The Kroger Co. had lofty ambitions when it set out to build its first new fluid milk plant in more than 20 years.
“We wanted to build a plant that would set us apart from other dairies in the U.S., both from a capability, flexibility and future innovation standpoint,” said Erin S. Sharp, Kroger’s group vice president for manufacturing.
The Cincinnati, Ohio-based grocery chain got its wish with the Mountain View Foods plant in Denver that opened Memorial Day weekend 2014. The facility processes fresh conventional and organic milk in half-gallons and gallons and it packages aseptically processed milk, creams and juices in quarts and smaller bottles.
To get to opening day, May 25, 2014, was an eight-year journey. Initially the company thought about building a traditional dairy plant. Denver was the only major market not being served by one of Kroger’s dairies. The company was buying milk from several Dean Foods plants. But then Kroger started thinking bigger. A cross-functional team consisting of Sharp, Nosewicz, Dubuc, Noe and Shank began studying European technology and practices. The executives hit the road and toured dairy processing facilities in Europe and met with equipment manufacturers there.
A focus on freshness
What made the most impact on the Kroger team was how the Europeans handle milk to keep it fresh for as long as possible.
In approaching the design of the plant, Nosewicz said, “We started with: How can we bring in a milk supply and protect it from contamination by any means? We worked on a process to keep product completely clean on its journey through the entire plant.”
While the plant does use some traditional pasteurization equipment, “we’ve done some things with processing techniques that are new to us,” Shank said. “What we were able to do is take what Europe has done and combine that with what we believe in the U.S. is a better milk supply [and refrigeration systems] and give our customers something that, at the end of code life, tastes the same as it did the day we made it. That’s important because freshness is very important to our customers.”
The plant bottles fresh milk in paper and plastic half-gallons and gallons. It also processes flavored milk, drinks, and what Kroger calls a “carafe” orange juice. On the aseptic side, the company makes milk, juices and creams (half-and-half and whipping) in 8-ounce, 16-ounce and 32-ounce PET bottles. It processes conventional and organic milk. At full capacity, the plant will manufacture aseptic beverages for all of Kroger’s stores. It does not co-pack for other accounts at this time, nor does it produce a school milk line.
The company has 37 manufacturing plants (including 18 dairies, two cheese plants and nine deli or bakeries) that produce about 40% of the corporate brand units sold in its stores. Private label brands (which Kroger calls corporate brands) include Private Selection and Simple Truth. The latter is a natural and organics brand (including dairy foods and beverages) that has existed for only two years. Simple Truth alone rings up $1 billion in annual sales and Kroger expects to double that soon.
As a manufacturing unit of a retailer, “we are very, very conscious of the return on capital that we provide the organization,” she said. “We only exist when we have a positive return on capital. So our team understands that. We understand that our role is to drive value out of the investment the company provides.”