B.C. dairy invades Ontario market

The official opening earlier this month in Ontario of a dairy operation by b.c.'s Dairyworld Foods might well change the culture of the provincial dairy market.Jerry Duncan, Dairyworld's vice-president of marketing, says the plant in Brampton, just west of Toronto, has...

The official opening earlier this month in Ontario of a dairy operation by b.c.’s Dairyworld Foods might well change the culture of the provincial dairy market.

Jerry Duncan, Dairyworld’s vice-president of marketing, says the plant in Brampton, just west of Toronto, has the capacity to supply 15% of the Ontario fluid milk and cream market.

Although the Ontario operation is selling primarily to food service and smaller retail accounts, including Valdi Discount Foods, Duncan says the plant, built on the site of the former Flowerlea Dairy facility, was constructed with ‘room for growth.’

Burnaby-based Dairyworld Foods, with sales last year of $850 million and anticipated sales of $900 million in 1994, is Canada’s third-largest dairy behind Etobicoke, Ont.-based Ault Foods and Granby, Que.-based Agropur, co-operative agro-alimentaire.

The company makes fluid milk and cultured products, ice cream, frozen confections, juices and drinks under a dozen brand names, the most widely recognized of those being Dairyland, Nu-Maid and Alpha.

Duncan says the Brampton plant will make fluid milk and cream products under the Dairyland brand, and import yogurt, cottage cheese and sour cream products from Montreal-based Ultima Foods.

(Dairyworld is a 50% partner with Agropur in Ultima Foods, makers of Yoplait.)

Merger

Dairyworld is the result of a merger two years ago of three Western Canadian dairy co-operatives – operating as Alpha Milk Company of Red Deer, Alta., Nu-Maid Dairies of Edmonton, Alta. and Dairyland Foods of Burnaby.

Much of Dairyworld’s focus since that time has been on rationalizing its operations and consolidating its brands.

The company has closed 10 of its 24 plants, reduced the number of brands to 12 from 30, and slashed the number of skus to 2,500 from more than 6,500.

And, it recently adopted a universal logo – a woodblock cow – for its Dairyland, Alpha and Nu-Maid brands, with the long-term goal of phasing out the latter two.

As well, Dairyworld has spent what Duncan terms ‘a lot of money’ over the past two years on consumer research to understand the motivating factors in a purchase decision and to identify new marketing opportunities.

He says the company is now in a position to really start driving its business, and has recently started advertising a range of its products to Western Canadian consumers across a wide variety of media, including tv, radio, print and out-of-home.

For the time being, however, the company has no plans to advertise to Ontario consumers.

‘If we start getting market penetration, then advertising the brand makes a whole bunch of sense,’ Duncan says.

‘But if we don’t have the market penetration to support the consumer demand created by advertising, then there’s not much sense in doing it,’ he says.

Given the 65-year heritage associated with the Alpha and Nu-Maid names in Alberta, however, the transition to a single brand will not happen overnight.

Duncan says there is a lot of risk associated with such a move, and, as such, any move in that direction will be undertaken slowly and deliberately to avoid losing market share to the competition.

With its house now in order, the company can concentrate its efforts on its second major goal – to turn what has traditionally been a commodity business, driven by production and distribution, into one that is driven by the customer.

‘When you are dealing in the commodity end of the business, then the value-added perception at the consumer level is based on brand differentiation, quality, perception,’ Duncan says.

‘What’s different?’

‘Milk is milk, and price is price, and usually everybody’s the same price, so what makes yours any different?’ he asks.

‘So, we have really been focussing on the consumer understanding side of the business. What are the key motivators? What are the needs? What are the benefits?’

As for future plans, Duncan says Dairyworld wants to look beyond the dairy category.

‘We think we are in the food business, so there are a lot of other opportunities out there for us, given our ability to manufacture and distribute both frozen and refrigerated products across the country,’ he says.