It took a long
time – nearly
20 years – for
Stonyfield Farm
CEO Gary
Hirshberg to
succeed in
the yogurt
business, and
he’s the first
one to tell you
that he didn’t
manage to do
it until he
stumbled
through long
periods of trial
and error.
“We went through a very brutal nine year startup, and during that time we
lost one heck of a lot of money,” Hirshberg says. “We had a lot of missteps and false steps.”
That might be true, but now they band is playing Hirshberg’s song. What had been a
fledgling outgrowth of a small farm has now grown into a business with close to $200 million
in sales. But it’s Stonyfield Farms’ new product lines – a fast growing set of organic yogurt
smoothie drinks for adults and kids, as well as its longstanding milk business – that puts the
company solidly in two important beverage categories.
But things weren’t always smooth as milk at Stonyfield Farms. In fact, it the New Hampshire
native had to beg, during his own birthday party, for his friends to become consumer
advocates on his behalf and demand his products at the Bread & Circus (now Whole Foods)
in Cambridge, Mass. But once he gained shelf space in that natural foods Goliath, things at
Stonyfield started (ahem) moo-ving.
But now, having ridden the growth of his yogurt line straight through the natural and
Whole Foods channels into mainstream grocery stores in all 50 states, Hirshberg’s yogurt and
yogurt drinks are well-recognized standard-bearers for organic consumer products that have
become integrated across all channels. With Group Danone – Dannon, to you and me -- taking
a majority stake in the company in 2004, Hirshberg has finally found himself with the
money, influence, and legitimacy to be not just an entrepreneur in the organic yogurt business,
but also as a consigliere to those who operate companies outside of his core category.
And that means that the benefit of Hirshberg’s experience is now being injected into a pair
of organic beverage companies, rising-star RTD tea producer Honest Tea, and a beer startup
called Peak Organic, which is run by a former Stonyfield Farm employee, Jon Cadoux.
“Gary’s a great guy to call on,” Cadoux says. “He’s my uncle through marriage, but at
Stonyfield, he sure made me give out a lot of beer. He made me learn it all.”
Hirshberg knows that it was his energy and enthusiasm that helped turn organics into
a still-growing, $13 billion-per-year industry, and he says he believes strongly in products
like beer – and other beverages – as avenues for increasing organic consumption patterns.
But beyond that, he feels strongly that organics are going to be a prime mover when it
comes to the beverage industry itself, and that smart retailers will recognize that sooner
rather than later, before “organic” becomes as commonplace on a label as “fat-free,” and
they’re left behind.
“I believe there’s a lot of people who would be interested in these products because they
taste great and they’re relaxing,” he says of products like Peak Organic. “And there’s a growing
number of people that would relax even more with the knowledge that what they’re using to
drown their sorrows with is non-toxic.”
Beverage Spectrum interviewed Hirshberg in his office in Manchester, N.H., to learn his
thoughts about the beverage business, as well as his own beverage-oriented goals.
Beverage Spectrum: What are
your priorities with regard to the
beverage business?
Gary Hirshberg: Well, really, I’m
just now figuring out that I’m actually
in the beverage business. But
anywhere in the world – outside of
the United States – that you could
have traveled in the last three
decades, you would have found
a yogurt drink situated next to
the spoonable yogurt. And it was
always an enigma to us – and to
everybody else – why that couldn’t
be the case here.
We never entered the yogurt drink
business – at least intentionally.
Sometimes when we had bad runs
of refrigerated yogurt it would
come out as liquid. (laughs) It
tasted very good but we didn’t
want to market it to people with a
spoon to slurp it out.
But we were always working on a
recipe. To be precise, from about
1997 to about 2000, we were hard
at work on it, because we knew
that time would eventually come.
BS: How were you so sure?
GH: Yogurt is one of those bizarre
cases where if you want to see
what’s coming here in the U.S.,
you go to Europe. They have
about a 300-year head start on us
in terms of understanding probiotics
or yogurts or healthy dairy
in general. If you’re in Paris, and
you go into a Carrefour [market],
you’ll see about 100 meters of
yogurt shelf space, compared
to the 10 meters we might have
in a typical supermarket here.
And in that space, there’s all kind
of variety, including plenty of
drinks. And per capita consumption
of yogurt has been on the
rise here so much.
So we just figured that drinks
would sooner or later emerge.
You started to have yogurt showing
up in tubes, you had yogurt
showing up for babies, like our
YoBaby, small cups, large cups,
different formats.
The funniest thing was, in one
year, suddenly, Yoplait, Dannon
and Stonyfield, they all had drinks
within about a month and a half
of each other. There was no communication
between the companies,
but there was like this tipping
point. All three of us launched,
and suddenly, yogurt drinks
had arrived.
Now, one of those, Nouriche,
Yoplait’s, has since bit the dust,
but you know the others. Dannon’s
Light and Fit Smoothie has
done incredibly, our smoothie has
been a rocket ship, and now our
own light smoothie is up about
35 percent versus last month. The
point is that I’ve been in business
for 24 years, and I’ve been in the
yogurt drink business for only
about four years.
So I keep thinking I’m in the
yogurt business, but it’s dawning
on me that people are choosing
this product as a drink against
an energy drink, a soda, milk,
or water.