Becoming the Big Cheese; Vermont Farm Expands Operations to Meet Demand

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South Woodstock -- Vermont Farmstead Cheese Co. started producing cheese only in January and didn't begin distributing until June, but it's already struggling to keep up with customers' requests.

The company distributes to 1,000 locations in more than 20 states, including Price Chopper, Publix and Whole Foods Market, but with only 60 milking cows and cheeses that can take up to six months to age, head cheesemaker Rick Woods can't keep up.

"Right now we're not coming anywhere close to meeting demand," Woods said. "We've had to put reins on our distributor to not pitch to certain chains because we can't meet demand."

But this is a good problem for Woods. He said he could make cheddar in his sleep, however, that doesn't mean he can make it fast enough, especially his aged cheese.

"I can't make that today and ship it out tomorrow," he said.

The South Woodstock location has the ability to make 400,000 pounds of cheese a year, but Woods and his crew of three are set to make only a quarter of that in their first year.

The slow growth is due in part to a growing farm.

When Woods arrived in September 2010, the farm had 25 cows. It has grown to about 100 cows, with 60 of them milking. It will have 180 cows at capacity.

"We're tapping our brakes a little bit," said Woods, who added that he hopes to have the South Woodstock location at full capacity in two to three years.

Gregg Fairbrothers, an adjunct professor of business administration at Dartmouth's Tuck School of Business, said having a high demand is a good sign if the business can handle it. He said it's a "fairly common problem" for many start-ups, but said businesses get in trouble if they find themselves in an inventory trap and don't have the financial resources to meet the demand.

About 20 miles away in Windsor, Terry McDonnell, president of Great Bear Realty, is constructing an 11,000-square-foot building that will help Woods grow his cheese production. Vermont FarmsteadCheese hopes to be operational in its new building by April. Construction is already under way at the industrial park in Windsor, where the cheese company is a neighbor to Harpoon Brewery.

The location is a good match for the companies because Vermont Farmstead Cheese uses Harpoon IPA in its alehouse cheddar. Vermont Farmstead Cheese will take up 7,000 of the 11,000-square-foot building, McDonnell said, who owns the land and is building the project.

McDonnell also owns the land beneath the Path of Life Sculpture Garden and Harpoon Brewery, and he was introduced to Vermont Farmstead Cheese through a mutual friend. He knew the company was interested in expanding, and thought it would add to the "multifaceted attraction."

When he bought the land 15 years ago, McDonnell's goal was to create a broad range of facilities that allow customers a "deeper look into your product."

"It's a really diverse place. People can come down and spend the whole day," McDonnell said.

The South Woodstock farm, which isn't near the tourist shops of Woodstock, but isolated on the dirt Church Hill Road, is not ideal for customer visits. But the Windsor facility, which is only a few miles off Interstate 91, is being designed with tourists in mind. The building will have a glass wall to give customers a peek into the aging, cutting and wrapping rooms and a 2,000-square-foot retail store will serve as an "indoor farmers market," offering Farmsteadcheese as well as local maple syrup and honey, McDonnell said.

Windsor Selectboard Chairman John Tansey said he's looking forward to the jobs Vermont Farmstead Cheese will bring, especially in its retail store. And he said it would be another reason for people to visit the area.

"It'll be another piece of the puzzle to helping the economy in Windsor," Tansey said.

Vermont Farmstead Cheese is the first community-owned farmstead cheese facility in Vermont, and it's a result of a group of South Woodstock neighbors who didn't want to see a local farm converted to a slaughterhouse. A year and a half ago, 14 investors bought the property, which was once a buffalo farm. One of those investors, Kent Underwood, is now the chief operating officer of Vermont Farmstead Cheese.

Underwood lives about three miles from the farm, and worked there when it still housed buffalo. The investors closed on the property on April 1, 2010, and started milking cows two weeks later. The company now has more than 30 investors, and as of September of this year, had raised $3.1 million from them.

The company's sales are increasing each month, Underwood said, and sales are about 26 percent above plan.

The business is also operating debt free, and it has retired the mortgage on the property, he said.

Underwood is also optimistic that the young business will be profitable in 2012, and said the company is on track to fulfill its first-year revenue goal.

Fairbrothers, the Tuck professor, said that to be profitable two years in is a "pretty good accomplishment," especially for a business with many fixed costs, like expensive equipment.

Underwood added that one of his biggest challenges is managing growth, which Fairbrothers said can be a serious issue. The most dangerous time for a start-up, Fairbrothers said, is when the owners are deciding how big they want to become.

"Many businesses, this is when they fail, when they can't efficiently manage their growth," Fairbrothers said.

When Woods came to Vermont FarmsteadCheese in September 2010, he was the only cheese-maker, and the production room had only one pasteurizer. Now there are three other cheesemakers, one who has been in the business for 20 years, while another is a chiropractor and the other has a master's degree in secondary education. The production room is full of vats, including a new one that will make 1,500 pounds of cheddar.

The business has seven full-time and five part-time employees in South Woodstock, Underwood said. The Windsor location will need more workers, Underwood said, but the number of employees will depend on the rate of production, he said.

Underwood and Woods both said they don't want to compete with large Vermont cheesemakers, such as Cabot Cheese, but instead they want to "ride their coattails," and focus their energy on competing with California and Wisconsin.

"The American palate is really changing," Underwood said. "People want to understand more about their products. Cheese is really moving forward in that sense, too."

For Woods, it's not just about the cheese. He wants to see Vermont FarmsteadCheese partner with other dairyfarmers and help them use their equipment to grow the business around the state. Woods has an image of a "cheesemaker on wheels," in which Vermont FarmsteadCheese would help dairyfarms make cheese. The company would share its equipment and expertise, but make sure it didn't steal milk away from farmers.

"To roll onto a farm and show a guy what your milk can become is pretty amazing," Woods said. "I've worked with farmers before who said all he'd ever done is see his milk move away on taillights."

Vermont FarmsteadCheese also has plans to work with Vermont Technical College, and Sharon Huntley, marketing director, will be making videos of the farmhands working with cattle to send to a class of students with autism in New Jersey.

"Every day you hear 'sustainable agriculture,' " Woods said. "Instead of growing kids up and sending them away with their talents, let's keep them here. You don't hear of people starting dairyfarms every day."

Sarah Brubeck can be reached at 603-727-3223 or sbrubeck@vnews.com

 

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