Lewis Road Creamery grass-fed butter hits Whole Foods supermarket shelves in US
By Bonnie Flaws.
Boutique Kiwi dairy company Lewis Road Creamery has hit the shelves in United States in a deal worth up to US$5 million (NZ$8m) in its first year.
The company has been pursuing a slow push into the United Since for the last 18 months, first appearing in California's premium organic grocer chain Erewhon and specialty supermarket Central Markets in Texas. Sales took off, with the Lewis Road brand selling twice twice as fast as it did in New Zealand, founder Peter Cullinane said.
As a result the company caught the attention of Whole Foods Markets, a large US supermarket chain specialising in natural and organic food. The butter is now in 271 Whole Foods stores across 37 states.
Cullinane says the deal is proof of concept for an idea that he founded the creamery on: That New Zealand should be exporting finished branded products rather than commodities for the lowest possible price.
"The interest in all things grass-fed is extraordinary. US consumers are really savvy and they appreciate that there is a significant difference between grass-fed and grain-fed," he said.
The yellow colour of grass-fed butter is a selling point because it contrasts with the pale appearance of US domestic grain-fed butter, he said.
The other big selling point was having US GMO free certification, which Cullinane said is huge in America.
"We take it for granted here. The way US consumers think about it is it's the first step they apply to food before they ask if it's organic or anything else. If it's GMO free, it's like OK we can play."
The butter will be coming up against Irish grass-fed butter brand Kerry Gold, which is the number two selling butter in the US, Bloomberg reported in October last year.
But Cullinane says anything the Irish can do, "we can do better". Unlike in New Zealand, Irish herds are kept in barns over winter because of the colder climate.
Westland Milk Products also sells several thousand tonnes of butter under specific brands to the US worth tens of millions of dollars each year, chief executive Toni Brendish said.
She would not disclose the names of those brands.
The Lewis Road butter range will sell for US$6.99 for an 8oz pack, making it the most expensive grass-fed butter per pound being sold nationally by Whole Foods.
General manager Nicky O'Rourke said Lewis Road expected to export 400 metric tonnes of butter to the US this year and hoped to triple that every year by picking up new accounts.
The butter exported to the US is made from milk exclusively from nine Southern Pastures farms in Canterbury, that meet stringent 10 Star Premium Standards that cover grass-fed, free-range, animal welfare, environmental sustainability and climate change mitigation criteria.
Lewis Road first set its sights on the US market when Southern Pastures invested in the company in 2017 with a 25 per cent stake. Today Southern Pastures has a 50 per cent stake, while Cullinane remains the single biggest shareholder.
Offshore growth is projected at 550 per cent for the 2019-2020 year because of the Whole Foods deal.
"We were in 15 [US] stores in November 2018 and we're about to be in 350," O'Rourke said.
They are targeting another 550 per cent growth in 2021, she said.
The company also launched flavoured milks into China just before the Coronavirus broke out but will wait for things to stabilise before pushing further, Cullinane said.
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