Slate River Dairy is owned by Jim and Wilma Mol, the Dairy produces, pasteurizes and distributes local milk and dairy products in Thunder Bay. The farm’s aim is to provide Thunder Bay with the freshest dairy products possible and to operate a bottle-washing system for reusable glass milk bottle packaging. The products (ranging from cocoa milk, yogurt, kefir, and whole milk) are getting rave reviews from local customers.
Wilma Mol shared her experience below on some of the lessons learned through researching the market and developing their new products.
1. Trial and error – the best market research
Slate River Dairy received the best feedback from customers by providing samples of yogurt to both retailers and to customers at the farmers’ market. Along with the samples, they asked people to fill out a questionnaire about tastes, preferences, packaging and the price they would be willing to pay.
“there were people that just did not want to buy yogurt in plastic containers and they said once we sell in glass they would buy. All this information from customers was great information and gave us the necessary info for our market strategy” ~Wilma Mol, Slate River Dairy
Listening to customers provided the confidence needed to proceed with the project. The customer feedback for glass bottles provided a uniqueness to the product and it helped to differentiate from competitors. Slate River Dairy learned from other dairies that were successful with glass bottles before implementing them in their own operation.
2. Setting a price – Consider adding value, cost of production, and consumer demand
At first, Slate River Dairy priced their products similar to what grocery stores were selling similar products for, such as organic yogurt.
The price needed to be adjusted as the operation needed to cover additional costs as they progressed. Pricing from other on-farm dairies, as well as considering their cost of production and consumer demand, helped to determine how the price would be set.
Since the business was selling cream, a lot of skim milk was being made in the process that wasn’t easily moved off the shelves. In order to make up for the lower sales of skim milk, a higher price for cream was warranted.
Slate River Dairy partnered with the Northwestern Ontario Innovation Centre, who help new businesses with business plans, market studies, applying for funding, and workshops.
The Innovation Centre assisted with the creation of a market study that influenced the approach to selling on-farm, to retailers, and to consumers at the farmers’ market.
This partnership enabled the business to prepare business and marketing plans that was useful when the provincial government considered supporting the project. The partnership proved to be fruitful as the provincial government provided $500,000 in support to add the bottling facility through the Northern Ontario Heritage Fund Corporation (NOHFC).
Similar Innovation Centres and Economic Development Corporations in northern Ontario are well positioned to provide similar services. See what services RAIN (through Sault Ste. Marie Innovation Centre) offers as well as other Innovation Centres across northern Ontario including NORCAT (Sudbury) and IION (North Bay).
4. Search out examples
Slate River Dairy interviewed a similar business in Thunder Bay, the Thunder Oak Cheese Farm, which has been in operation for 20 years. Through this interview they learned what the potential customer base could be for their business. They also learned how much traffic the business could expect for the on-farm retail business, as both businesses were in close proximity.
5. Going full steam has its faults
The plan for the dairy was to start off with yogurt and slowly add fluid milk, cream and butter. That changed as the market research recommended to start all four products right away to get a larger customer base.
“We had a lot of problems with the separator to make skim milk and cream and did not get that on the market till 6-8 weeks after opening. This was very frustrating but we did get 7 products going in the first 6 months.” ~Wilma Mol, Slate River Dairy
Slate River Dairy is now making eight products and there is plans to get a new piece of equipment to add four more. At the beginning, Slate River Dairy was turning down magazines and TV stations out of fear that demand would quickly be greater than the ability to supply. Since then, Slate River Dairy has become established with three retail stores and most of the sales are at the Thunder Bay Country Market.
While their market research caused Slate River Dairy to reconsider some of their assumptions around pricing and packaging, it did not prepare them for the operations and logistics challenges of launching all their new products at once.
Market Research Tools
The following are market research tools and guides to help you in developing your marketing plan.
Cost of production tool: The On-Farm Processing Recipe Based Costing Tool allows you to analyze the impact of changes in recipe, ingredient costs or packaging size on product margin.
Market research tool: Market Assessment Spreadsheet (Excel Spreadsheet) – A similar spreadsheet was used for Slate River Dairy to assess demand of the product from local retailers. It can be used to acquire needed information for assessing the market for a new product. The spreadsheet has been updated with retail stores specific for Sault Ste. Marie.
This article was developed as part of the Next Generation North Project. Additional articles include: Management Tools for Syrup Producers
Thanks to Wilma Mol for her perspectives!
This project was funded in part through Growing Forward 2 (GF2), a federal-provincial-territorial initiative. The Agricultural Adaptation Council assists in the delivery of GF2 in Ontario.