All sectors of the food processing industry experience change. And growing pains can have a very real effect on the bottom line.
To learn more about how suppliers are helping processors meet today’s top challenges, especially in the dairy industry, we spoke with Jim Hall, a 30-year sales veteran who has been with the Paul Mueller Company for the past decade.
Opened in 1940 as a sheet metal manufacturer, Paul Mueller began making dairy processing equipment in 1946. The company continues to operate out of its original Springfield, Missouri, location.
Of course, the operation has grown quite a bit over the past 75 years. Hall describes Paul Mueller as “a small international company.” However, they loom large in the food, chemical, and pharmaceutical processing industries. The 1 million ft2 Missouri facility is coupled with manufacturing and sales in Osceola, Iowa, and the Netherlands.
“The company started off manufacturing dairy farm coolers, but it has morphed into different phases,” says Hall. Mueller now makes a wide variety of products including tanks for wine and beer, a range of heat transfer equipment, and products for the chemical and pharma industries. They even make remote monitoring equipment and tank trailers for crude oil.
Hall’s focus is dairy processing. Through our conversation, he painted a picture of today’s dairy industry dealing with rapidly increasing production coupled with evolving consumer preferences and an increasingly strict regulatory environment.
In this article, we review what Hall sees as the main challenges currently facing the dairy industry — rapid growth — as well as how suppliers can help processors meet this challenge by providing education and guidance.
Faster throughput and growing product selection requires larger dairy plants
One of the biggest changes Hall has seen in dairy is a rapid growth in production. In general, faster throughput is requiring larger plants, and customers are demanding a wider selection of products.
Rapid market growth demands increased silo sizes
In the latter part of the last century, a large number of small dairy plants occupied the countryside. These facilities processed relatively few gallons of milk compared to what we see today.
But recently, those small plants have suffered. “A couple of years ago, we were seeing these plants close—mothballed, the equipment sold out of them,” says Hall. “That still continues a little bit. But, on the flip side, today we’re seeing more dairy plants under construction.”
As the dairy industry grows, bigger plants have become the norm. “Over the last 20 to 30 years,” says Hall, “we’ve seen a gradual trend of the faster throughput of milk at dairy operations. As a result, dairy companies are building larger and larger plants.”
If you need any convincing to wrap your brain around the idea of the emergence of large dairy processors, the news that Walmart is beginning to produce its own milk should do it. “It kind of makes sense,” says Hall. “Kroger does it, Safeway does it.”
Important for equipment manufacturers is that bigger plants mean bigger equipment, such as storage silos.
When tankers of milk from a dairy farm arrive at a processing facility, they empty into the type of dairy silos that Mueller manufactures. “Five years ago,” says Hall, “the maximum size of dairy silos was about 50,000 to 60,000 gallons. There were just a few 70,000-gallon tanks.” In contrast, today’s tanks average 70,000 gallons. Some processors “want up to 100,000-gallon silos,” says Hall. “The milk comes to them so fast, and they need somewhere for it to go.”
They also need to be able to move the milk through the processing plant very quickly. “They process so much product that, a lot of the time, the milk doesn’t even sit in silos for a day,” says Hall. Like many industries, dairy benefits from a just-in-time supply chain. “They bring the milk in and process it. Then the final product is out the back door, and it’s sold.”
In addition to the capacity advantages, there are definite technical benefits to larger silos. For example, if height restrictions won’t allow a 70,000-gallon silo, you can use two 35,000-gallon silos. But two silos also means twice the pumps, twice the valves, and twice the maintenance issues in general.
One technical challenge — and this goes for silos of all sizes, but can be exacerbated in large ones — is proper venting. “One issue is if the tanks don’t vent properly, the top of the tank can collapse as pressure is sucked out of it,” Hall says. That’s why it’s important for processors to have expert guidance like the type Paul Mueller provides. “We talk to people about ways to prevent incidents like that.”
New products drive growth
What is leading to all this growth? “Part of the whole equation is the availability of cattle, dairy farms, and weather—everything related to agriculture.”
Hall also sees fast-growing companies developing bigger customer bases due to the continuing development of more products. “Just look at the dairy case, the number of yogurts, cottage cheese, even butter. New products are coming at you fast and furious.”
Trends in customer preferences include a desire for new flavors and continued growth in the natural and organic food markets. These trends are especially strong among Millennials. “People like organic. Everybody’s trying something different, everybody’s trying new flavors.” For example, Hall mentioned Land O’Lakes, whose European-style and olive oil butters seem tailor-made to tap into these trends.
Organic and natural products aren’t new. But their representation in the marketplace has grown to an extent that no producer can afford to ignore. Indeed, Packaged Facts estimates that total U.S. retail sales of natural and organic foods and beverages will grow to $69 billion by the end of this year. That’s a whopping 11% increase from 2015, and 32% higher than five years earlier.
And it turns out there are niches within niches. For example, pet food. As people increasingly treat their pets as family members, human food processors are opening up to the specialty pet food market, says Hall. “We sell tanks to pet food manufacturers, and their requirements are just as high as for human food.”
Especially with new food safety requirements, guidance is key
Whether in reference to pet food or human food, government regulations are something the dairy industry — and the food industry as a whole — takes very seriously. Search for food safety or FSMA on the PROCESS EXPO blog, and you’ll see that almost all of the articles at least touch on these topics.
Another thread running through many of the articles is the need for suppliers to help educate their customers. For example, in his interview for our recent article on housekeeping, Nilfisk’s Scott Boersma noted that it would be easy for food processors to feel overwhelmed by the constantly changing regulatory landscape.
Like Boersma, Hall believes it’s the suppliers’ job to guide their customers with respect to issues affecting food safety and compliance. A major issue that impacts both is cleanliness.
“Producers and suppliers need to make sure their equipment is clean, or it could cost them their business,” Hall says.
Preventing problems like this — and the fines that go along with them — requires processors and suppliers to work together, not just in a vendor-purchaser arrangement, but as partners. Hall notes that processors needn’t feel alone in this high-stakes environment. Rather, they can and should “look to companies like Mueller to assist them.”
In an interview last summer, Commercial Food Sanitation’s Darin Zehr said that the best results come when processors and their suppliers collaborate from Day 1.
Hall echoed this idea, noting that different customers have different levels of knowledge. “It could be a small customer looking to you for help designing a tank, for instance, to figure out what they need on the particular tank itself, or for help designing a process that makes production better.” Alternatively, “you can have a highly technical customer that tells you everything that they need in a tank.” What’s important is that suppliers listen to their customers to understand exactly what they need.
In such a cooperative environment, manufacturers can serve their customers across the board. Mueller offers both equipment and services, ranging from process and design advice to field maintenance. “People are looking for a one-stop shop, so to speak,” says Hall. “If you come to us, we’ll help you develop your process and your tank requirements. We’ll manufacture the equipment, deliver it and set it up, and even take care of repairs.”
That includes field operations. Mueller’s field repair division can service many types of vessels. They’ll even build tanks in the field.
Overall, Mueller provides a model for how supplier relationships are shifting from many suppliers working on different parts of a project to fewer suppliers helping their customers every step of the way.
The good news is that this increased cooperation benefits everyone. It enables dairy processors to maximize value and meet the ever-changing demands of consumer preference. For suppliers, it creates long-term relationships that allow them to grow alongside the customers they serve.
Sounds like the beginning of a beautiful friendship!