Bergey Dairy  
by Deborah S. Wechsler
(This article is excerpted from Making It On the Farm: Increasing Sustainability Through Value-Added Processing and Marketing, published in 1996 by Southern SAWG.) 
 
CHESAPEAKE, Virginia--Within the city limits of Chesapeake, on the edge of an area of suburban sprawl, lies a dairy farm that still bottles milk in glass bottles and delivers dairy products to the doorsteps of their customers. Over the past 20 years this family farm has also diversified into value-added processing and direct-market retailing.

In front of the farm's low barns, milking parlors, and its tall, blue Harvestore silos, a farm-owned retail store offers a wide range of products. Attached to the store is the farm's processing building, where the milk has always been bottled and ice cream is now made. Welcome to Bergey Dairy--have a sandwich and an ice cream cone, buy some candy or perhaps a handcrafted gift, and bring home a gallon of milk and some eggs for breakfast.

Bergey Dairy was started in the 1930s by Titus H. Bergey, and has always been a family-held corporation. When we visited, James and Mary Bergey, the second generation to farm this land, were in Albania doing a year of mission work through the Mennonite Church, and had passed much of the responsibility for the farm to their children. Not all of their seven children are shareholders, but of those who are, all work on the farm in some capacity, either full-time or part-time. Leonard Bergey has over-all responsibility for milk handling, bottling, and processing; his wife Elsa manages the store; his brother Floyd is responsible for fields and care of the cows. Their brother-in-law, Mike Morris, is in charge of route sales of milk, and numerous members of the following generation are also employed in some way.

All of the farm's 160 acres, plus 60-80 acres of rented land, is in feed crops and silage, except about 10 acres of pasture near the barns. Leonard wishes they could do more pasture-based feeding, but most of their fields are too far from the barn--the ten acres of pasture they do have functions more as an exercise area. Two years ago, they increased their cow herd from 90 cows to 110; the maximum the farm can handle is around 120. Seventy-five percent of the cows are Guernseys, the rest are Holsteins. 

Ice Cream From Excess 

From its start, Bergey Dairy operated house-to-house route sales and bottled its own milk. In the late 1970s, James had the vision to start making ice cream and open retail stores. At that time, as demand for cream and butter went down, the Bergeys had excess butterfat, especially from their Guernseys. Producing ice cream was a way to use it and the timing was right--the market for premium ice cream was growing.

They turned to Virginia Tech's extensive dairy processing program for help in setting up the new system. (Unfortunately that program is now mostly gone.) The Bergeys' local customers participated in their trial-and-error evaluation of flavors and recipes. Leonard recalls his mother cooking up apples and cinnamon for one favorite flavor, but they eventually found it was easier to buy commercial syrups and mixes for most of their flavorings.

Bergey Dairy now produces whole milk (homogenized and non-homogenized), low-fat milk, skim milk, chocolate and strawberry milk, cream, butter, and ice cream in several dozen flavors. Skim milk is their best seller--since milk from the Guernseys is higher in proteins and milk solids, their skim milk is more substantial and flavorful than others on the market. They bottle strawberry and chocolate milk like the regular milk, in glass; butter is packed in small plastic tubs.

Milk is piped from the milking parlor into a processing building crowded with stainless steel cooling tanks, a bottling machine, ice-cream mixers, and other essential equipment. Most of the equipment is quite old, but still serviceable. The Bergeys can run 300 gallons an hour through a continuous-flow pasteurizer, and also have an older batch-pasteurizer, mostly used for pasteurizing milk and cream for ice cream. They make 10 gallons of ice cream at a time, several batches a day. Then, they store the ice cream overnight in three-gallon tubs before bringing it into the stores.

In the last few years, they've also begun making and selling iced tea, about 50-60 gallons a week, and some juices and juice drinks from concentrates. All of these can be bottled with the same equipment they use for milk.

Though the processing area is crowded, workers seem cheerful. Having it connect right to cold storage rooms and the back of the store is convenient for everyone. In hindsight, however, Leonard says, "It might have been better to think bigger, build a little bigger." 

Grocers Are Eager to Carry Their Products 

The Bergeys opened their on-farm store at the same time they started producing ice cream, in 1980. At first it was a bare-bones operation, selling just their milk products and ice cream. They then experimented with offering an extensive selection of deli meats, cheeses, and fresh vegetables, but found that managing so many perishable commodities was too difficult. Now, besides their own products, the store carries a small line of deli products for sandwiches and stocks eggs, juices, cow-oriented gifts, candies, and a small selection of local gifts, books, and craft items. In the mid-1980s, they opened two other stores, one in suburban Chesapeake, the other at the state-run farmers' market in Virginia Beach.

Milk sells for $2.01/half gallon delivered; $1.79/half gallon at the farm, and a few cents more at their other two stores. Leonard says customers include a wide mix, both yuppy/food-conscious types and traditional local folks. Route salespeople also deliver eggs and juice, which the dairy buys wholesale.

Unlike most other diaries, Bergey Dairy has only recently begun wholesaling its milk. In the late 1980s, the dairy was approached by Wellspring Grocery, a small gourmet supermarket chain with three stores in Raleigh, Durham, and Chapel Hill, North Carolina, about buying milk wholesale. Eager to get high quality, glass-bottled milk from a small family dairy--and unable to get it closer to home--Wellspring was willing to send its own trucks to pick up the milk and to coordinate the exchange of the empty bottles.

"Since then," Leonard says, "we've started to wholesale to a few other stores locally--gourmet groceries, wine and cheese stores, health food stores, and mom-and-pop supermarkets." The Bergeys have been getting numerous requests for milk from other wholesale buyers, including the mid-Atlantic Fresh Fields supermarket chain. "I'm a little surprised at the interest from large supermarket chains," says Leonard.

Their wholesale price for milk is $1.79/half gallon, the same as the retail price at the farm store. They don't wholesale ice cream, though small stores in their area have shown an interest in carrying it, perhaps as franchises.  

Inviting Customers Onto the Farm

The Bergey family has always had direct contact with their customers, but they expanded their consumer relations and publicity efforts after setting up the retail stores. Three mornings a week the dairy welcomes groups of school children for informational tours. Signs outside the store list times of daily milkings and calf-feedings.

Other visitors are welcome, too. On Memorial Day the Bergeys hold a "Day on the Farm" with milking demonstrations, opportunities for kids to milk, hay rides, tours, petting zoos, and other activities. Each weekend in October they haul visitors to one of their fields to pick pumpkins for "Pumpkin Days." The Bergeys try to raise half an acre of their own pumpkins, but find them difficult to grow in their coastal climate, so they also buy pumpkins and put them in the field. A couple of draft horses are kept to pull wagons for these events--the rest of the year the horses just stand around in a small field next to the road and look good.

Advertising for their home delivery route consists of occasional leafletting in targeted neighborhoods. Sometimes they run coupons in local newspapers for free ice cream.  

Challenges of a Growing Business 

Keeping track of the dairy's finances is a challenge. About half of its income of a little over two million dollars per year is from the home delivery routes, serving about 1500 customers; the other half is from the stores and wholesale buyers. The dairy tracks costs and profits by a system of on-paper sales, tracking milk from the farm through processing to stores and routes. It's an imperfect system, however, and the Bergeys are not always sure where to allocate some of the costs or to assign the profit. A computer student from a local college helped them develop a cost/analysis program that has improved the situation somewhat.

Though the dairy seems eminently successful now, the family had some lean times back in the early 1980s, when they had invested a lot in producing ice cream and setting up retail stores, but sales hadn't caught up. Getting loans has not been a problem--if anything, money is too temptingly easy to borrow. Because the farm is within city limits, urban expansion is a potential problem, though their location also gives them an excellent customer base. So far, the farm is taxed at agricultural use rates, except for the one acre where the store and processing facilities are, but it may have to pay more in the future.

Managing the farm's considerable labor force can also be a challenge. In total, the business employs approximately 60 people, from route drivers to ice-cream makers to store employees to office help. There are about 40 core employees, 15-20 of these full-time; in summer, when store hours are extended and ice cream sales go up, they hire additional employees. Hiring and keeping labor is sometimes a problem.  

Pressures to Expand 

Leonard sees Bergey Dairy's main problem as knowing what decisions to make in the face of pressures to expand. Demand for the Bergeys' products exceeds production, yet they cannot easily expand their cow herd. Already they have bought some milk from Yoder Dairy, a small dairy cooperative nearby, in order to have enough for ice cream in the summer, but using all their own milk is one of their strong selling points.

Should they cut back the route sales? Increase the amount they wholesale? Overhead from wholesaling is less than that of route sales, but route sales are their traditional base. Some members of the family prefer direct-to-consumer sales; some like the streamlined impersonality of wholesaling. It's a nice problem to have. With a successful blend of wholesale and direct marketing, and with a diversity of products, Bergey Dairy is just trying to find the mix that will be most profitable, most sustainable, and most satisfying for all the family members involved in the farm.

Could other dairy farms do what they are doing? Their location and history of route sales were advantages for direct marketing of value-added milk products, but consumers in many areas are eager to buy direct from local farms. Bergey Dairy was also fortunate to have its bottling systems in place, though it had to acquire additional equipment for making ice cream. Getting into processing is expensive--Leonard estimates at least $100,000--but second-hand equipment at this scale is easy to get as other small dairies shut down.

"Dairy farmers have the tenacity to stick with it," says Leonard. "They are already familiar with similar equipment and cleanliness requirements, and have the necessary 'jack-of-all-trades' skills. But [for this kind of direct-marketing] you need marketing skills, a vision, and a willingness to deal with people."