From Guernseys to Buttermilk — Local, Premium Dairy — Where Is It Headed?
Our Conversation With Dan Horan, Chief Executive Officer of Five Acre Farms
The pandemic intensified interest in local products and food production because consumers gained firsthand knowledge of the fragility of the food supply chain and risks posed to food industry workers in diverse settings ranging from supermarkets to restaurants to food processing. Even prior to the pandemic, consumers idealized “local” conceptually as speaking to a number of factors they value, of which distance (being “close by”) is only one key element — their visions of local also include quality and sustainability as central themes. To find out how the pandemic influenced demand for local, premium dairy products and what the future for products marketed with local distinctions might be, we spoke to Dan Horan, Chief Executive Officer of Five Acre Farms, a leading marketer of local, premium dairy, egg and apple products in the New York region since 2010.
The Hartman Group (THG): On the topic of local, with so much leeway on how food culture defines the term these days, can you say a little about how your definition of local as "everything sourced and produced within 275 miles" came about, and do you think having such a carefully delineated definition helps in terms of how you market to consumers?
Dan: I first started thinking about “local” and how powerful a word it was to people in general and consumers specifically. “That’s my local bar, my farm stand, my barber, my hairdresser, school, supermarket… fill in the blanks...” It resonates across all levels of society. I knew that people felt the same way about their food. Because we started in the Northeast, I thought 275–300 miles would capture the spirit of the word. In other regions, it may be more. It may be less. We wanted to start with a number that sounded plausible and then tell consumers the specific farm we were sourcing from and then let them decide if they agreed. Happily, most did!
The Hartman Group (THG): We've been tracking considerable rising consumer interest in local for years now, and today that's moving into broadened interest in aspects of community, regenerative agriculture, idyllic notions of farming and interest in farmers themselves. We find that the pandemic has made us all aware of weaknesses in large-scale supply chains, and we've certainly seen consumers paying even closer attention to local businesses — ranging from supermarkets to local food producers and restaurants. Despite loose definitions around "local," they generally associate premium attributes with local products and local producers. Do you find your marketing, which embraces many of these consumer interests, is resonating more strongly today than, say, five years ago?
Dan: Local is a trend that is only gaining steam. The key is to differentiate yourself and prevent the “greenwashers” from diluting the word. Quality and supply-chain transparency go a long way towards accomplishing that. Local will also gain strength if people don’t become too dogmatic about it and resist the temptation to make everything local. I love bananas, but they don’t grow here. Trying to do so seems like misplaced energy. Loving local does not mean that you don’t appreciate or want national and international foods. It just means you recognize local food has a valuable place in your kitchen. It means you recognize the value farmers can play in your community.
The Hartman Group (THG): And, somewhat linked to the previous question but linked to trends that started prior to the pandemic: What about milk itself — generally, Americans are drinking less conventional milk, and it seems plant-based options have exploded into the market. How does flattening demand for conventional milk compare to demand for milk that is marketed as local?
Dan: Even though fluid milk retail sales have been dropping, the demand for high-quality whole local milk has been increasing. Interestingly, as fluid sales have slipped, overall milk production has not because cheese, yogurt, sour cream and other dairy products have picked up the slack. As for milk substitutes, a glass of whole milk is more nutritious than a glass of any plant-based beverage by a lot. In order to match milk’s nutrition, the plant-based beverages need to put in additives and heavily process, even add sugars. For those with real allergies, there isn’t a choice, but to the huge majority of the population, a glass of milk is unbeatable ounce for ounce. I still believe that taste, quality, nutrition and where things come from still matter to people. On the other hand, plant-based drinks have clearly filled a need for people. I’m fine with that.
The Hartman Group (THG): Related, it seems there are quality markers, like pasteurization techniques or breed of cow — like Jersey or Guernsey — that are more strongly associated with local or regional dairy. Do you see these types of quality markers being able to potentially scale up for mainstream demand?
Dan: Absolutely. Higher butterfat and better farming practices are difficult ideas to market, but they make a big difference in how milk tastes. And there is no question that this is scalable throughout the country. Every region has good farms with better practices that translate into better products. Taste and quality are scalable throughout the country. It’s the single greatest opportunity to stop the decline of the American family dairy farm. Smaller operations have to distinguish themselves through quality. Americans (and the world) love community. Family farms say community; they are meaningful contributors to their local economy. High-quality milk is currently poorly marketed in general.
The Hartman Group (THG): Similarly, we’ve been seeing rising consumer interest in purchasing products that prioritize animal welfare. Do you see certified humane or similar certifying bodies as helping the cause, or are there other ways to convey animal wellness and welfare in the dairy space?
Dan: People are right to care about animals, and concern about animal welfare continues to increase among consumers. The answer to this question is more nuanced than space will allow, but suffice to say that concern about animals is only growing and farmers who do not recognize this will find increasing challenges in the market. Labels and certifications are helpful and important so long as they don’t become diluted and meaningless. So “greenwashing” this topic is an existential threat to the small to mid-sized family farm that is unable to communicate to the public on this point. The communication challenge is made more difficult as fewer and fewer people actually know or have experience about what goes on at a dairy farm.
The Hartman Group (THG): Speaking of the pandemic, how has it disrupted your business — you mentioned when we spoke to you recently that the closure of restaurants in New York had serious effects on your business — have you had to make pivots, and in what way?
Dan: The pandemic has been especially challenging given that we try to seek a balance in our markets between food service and retail outlets. When the pandemic hit, our food service business vanished. Our retail picked up, but we had to be very nimble. Because we are committed to the entire supply chain being profitable, we need all of our partners to pivot with us, and that has proved to be not so easy. The pivots that we have made will yield in a few years, but there have been no magic bullets. One really good outcome of the pandemic was that we were able to team up with the Fair Food Network and bring local food directly to those in need at food pantries.
The Hartman Group (THG): In a prior conversation with us, you mentioned rising popularity for some new products you offer, notably buttermilk — do you think its popularity correlates with what we've seen as a spike in consumer interests in cooking and new ingredients during the pandemic?
Dan: The proliferation of cooking shows coupled with more people cooking due to the pandemic has offered a good opportunity for better quality ingredients to shine. The more you cook, the more you recognize and appreciate that ingredients matter.
The Hartman Group (THG): Your website mentions support of programs like Breakfast to Children and efforts to battle against food insecurity — how important do you think having a community focus and social efforts are to a brand that embraces local attributes?
Dan: Let me start by saying that from a hungry person’s perspective, it doesn’t matter at all where their food comes from. However, the level of food insecurity in the United States is unacceptable, and the deeply seated struggle of local farmers — particularly in the commodity markets — is real and worsening. This question is less important to our brand and more important to the cause of connecting people to their food sources. That we can do so much locally and not only feed people but also bolster rural economies that have been depressed for years — that’s what’s important to me: the people in the supply chain matter.
The Hartman Group (THG): We notice you offer apple products in addition to eggs and dairy — do you think Five Acre Farms might expand into other food or beverage categories in the future, or might you stay mainly focused on dairy?
Dan: We are always looking to expand our product mix. We like to focus on a region’s agricultural strengths and then highlight those products in those markets. Dairy, eggs and apples are found almost everywhere in the United States, so we started with those items, but our eyes are always open. We are also aware of how challenging this is and how expensive it is to be successful.
The Hartman Group (THG): Where do you think the term “local” is going next in terms of the food industry and food culture itself?
Dan: “Local Food” as a term will continue to evolve with each local market. The connective traits will be transparency, quality and community. Each region may provide its own wrinkles. Price will continue to trump local as a factor for 60%–75% of consumer choice, but local should not be underestimated. There will be sizable rewards to those who effectively capitalize on this opportunity. Five Acre Farms will continue to be the one-stop solution for local.