Organic Growth: Mountainside Farms

As if the dynamics of a new generation entering a family business weren't complicated enough, a fifth generation dairy producer decided to produce milk from something other than cows. Cyrus Schwartz, part of the next generation at Elmhurst Dairy, wanted to get into organic milk made from soy. Schwartz started his own brand of organic dairy products – Mountainside Farms – as part of Elmhurst.

Elmhurst Dairy is a Queens-based dairy producer that operates out of a 15 acre plant. The dairy imports fresh milk exclusively from New York State farms and pasteurizes, homogenizes, packages and delivers milk to local grocers. It is one of the largest milk producers in the New York metro area and is 100% family owned. With a company so steeped in tradition, it seems that convincing the family, including Schwartz's father, Henry, the president of Elmhurst, to begin producing a new category of milk would be a challenge. But his father saw the potential in his son's idea.

A New Kind of Milk

After a period of research and development, Schwartz launched his organic division with its first product, ZenSoy Organic Soy Milk, in 1999. In 2000, ZenSoy Organic Soy Pudding was launched. The transition from processing cow's milk to milk made from soy extract was not easy. "When we first looked at soy milk it was a very small category and it wasn't a good-tasting product," says Schwartz. "The extract from the soy bean has a very 'beany' taste. We were looking to create a more neutral-tasting product and that took a few years of research and development. At the end of the process, even though we had improved the taste significantly, it still wasn't a very good product and we went away from it and focused on organic cow's milk."

However, two-and-a half years later, Schwartz turned his attention back to soy milk because he was able to outsource the soy extraction to a plant that produced better quality extract and better technology for processing the soy he had. "At the time, we had invested in a new processing system for regular milk and it turned out that it works better with soy milk," says Schwartz. "We bought it for other reasons, but we realized it took some of the 'beaniness' out of the soy milk."

A few years later, Schwartz found out that daries in Canada were developing a new category of organic milk that no one in the United States was producing. "The product was developed in Canada but no one was doing it in the US due to the capital investment this product required, as well as the marketing investment, PR and advertising required to create this category," says Schwartz. "Like most entrepreneurs, we were looking to develop a new category and be able to sell a new product with more for margin it."

Schwartz made the investment and launched UltraPure in 2006. This product was a new category of organic milk that utilizes an advanced filtration and clarification technology in addition to pasteurization to improve the purity of cow's milk. Schwartz knew that health-conscious consumers would buy the product, but he had trouble differentiating his product from the competition. Instead of competing on price, Schwartz created a more expensive product than traditional milk. He invested in research and development, and sophisticated organic testing and marketing.

First, he improved the product by investing in research to extend the shelf life of the milk. UltraPure has a 19-day shelf life while conventional milk typically lasts for 12 days. Second, he aimed to take advantage of the public's growing concern about hormones and antibiotics in milk. UltraPure is rbSTfree milk, which is not unique, but they also screen for more families of antibiotics than state or federal regulations require. "This is a costly step to do: we spend tens of thousands of dollars more each year for those extra tests," says Schwartz. "But it enables us to make an additional claim of purity."