TILLAMOOK, ORE. — A surge in demand for dairy staples has brought about “a lot of change in a short time” at Tillamook County Creamery Association, said Patrick Criteser, chief executive officer.
The 100-year-old dairy cooperative already has undergone dramatic changes in the last six years, expanding its consumer brand of cheese, ice cream, yogurt, sour cream and butter and beyond its Pacific Northwest roots. Since 2018, it has gained distribution in tens of thousands of grocery stores throughout the eastern United States.
This aggressive expansion in the grocery channel may have positioned Tillamook to better withstand the COVID-19 storm. Despite increased demand, dairy processors across the country have struggled to respond to a rapidly changing situation. With restaurants, schools and cafeterias being closed indefinitely, many have been forced to switch from wholesale foodservice markets to retail grocery stores. Short shelf lives have further compounded logistical headaches.
“Now is the time to consider a little extra culling of your herds,” Foremost Farms told its farmer-owners in a March 17 letter, noting that the ability to pick up and process dairy products could be compromised.
Several of the country’s largest dairy cooperatives have asked farmers to begin dumping product.
“That hasn't been a factor for us because of our large grocery business,” said Mr. Criteser said. “Those parts of the dairy business that were structured to serve food service have been hit really hard. It’s been tragic.”
Tillamook has managed to offset reductions in its foodservice segment, which only accounts for a small portion of its business, by repurposing product meant for foodservice into product for grocery retail.
“Retailers’ orientation has been to accommodate some of those adjustments,” Mr. Criteser said. “If you watch consumers walk out of a grocery store with six or seven packages of something, you realize that a larger pack size might meet their near-term needs better, and foodservice packaging tends to be larger. We've seen it and I've seen it with other categories, too.”
Tillamook’s two biggest businesses, ice cream and cheese, have been up around 50% in March and April. In both cases demand has skewed toward larger pack sizes and more storable formats, like block cheese over shredded and sliced cheese.
“I think it's a combination of people wanting to store more things in their refrigerators, but also maybe being more inclined to take the time to shred their own cheese, slice it and use it when cooking recipes,” Mr. Criteser said.
He added that while demand across the board has been significant, he’s yet to see any major disruptions in the supply chain.
“We’re certainly not out of the woods in terms of what challenges might present themselves, but I'm feeling really good about how we're delivering,” he said.
Mr. Criteser also is feeling good about the company’s first cream cheese product, which launched just before COVID-19 hit the United States.
“That launch timing was great because we got on the shelf, we got the authorizations we wanted,” he said. “We're getting a lot of trial because people are buying a lot of groceries.”
Tillamook’s next product launch, originally scheduled for the second quarter, likely will be delayed due to challenges in getting new product authorizations.
“We have some really quick new distribution authorizations on existing products,” Mr. Criteser said. “That’s a months and months, if not quarters and quarters, process normally.”