketing methods were a priority. The company replaced its “funny bunny” logo, prominent on the Blue Bunny ice cream label, with a classic rabbit image. Pursuing a more sophisticated image, the company recruited television actor Kelsey Grammar to perform in eight radio spots. Grammar, best known for his role as psychiatrist Frasier Crane on the television show “Frasier,” projected an epicurean persona and had a distinct voice immediately recognizable to many Americans.

Associations with large food conglomerates continued in the late 1990s as well. In January 1999 Pillsbury closed a Woodbridge, New Jersey, plant that made Haagen-Dazs ice cream and then in February contracted with Wells’ Dairy to manufacture Haagen-Dazs pint and bulk products, as well as that brand’s ice cream, sorbet, and chocolate-coated ice cream bars. Prompted by the lucrative Haagen-Dazs contract, Wells Dairy began a 120,000-square-foot addition to its South Plant in Le Mars. When completed, the plant would comprise some 550,000 square feet. However, on March 27,1999, an explosion shut down the South Plant for two months.

Wells Dairy also faced the challenge of acquiring enough milk to meet demand for its growing product line and sales. Although it did ship in milk from as far away as California, the company preferred to purchase its perishable milk supplies within 150 miles of Le Mars. “The closer to Le Mars, the better,” said Dan Wells, senior vice-president and treasurer of Wells’ Dairy, in the January 13, 1999 Omaha World-Herald.

In 1999 dairy farmers near Le Mars had about 65,000 dairy cattle that supplied Wells’ Dairy with its main raw material, but the company estimated that in two or three years it would need milk from another 30,000 to 60,000 dairy cattle. Thus Wells’ Dairy did all it could to promote the local dairy industry, including working with accountants to develop a business plan to show prospective dairy farmers. Still, Dan Wells maintained that his family was not interested in owning dairy farms.

The company in 1999 operated various facilities in Le Mars, Omaha, El Paso, Phoenix, and Kansas City, Missouri. Through co-packer agreements, Wells’ Dairy products were sold in all 50 states and in 30 nations, including Indonesia, Mexico, Russia, Japan, Singapore, and Saudi Arabia. About 2,200 individuals worked for Wells’ Dairy; some drove and maintained the company’s 200 semitrailer trucks, while others produced milk, sour cream, cottage cheese, and over 2,000 ice cream products.

In 2000, Wells’ Dairy remained a family-owned and operated business. Fay Wells served as the chief executive officer, with Gary Wells as the executive vice-president, Dan Wells as senior vice-president and treasurer, David Wells as vice-president of engineering, and Mike Wells as vice-president of sales and transportation. To share its history and promote its business, Wells’ Dairy in March 2000 opened the new Ice Cream Capital of the World Visitor Center also sponsored by the Le Mars Chamber of Commerce and local businesses. In 1994 the Iowa legislature had proclaimed Le Mars to be the Ice Cream Capital of the World because it produced the most ice cream in one location. The Visitor Center presented videos of the company’s history and the history of ice cream, first made in the 16th century. A restored delivery truck used by many dairies in the 1930s sat in the museum’s parking lot. After viewing interactive computer programs and a mock-up of an ice cream plant, visitors were invited to eat ice cream at an old-fashioned soda fountain and were given the chance to buy souvenirs. By June 2000 over 13,000 persons had visited this unique museum to learn of the legacy of the Wells family and its role in making ice cream the quintessential American treat.

Principal Competitors

Prairie Farms Dairy Inc.; Dreyer’s Grand Ice Cream, Inc.; Schwan’s Sales Enterprises, Inc.; Ben & Jerry’s Homemade, Inc.; Nestle S.A.

Key Dates

1913:: Fred Hooker Wells, Jr., starts delivering milk in Le Mars, Iowa.
1920s:: Family begins delivering ice cream in Sioux City, Iowa.
1935:: The business adopts the “Blue Bunny” name for its ice cream.
1950s:: Main ice cream plant is constructed in Le Mars.
1963:: The company builds its Le Mars Milk Plant.
1977:: Wells’ Dairy, Inc. is incorporated.
1980:: New corporate office is built in Le Mars.
1991:: Wells’ Dairy acquires Merritt Foods.
1994:: The Iowa legislature declares Le Mars to be the Ice Cream Capital of the World.
2000:: Company opens a new museum/visitor center in Le Mars.