Business Spotlight: Hiland Dairy Foods Co.

Owner: Kansas City-based Dairy Farmers of America and Carlinville, Ill.-based Prairie Farms

Founded: 1938

Address: 1133 E. Kearney St., Springfield, MO 65803

Phone: (417) 862-9311

Fax: (417) 837-1197

Products: Milk, butter, ice cream, egg substitute, orange juice, cottage cheese, dip, yogurt, cheese, tea and lemonade

2007 Revenue: $500 million

Employees: 240 in Springfield; 1,600 companywide

Hiland Dairy Foods Co. traces its roots to a small hilltop barn north of Springfield.

That’s where Bert Putnam and Walter Carter began their joint business venture 70 years ago, clocking in at 3:30 a.m. to feed and milk 50 cows with the help of a milking machine run by a gasoline-powered generator. Then they strained the milk through a white cloth to filter out barn dust, bugs and cattle hair.

With family help, their product was bottled, loaded onto a horse-drawn wagon packed with ice and hay, and delivered to their customers. Hiland milk was on the table by suppertime of the same day it came from the cow.

“Of course, we do it a lot differently now,” says Greg Stephenson, director of marketing and advertising, “but our focus is still on freshness and quality.”

That small farm operation has grown into a $500 million Springfield corporation that comprises eight manufacturing plants and 25 distribution centers, and provides its customers with an array of products that would have been hard to imagine in 1938. The company’s headquarters are still in Springfield.

Quality checks

Hiland’s quality is further assured by the “Quality Chekd” symbol on its product labels. This means the dairy products purchased at local grocery stores have been tested by an independent third party and found to meet or exceed industry standards. For several years, Hiland has been a finalist for the Wayne Gingrich Award for excellence in milk quality sponsored by Quality Chekd Dairies Inc.

Although much has changed in the farm-to-market process since Putnam and Carter began milking, one thing remains the same – milk still comes from the cow very early in the morning. It is then hauled in a temperature-controlled tank truck to the nearest processing plant, where it undergoes testing and pasteurization.

Then it is packaged and delivered to businesses in six states. Many of Hiland’s gallon and half-gallon jugs end up in large grocery chains. Schools and hospitals provide major outlets for milk and orange juice in individual serving sizes.

Milk market leader

Gary Aggus, Hiland’s president and general manager, estimates the company holds 85 percent of the milk market in southwest Missouri.

For RPCS Inc. stores, the percentage may be even higher. Royce Jackson, manager of the Price Cutter store on East Battlefield estimates 95 percent of its milk sales comes from Hiland Dairy products, including the Prairie Farms label.

“That’s the way it is for a reason,” Jackson says. “The product is always good and always fresh.”

Until 1979, the 150,000-square-foot Springfield plant was Hiland’s sole site. But business boomed in the 1980s, when a health-conscious public began to consume more milk. Yogurt appeared on the scene, and the demand for ice cream specialties skyrocketed. Hiland quickly expanded into Arkansas, Texas, Oklahoma, Kansas and Nebraska.

Today, Hiland is jointly owned by two dairy cooperatives – Carlinville, Ill.-based Prairie Farms and Kansas City-based Dairy Farmers of America. This arrangement channels profits into the hands of the farmers who actually produce the milk.

Although milk and dairy products have been the backbone of Hiland’s sales, the 2001 purchase of Farm Fresh Dairy in Chandler, Okla., brought some new products into the mix.

“Although orange juice was not part of our original business plan, it fit well with our operation,” Aggus says. “We already had an extremely efficient distribution system and were looking around for a product that worked well with that system. Juice appeared to be just right.”

Another recent addition, Red Diamond Tea, was also a good fit for Hiland’s distribution system. “We are the largest distributor of Red Diamond Tea in the U.S.,” Aggus says, noting that the company moves nearly 100,000 gallons a year.

The Highland

The original founders chose the name Hiland Dairy for their fledgling enterprise 70 years ago. Although the company has been sold several times since its inception, it has retained the Hiland name. According to Greg Stephenson, director of marketing and advertising, founders Putnam and Carter chose that name because of their business location. “The barn was on a hilltop, the highest spot around,” Stephenson says. “So it became Hiland, a shortened version of highland.”

Healthy Products

Hiland Halftime is held during high school sporting events to help young people learn about the health benefits of dairy products. Prizes are awarded to participants in games, quizzes and contests. Dairy Foods International Inc. recently chose Hiland Halftime as its Best School Marketing program.