Yogurt Maker Acts on Its Commitment

AT Stonyfield Farm Inc., in Londonderry, N.H., the goal is to practice what management preaches.

What's being preached? To make top-quality, all-natural refrigerated and frozen yogurt and to support family farmers in New England by paying a small premium for their dairy products.

Stonyfield Farm's success in the hotly competitive yogurt market is seen by its executives as one proof that an environmentally and socially responsible businesses can be profitable. As part of this strategy, the company recycles 90 percent of its solid waste, contributes 10 percent of its pre-tax profits to nonprofit environmental organizations, and promotes career advancement for its employees.

``Our greatest contribution will be that we grew, and that we supported a lot of farmers and made it possible for them to survive and grow and innovate and cut their costs and become profitable, and that we influenced other food companies to do the same thing,'' says Gary Hirshberg, president of Stonyfield Farm.

Stonyfield Farm was founded in 1983 by Samuel Kaymen, the company's chairman, at Stonyfield Farm in Wilton, N.H. Mr. Kaymen launched the yogurt company with a borrowed $35,000, a recipe, and a few cows.

Today, Stonyfield claims to be the fastest-growing yogurt company in the nation. Its products are distributed coast to coast as well as in Britain, Sweden, and St. Petersburg, Russia. Sales have grown from $15.5 million for fiscal year 1993 to $22 million for fiscal year 1994. The company projects sales of $30 million for 1995.

Stonyfield has captured only about 2 percent of the nation's refrigerated yogurt market (8 percent in New England), which is dominated by Dannon, Yoplait, and Colombo. ``It took us a long time to become a national competitor, so I'd be surprised if they could do it overnight,'' says Becky Ryan, spokeswoman for Dannon, the nation's leading yogurt producer, with a 30 percent market share. Dannon also claims involvement with environmental causes.

Stonyfield has been recognized twice by Boston-based Inc. magazine for its contributions to American business. Recently, it was cited by the Council on Economic Priorities for supporting local farmers and actively pursuing companywide recycling.

The last four years have been a payback for the company's first eight years, when it never turned a profit. ``There were a whole host of decisions we made that were costly, but we always had this belief that eventually we would have enough consumers paying the marginal increase in price that we needed at a volume that would make this thing work,'' Mr. Hirshberg says.

``It was our blind commitment to a product that has never been compromised,'' he adds. For example, while most yogurt makers use sugar as a sweetener because it is cheap, Stonyfield sweetens its yogurt with fruit juice and uses a higher grade of milk than the competition, Hirshberg says.

Stonyfield's commitment to buy its milk from New England family farmers fortifies its mission. ``You can talk about restoring and protecting the environment, but at some point you have to really pick a place in that equation,'' Hirshberg says.

For these former environmental activists, the reason for supporting family farmers is clear. ``It's absolutely a given by observers on all sides of this debate that family farmers use less imputs,'' Hirshberg says, meaning that they use less pesticides and fertilizers and burn less fossil fuels. ``If you look over the horizon ... it's very easy to see that in 25 or 30 years ... we're going to need some solutions, and those solutions are not going to happen if family farmers are an extinct species.''

Since 1950, the United States has lost 3 million family farms, according to Stonyfield research. In New England, farms have dropped from 35,000 to fewer than 4,000 in the same period, the company says.

For the average consumer, Hirshberg admits that this is a rather refined argument. So, in recent years, the company has made an effort to broaden its mission. ``We feel that the power to change the way the world does business is in the hands of consumers,'' Hirshberg says. ``However, consumers need to be educated. Most consumers don't go into the supermarket thinking of it as an intellectual exercise.''

``So even on a simplistic level,'' he adds, ``we feel that it's important to reach consumers and make them aware that behind their choice is something either working to make the world better or make the world worse.''

Stonyfield does no commercial advertising, but it is the major underwriter for National Public Radio's ``Living on Earth'' series, Hirshberg says. It instituted an annual ``Mooers and Shakers Award,'' a prize that recognizes outstanding community service by elementary school children in New Hampshire. And to help consumers learn more about the obstacles family farmers face, the company organized an ``Adopt a Cow'' program.

Stonyfield also publishes a biannual newsletter called ``Moos From the Farm,'' that details environmental and cultural issues. Approximately 100,000 people receive the publication, Hirshberg sys.

According to Hirshberg, Stonyfield was the first company to pay a premium to its farmers not to use Bovine Growth Hormone (BGH), a synthetic hormone developed to increase the amount of milk a cow will produce. The company's rational is again in the name of family farming: Even a small increase in the milk supply will result in a price drop, which could put many more of the nation's family farmers out of business, Hirshberg says.

Although Stonyfield focuses much of its attention on marketing and social objectives, Hirshberg says it concentrates an equal amount of energy on an internal matter - its employees.

``Everything that we do - how we're structured, how they're paid, how our benefits are formulated, how much interfacing they get to have with me and other key managers - all of that is reflective of a goal of making them [our employees] as happy and as empowered and as involved as they want to be,'' he says.

For starters, Hirshberg says he has lunch with each of the company's 96 employees once a year. As an incentive, Stonyfield pays a percentage of its pre-tax profits to its employees. And any employee who has worked for Stonyfield for a minimum of two years can buy company stock.

What's next for this company? First, Stoneyfield will convert its entire facility into a low-emissions or zero-emissions facility, Hirshberg says. It will also convert all of the offices to 100 percent solar heat. In product development, the company is launching several new products, including a new frozen yogurt cookie sandwich.