Why milk matters so much in food retail

Even David E. Gumpert of the Complete Patient blog is writing about Ontario’s decision to appeal the Michael Schmidt acquittal. Here’s an excerpt:

Connecticut entrepreneur Ed Hartz, with his two children and author David E. Gumpert's following David's talk at Rutgers University. Ed is starting a milk delivery service. Complete Patient blog photo.

“The news that Ontario’s food police are challenging the exoneration of raw dairy producer Michael Schmidt—in the face of a thoroughly researched and documented judicial opinion—raises the question of why these officials remain so obsessed about milk.

Michael Schmidt, after all, serves only a couple hundred people, and conventional dairy producers in Canada are well compensated for their milk.

The problem for the food police, in Canada and the U.S., is that milk is such an important item in the food-business scheme of things.

In talking with a number of farmers in Wisconsin and elsewhere, I’ve come to understand a fact of business life that grocers through the ages have long appreciated about milk: it is an important traffic driver. In other words, because milk is a basic perishable product for many families, it needs to be regularly replenished. But here’s the key: when you go to a store to purchase milk, you invariably purchase other items—eggs, veggies, fruit, bread, meat, cheese, laundry detergent, nuts, flour, etc., etc.

That’s helps explain why Wisconsin’s campaign against raw milk is so devastating to the farms that receive orders to halt raw milk sales, or warning letters that they may be subject to such an order. Many of the dairies are diverse farming operations. They sell their own meat, cheese, eggs, and so forth. They may even bring in other items for sale, like kefir cultures and books (like The Raw Milk Revolution, which a number are already doing). But it’s the raw milk that drives the traffic. Once the dairies can’t sell raw milk, then consumers lose the sense of urgency to drive ten, twenty, or thirty miles to the farm for the meat, cheese, and eggs. They look for another source of raw milk, and when they find it, that new source becomes the place where they move their demand for the meat, cheese, and eggs.

All things being equal, raw milk sellers might be able to weather an interruption in their ability to sell raw milk. But all things aren’t equal.

Wisconsin’s Department of Agriculture, Trade, and Consumer Protection understands this basic fact of life, which helps explain why they are so obsessed with halting raw milk sales. Without raw milk, farmers can’t sustain their retail businesses, and must go back to the conventional system.

It doesn’t matter what business you are in, whether food, clothing, automobiles, or credit cards. Each customer can be measured in its lifetime value—how much is the customer likely to purchase over some period of years? In the food business, a customer who spends $100 per week on groceries is worth $5,000 per year, for possibly twenty or thirty years. Suddenly some mom or dad looking for a half gallon of milk on a Saturday is worth possibly $100,000 or $150,000.

You don’t think the executives at Whole Foods, Krogers, and Wal-Mart don’t take each individual customer seriously? And you don’t think that the processors that supply those grocers with pasteurized milk don’t take each store customer seriously?

Now extend the thinking a little further. Each person who goes to a farm store or a farmers market or a church parking lot dropoff point for a few gallons of raw milk isn’t just a lost $10 or $20 sale—that person likely is putting off a trip to Whole Foods, Krogers, or Wal-Mart, or avoiding it entirely, or going to a competitor as a result, and may well represent $150,000 of lost sales….”

Read the whole story on the Complete Patient blog

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