Rollin Reiter had the gift. So did his father, Harold Reiter. They shared a propensity for innovation — a trait they inherited from Ralph Reiter, who founded the Reiter family dairy in the ’30s.
And all three men believed that bigger is better.
Despite pressures intrinsic in industry competition and consolidation, Akron-based Reiter Dairy has flourished through the decades by consistently implementing new business practices and technologies and tackling aggressive growth strategies.
But, in contrast with traditional growth tactics, Reiter reached its summit of success by “selling out” to stay in business — eventually partnering with the largest dairy processor and distributor in the country. It was a decision the family never regretted.
It started with the 1930s departure from butter toward fluid milk production. The trend compelled Ralph Reiter, then owner of Akron’s Miller-Maid Creamery, to depart from the butter business. In 1933, he established Reiter Dairy across from The University of Akron.
Times were hard. Milk was eight cents a quart. But the dairy grew, nourished by pride and enthusiasm. To meet payroll or to buy hay for the delivery-cart horses, Reiter sometimes relied on infusions of capital from friends and suppliers.
Seeking ways to improve his product, Ralph Reiter pioneered the use of cellophane to cap his milk bottles.
“Actually, it was plyofilm, more rubbery and soft. Goodyear made it and my grandfather saw it, and he invented a machine to cap the covers in place with a rubber band,” says Rollin Reiter, now retired.
Reiter was also the first to use the homogenization process in Akron, dubbing his product Mello-Milk. After World War II, milk sales in stores became popular. So did paper containers, as a convenient way to sell milk to grocers. Reiter began developing store sales using PurePak containers.
Reiter first produced ice cream in 1946 and set out to make its frozen product the best. In 1954, the firm merged with Belle Isle Dairy Farms, which was well entrenched in the ice cream business. The partnership boosted sales for the new Reiter & Harter Dairy Inc. (It helped that Belle Isle’s owner and president was former state senator Fred S. Harter.)
An acquisition period began in the 1950s that added more than 20 smaller dairies to the growing Reiter enterprise.
“We were aggressive in acquiring many companies,” Rollin Reiter says, recalling that his grandfather steered the company until he died in 1959 and his father, Harold, took the helm. When Harold passed away in 1966, Rollin stepped in. Three years later, in 1969, the company became Reiter Foods Inc.
With a foothold in refrigerated and frozen food specialties, the firm ventured into the convenience store business.
“We owned a frozen food institutional supply company in Ashland, then we developed some convenience stores called Stop and Go. We later sold the convenience stores to concentrate on dairy,” Reiter says.
The company name was changed to Reiter Dairy Inc. in 1978 and expansion continued with the 1982 acquisition of a modern milk plant and distribution facility in Springfield, the acquisition of Oak Farm Dairy in Findlay, and a frozen-food distribution center in Tallmadge.
A few years later, the third-generation son pondered the destiny of his grandfather’s legacy, realizing he wouldn’t be leaving the family business to any of his offspring since his son, Jefferson, who worked as Reiter Dairy branch manager, planned to pursue another profession.
“There were no more family members interested in staying in the business and we were facing major capital requirements, as do most dairies if they grow. It’s the same problem a lot of small family companies face,” says Reiter.
He knew that to continue growth without going deeply into debt, he needed deeper pockets. In weighing ways to exploit the very forces threatening many family dairies, Reiter accepted a tempting offer from a Fortune 500 dairy and specialty food manufacturer, selling his firm to Dean Foods Co. in 1986.
“Even though we were making $100 million in sales and had over 550 employees between our major production plants and branches, to go further constantly requires an infusion of new capital for new equipment and expanded facilities,” he explains.
Having known the Dean family for years, Reiter had great respect for Howard Dean, Dean Foods’ current chairman and CEO.
“Dean Foods was the strongest and best managed company in the industry, with the highest ethics,” Reiter says. “They started out as we did, as a small family company that grew and expanded by buying other independent dairies. It was just a bigger version of what we were.”
What made Reiter appealing to Dean, the country’s largest dairy processor and distributor, was Reiter’s presence and reputation throughout the region.
“We had developed all the major markets in Ohio and bits of surrounding states, and we had a very strong sales and marketing team. Our facilities were also very modern, as geared up for volume as any in Ohio,” Reiter says. “The excellent Reiter name recognition for milk and ice cream products in those markets was also appealing to Dean.”
When Reiter Dairy became part of Dean Foods, which boasts 11,000 employees and annual sales exceeding $3 billion, Rollin Reiter stayed on, sharing his innovation and growth strategies.
“I ran Reiter Dairy for four more years, but I didn’t retain control because I had sold the entire company for cash. But they didn’t send anybody in to help us run our business. We actually sent people up to help them run Dean rather than the other way around,” Reiter recalls.
Rollin Reiter eventually relocated to Dean’s home office in Franklin Park, Ill., to serve as vice president for milk and ice cream sales and marketing, responsible for about 22 Dean dairies until he retired in 1993.
Reiter is today part of Dean’s northeast division — comprised of 10 dairies stretched across Pennsylvania, New York, Ohio and Kentucky. Akron Reiter serves as Dean’s regional headquarters and employs about 550 people in plant, distribution, sales, administrative and clerical positions, including Reiter’s Springfield operation. Reiter’s milk and ice cream sales exceed $100 million.
Reiter says the merger was part of a consolidation trend, even back in 1986, but the decision was one he never regretted. “The years of working with Dean were probably the happiest of my life,” he says.
Steve Paasch, Reiter’s vice president of sales and marketing, says what is known as “The Dean Advantage” has strengthened Reiter beyond measure. In terms of how Dean divisions are run, it’s like running a family business. Good thing, he says, because most Dean divisions are still run by the families who sold their dairies to Dean.
“Dean’s philosophy is to be very decentralized, so the decisions as to how we run our businesses are all made locally,” he says. “Corporate does give us some direction with products, but we make our own yearly sales and business plans, which are approved by corporate. My main objective is to achieve my sales plan, manage the sales force and stay close to the customer.”
Rollin Reiter says it’s always been that way with Dean divisions. “They didn’t go into any of their acquisitions to change the way things were run. They looked for companies that were profitable and kept the management, so they didn’t have to invest huge amounts of capital,” he says. “They even kept the names of the companies because they were important names in their markets.”
The biggest challenge in running Reiter, Paash says, is a trend Rollin Reiter saw as long ago as the late ’80s: the consolidation of retailers.
“Retailers were becoming much bigger and more powerful. The trend mea
nt you had to be a big supplier to cover a wider area to satisfy the bigger retailers,” Reiter says. “We were successfully doing that and we were one of the few in the state that were able to cover anyone in the state, wherever they went. It’s becoming a bigger game now. Much higher stakes.”
Today, there are double jeopardy pressures for Paasch.
“Not only are the dairies consolidating, but so are supermarkets. Even though I write my own annual sales plan, once it’s approved by corporate, I can’t change it. So, if one of my retailers exits this market, it’s a problem, like when Acme downsized,” he says.
Although Acme is still a good customer for Reiter, Paasch says the consolidation hurt his sales.
“And when we were a supplier for Kmart and Big K, and those retailers switched over to Suiza — our biggest competitor, based out of Dallas — there was nothing we could do about it,” he says.
There’s yet another downside to retail consolidation, Paasch says.
“A lot of major businesses here that have consolidated now have their headquarters and buying decision makers outside this area. Finast was based out of Cleveland and now they’re part of Tops. Stop and Shop was based out of Cleveland and now they’re part of Giant Eagle. We have to go to Buffalo and Pittsburgh now for sales calls,” he says.
Plus, the retailers want only one supplier, he adds. Fortunately, Dean Foods supplies fluid milk, ice cream, pickles and specialty products, he says. “That’s been a plus for us. We’re able to supply many of their needs and we have many divisions, so we’re located where we can take care of them as they’re consolidating.”
Another challenge for Reiter has been a plunge in milk consumption. Like most dairies, Reiter must try harder to appeal to customers because they’re actually competing with “The Pepsi Generation.” One way Reiter has surmounted the hurdle is through Dean’s support of the industry’s “Got Milk?” and “Where’s Your Mustache?” campaigns, which raised public awareness and curbed declining sales.
“Milk sales did start to increase over the last couple of years when that started, but then sales were flat again,” Paasch says.
So it was back to the drawing board. Again, that’s where Reiter’s alliance with Dean, which has operations in nearly two dozen states and overseas, was fortuitous.
“In trying to get consumers to drink more milk, we learned we weren’t staying up with consumer trends at the time. We really didn’t know the consumer,” Paasch says. “What we learned was that our square carton wasn’t working.” Nor did people think of milk as an all-occasion beverage, he adds.
In association with Dean, Reiter introduced one of its most successful products ever: “CHUGS!” Colorful, plastic, resealable, on-the-go bottles that are sporty yet old-fashioned in appearance. The jugs hit stores last year and made the mark with on-the-go consumers. White, chocolate and strawberry whole and reduced-fat milks are available in quarts, pints and 8-ounce multi-packs.
“It really fits the lifestyle of today’s consumer and it’s been a big hit. Now we’re looking at other innovative packaging products we can offer,” Paasch says, noting that Orange Juice Chugs are being introduced.
Speculating that soy milk sales will climb, Paasch says that’s a product he sees “down the road.”
“Organic is very small right now, soy is going to be an important part of our business,” he says.
Paasch says Dean’s corporate resources have been a tremendous asset to Reiter.
“We’ve been able to use their resources to do those things. It would be difficult for a small independent family dairy to have the dollars to do all that research and marketing. Overall, it’s helped us achieve our sales plans,” he says.
In terms of marketing, Paasch made the decision locally to pump up endeavors to promote Reiter as a first-class company. Marketing power inherent in teaming with the Cleveland Browns has companies of all kinds clamoring to give the dog a bone, and Reiter successfully finessed an arrangement in which, as a licensee of the Cleveland Browns, Reiter is the only manufacturer of milk and ice cream that can claim billing as the official dairy of the Cleveland Browns.
The alliance allows Reiter to display the Browns logo and trademark on Reiter products and advertising materials. In addition to being the dairy supplier to all food service venues in the Browns stadium, Reiter will also have arena signage.
“We’re going to use our association with the Cleveland Browns aggressively in our advertising and merchandising,” says Marty Schwartz, vice president of marketing for Dean’s northeast region. “When you think about the stakeholders, the Browns generate a certain amount of income. We’re doing this because we believe we can attract additional sales.”
Altruism enhances the image of any business, and it doesn’t hurt that a portion of Reiter’s sponsorship dollars will be funneled into the team’s charities. “We think there are benefits for the Browns, for Reiter, for Northeast Ohio consumers and for underprivileged youth who will benefit from The Cleveland Browns Foundation,” says Schwartz.
In blending with the Browns, Reiter is debuting ChampionChip Dip — a bacon and horseradish blend — and four new ice creams: Quarterback Crunch, Football Nut Sundae, Butter Pecan Blitz and Touchdown Vanilla.
All things considered, Paasch says that with so much consolidation and stiff competition, he would be hard pressed to run a dairy like Reiter without Dean’s resources.
“I think that’s why you’re seeing so many family businesses either sell to Dean Foods or Suiza,” he says. “You just don’t know how far this consolidation thing will go. There’s so much less independence in this market than there was. And you wonder, is that going to change even more?”
How to reach: Reiter Dairy (330) 745-1123 or www.deanfoods.com
