Clover Stornetta taps into new generation

Generations has lately been a theme on the mind of Clover Stornetta Farms CEO Marcus Benedetti.

This summer, one generation of the Benedetti family passed its ownership of the Bay Area’s largest independent dairy processor onto members of the next generation.

The transition came June 30 when brothers Dan and Herm Benedetti formally retired from Petaluma-based Clover. Their shares in the privately held company were purchased by Marcus Benedetti and two cousins, Michael Benedetti and Mkulima Britt.

As the three younger family members take control of the business, their challenge is to shift Clover “from a traditional dairy to a consumer products company,” said Marcus Benedetti, Clover’s new chairman of the board.

Success will require not only developing innovative dairy products but also winning over a new generation of consumers - those 11- to 35-year-olds known as millennials - a cohort of Americans who have moved faster than their parents to cut fluid milk consumption.

“Marcus’ concern is who are we now in 2015 and who is that consumer,” said Dan Benedetti, 66, Marcus Benedetti’s father and the company’s former board chairman and CEO.

“Paige” the consumer

Clover has gone so far as to create a profile of an imaginary millennial: a mother of two named “Paige,” in her mid-30s with a median income. Marcus Benedetti, 40, said the company fashioned Paige’s profile as a first step to understanding how to make itself more relevant to shoppers like her.

“We still don’t know how to engage her yet,” he said.

He insisted he has learned the cost of failing to pay attention to such consumers. In 2008, two years after he first became CEO, Clover added a plastic twist cap to its half-gallon organic milk cartons, a move designed to make its packaging the same as national organic milk brands.

Within weeks, hundreds of organic consumers had contacted the company to decry the change, saying it made the cartons more difficult to recycle. Clover soon abandoned the twist cap, and Marcus Benedetti concluded that a poor decision had been made because “we didn’t engage our customers.”

For decades, Clover has engaged Sonoma County residents with its pun-filled billboards, its free ice cream cones at county fairs and its pudgy white bovine, Clo the Cow, easily the county’s most-recognized business mascot.

But the 38-year-old company is also credited as a pioneer that helped keep the North Bay dairy industry viable by distinguishing local milk as more than a commodity item.

“The reason why we still have so much dairy in this part of the world was they were early adopters in the need to add value,” said Tom Scott, CEO of Cotati-based Oliver’s Markets

Today a central tenet of local agriculture holds that farmers should find niche markets that allow them to earn premiums for their crops, be they coveted wine grapes, organic milk or pasture-raised meats.

And even as the county has become known as part of Wine Country, the North Bay’s coastal grasslands have developed a national reputation for producing fine artisan cheeses, organic milk and ice creams.

“The dairy products that come out of Sonoma County, and Clover right in the middle of that, are the best in the world,” Scott said.

The third generation

The succession in ownership to the third generation of the Benedetti family comes as Clover is projecting its best performance in company history. Revenues this year are expected to exceed $200 million, which would amount to at least an 11 percent increase over $180 million in 2014.

Clover employs 220 workers and buys milk from 10 conventional and 17 organic dairies on the North Coast, including a recent addition in Humboldt County. It sells products in California, Utah, Nevada, Arizona and Wyoming.

Teejay Lowe, CEO at Santa Rosa-based G&G Supermarkets, said this is an era of connections, whether that means people sharing via social media or businesses teaming up to create new products. Clover has shown a willingness to try such ventures, whether by adding Bear Republic Brewing’s Racer 5 IPA to its “Hoppy Hour” craft ice cream or by putting its organic milk into cartons of Blue Bottle Coffee’s iced coffee.

New products

To the county, Lowe said, Clover’s significance remains as a company with local owners who have “a stake in the community.” Its challenge, as for many consumer businesses, is to “move with the marketplace and stay abreast with what people are interested in.”

“That is a lot harder done than said,” Lowe said.

Clover this year is in the midst of making $15 million worth of capital improvements.

That includes a new 64,000-square-foot chilled distribution facility for which it hopes to break ground this fall on Cader Lane in Petaluma. Plans also call for installing four new 50,000-gallon storage silos this fall at its production plant on Lakeville Street in Petaluma.

The company is working by late next year to standardize its organic and conventional product packaging, and “in a more focused way” tell consumers what makes Clover unique, said Marcus Benedetti. Yes, he said, Clo the Cow will remain part of the brand.

About half of the company’s revenues come from fluid milk sales. But with per capita milk consumption in the U.S. declining for four decades, Clover is seeking to expand into new products.

Two years ago, it unveiled an array of craft cheeses, all made from local milk. This spring it rolled out a line of 12 premium ice creams, each using organic milk and cream. Next up? Greek yogurt, slated for spring 2016.

Typically Clover provides the milk and cream but hires an outside company to manufacture the new products. For its cheeses, Marcus Benedetti acknowledged the company has expended considerable effort trying to keep the supply chain running smoothly between farm, processor, manufacturer and retailer. And the challenge grows with each new product.

That explains why the company has expanded its payroll by $2 million a year, mostly to hire experts to help run this growing part of the business. And while the current products reside in categories abounding with competition, Clover officials want their staff to eventually develop food items that break new ground.

“In 2017, I’d like our company to galvanize around a first-to-market product,” said Marcus Benedetti. His only hint of what that might entail is something that would address health and nutrition.

It seems a far cry from the milk company that dairy cooperative manager Gene Benedetti founded with a handful of partners in 1977. The company came together after a 1975 fire destroyed Petaluma’s California Cooperative Creamery and its directors decided not to rebuild.

The new highly leveraged dairy company was established by milkmen who essentially were buying a job, recalled Dan Benedetti, Gene Benedetti’s son and one of the founding partners.

“Now it’s gray matter, as opposed to brawn, that’s pushing Clover forward,” he said.

Actually, Dan Benedetti is credited for ideas during his years as CEO that moved the company forward. A key one came in the early 1990s when Clover announced that all cows at its partner dairies must be free of the controversial growth hormone, BST. The company next became the first dairy in the nation to be certified for the care of animals by the American Humane Association.

Both decisions began to distinguish Clover from other brands.

In regard to succession, Dan Benedetti recalled that just as ?his father had told him years ?earlier it was time for him to assume leadership of Clover, so ?in recent years he had concluded “it was time for Marcus to take over.”

In a growing company, acting sooner rather than later allowed a succession where the next generation of owners aren’t burdened “with an insurmountable amount of equity debt,” he said.

Ownership shift

This summer, Dan Benedetti, his daughters Joanie Benedetti Claussen and Niessia Benedetti Diehl, and brother Herm Benedetti sold all their outstanding shares in the company.

The new owners all work in the business: Marcus Benedetti as CEO, Michael Benedetti as director of plant operations and Britt as chief sourcing officer.

Both Dan and Marcus Benedetti said the relatives managed to complete the succession and achieve their goal of remaining family. “We’re as tight today as we were” on the day the succession conversations began, said Dan Benedetti.

For years, rumors have swirled in good times and bad that Clover was about to be sold. Marcus Benedetti wouldn’t speculate on whether the succession would quiet such talk, but he insisted he has no interest in parting with the company.

Instead, Dan Benedetti said his son is “going to have to start thinking about the next generation,” including Dan Benedetti’s eight grandchildren.

With three children of his own, Marcus Benedetti smiled when asked if a fourth generation of the family might one day run Clover.

“That,” he said, “will be my dream.”