Omsco, a UK organic dairy co-operative with 120 farmer members, has rebranded to Organic Herd and will launch a new own-brand range of cheese, butter, chocolate and drinking chocolate in selected UK artisanal and online stores. Known in the US for its range of Kingdom Organic and British Organic Dairy Co. cheddars, the co-operative now wants to explore its home market while also looking to enter other overseas territories in the new year.
A new value-added offering is hoped to bolster the co-op’s resilience and provide additional income to farmers, who have enjoyed a stable milk price, receiving market-leading 49ppl/$0.62 since October 2022, a premium of roughly 10-12ppl compared to the average conventional milk price.
But with British shoppers continuing to trade down and organic milk losing more than 15% of volume compared to 3.3% for conventional in H1 2023, launching a new range of organic products still feels like a gamble at this time. We caught up with Organic Herd CEO Martyn Anthony to find out why the time was right for this launch, how the rebrand came about, and how the co-operative’s export strategy is shaping.
Putting value before price
Anthony told us that while UK retail volumes had been down, demand for organic milk from processors has been increasing. “The current demand for our UK organic liquid milk from processing customers – and PWAB milk for the US market – has to the contrary seen growth year on year and is still increasing. The balance of our core liquid business must be complemented by branded, value-added products that deliver healthy contributions to effectively build resilience in our business model. This is no different to any other manufacturing model [and] we already have a well-established export channel that delivers extremely well against this brief.”
“We know that organic dairy has a strong core base of loyal consumers who still put values before price when it comes to their buying decisions.” – Martyn Anthony, CEO, Organic Herd
The UK market is yet to catch up with the likes of the US when it comes to recognition for organic dairy products, he suggested. “Our international products are going to markets that are perhaps more seasoned at recognizing and in fact insisting upon characteristics such as organic and antibiotic-free dairy. The UK market, however, needs to be taken on this journey. To achieve this, we need a vehicle to convey these important messages and inspire our consumers and customers. This comes in the form of a sensible range of wide-reaching products, to bring this to life.”
The range will initially include 14 SKUs with the following: Organic Cheddars, from £3.79/$4.79 (200g); Organic Velvety cheeses, from £5.25/$6.64 (150g); Organic Butters, from £3.99/$5.05 (250g salted & unsalted block/ 80g flavoured butter rolls), Organic Chocolate, from £3.89/$4.90 (100g bar), and Organic Drinking Chocolate at £6.99/$8.84 (140g flaked hot chocolate pack). “We have initially focussed on launching some standout disruptive products to engage with consumers and gain wider brand penetration,” Anthony explained. “The range has primarily been designed around consumers who seek a sensory journey through their shopping and who make buying decisions around climate concerns, and who buy into the ethos of a company.
“The products are specifically designed to disrupt a consumer’s journey and intrigue them in to exploring the product, to see that organic dairy not only tastes great but also delivers against their environment and social sustainability concerns.”
Asked about the co-op’s approach to sustainability, Anthony explained: “Our approach to sustainability is deeply-rooted in our organic farming practices, the original and naturally regenerative farming system. From building nutrient-rich soil, to enhancing biodiversity, our farmers work hand in hand with nature, resulting in 50% more wildlife or organic farms. In addition to this, many of our farmers care for several critical landscapes including Sites of Special Scientific Interest, Area of Outstanding Natural Beauty, wetlands, moorland and protected nesting sites, all of which are flourishing through sensitive organic management. By doing this, we’re not just producing high-quality organic dairy; we’re creating a regenerative farming system that benefits us all. Our farming system, unlike claims made by other companies on regenerative and sustainable, are based on a the only legally-defined and diligently-audited standard.”
Back to business, there’s also the aspect of the UK artisanal market as an ‘important and growing outlet for consumers seeking a sensory shopping experience’ as Anthony put it. The UK’s circa 1,600 artisanal food stores generate £1.4bn in annual sales of which £500m comes from organic. “From an Organic Herd perspective, we have intentionally focused our own premium quality organic dairy products into these more premium retail channels such as artisanal food outlets and online stores, delis and farm shops,” he explained. “Our branded products have been specifically developed for this type of retail environment and we believe they will prove attractive to their shoppers who tend to have a greater disposal income, put a premium on quality taste and provenance, and naturally buy into the values of organic dairy.”
“There are clear signs that, executed in the right way, this strategy is robust and will deliver the message and value for consumers and members,” the chief executive added.
A balancing act
With the co-op continuing to supply third-party processors, its own-brand products have been designed not to conflict with those already developed by the co-op’s customers. “The value-added product side of our business is designed to complement and not cannibalize the hugely valued, long-term customers that we have worked with for many years,” Anthony said. “We have, therefore, made them aware from the early onset of the plan to rebrand. We have also personally introduced them to the rebrand in advance of the launch.
“Strengthening the messaging about the credentials of our organic dairy herd by rebranding and developing a voice is specifically designed to have a positive impact across the sector. You will see that from our first phase of products we are most certainly looking to develop our relationships to help enhance not only the organic message, but the value-added opportunities with all our partners.”
The Organic Herd range will be stocked and distributed via the Peter Green next-day delivery network and available from an array of wholesalers and direct to retail outlets as well as farmers’ own stores. “We are currently in advanced discussions with a range of retailers, both physical and online,” the CEO added.
Organic Herd enjoys a presence in the US through several brands including Organic Kingdom cheddar and British Organic Dairy Co.- cheddars, the latter made in partnership with Wyke Farms. Exporting to the US market has brought additional returns to the co-op and has been a crucial factor in maintaining a stable milk price for farmers. According to the Organic Herd CEO, the co-op’s international brands continue to perform well and are currently meeting expectations on penetration and growth, with an outlook that the organization expects to meet some stretch targets. “The US market had the same challenges as those in the UK and EU with the cost of living have a huge impact on retail sectors,” he told us. “However, we have seen that consumers remain loyal to the strong association to UK-based products, which carry the badge of quality and food safety.”
Going forward, the co-op will continue to focus on the US market first, but is also exploring other options. “[We] are also starting to look at other established markets, e.g. Australia and New Zealand, and emerging markets such as South East Asia,” the chief executive revealed. “Indeed, we have begun exploring partnerships to unlock these regions for 2024.”
‘Market-leading’ milk price to be held again
While being paid a stable farmgate milk price for the past year would have been comforting for the co-op’s farmers, the UK’s contracting organic milk pool – projected to dwindle further in the coming months – could put further pressure on retail pricing if processors are unable to secure the required volumes.
Anthony told the co-op will hold its 49ppl price for October, but is increasingly looking at how to improve production. “We are pleased to have informed our members this week that their October price will continue to be held at 49ppl on a standard liter basis. We have also encouraged our members to review the practicality of volume growth to support our strategy and growing demand.”