MODESTO -- Hundreds of gallon jugs scooted along on conveyors, waiting to be filled with milk, as Frank Otis talked with a few of his employees.
As president and chief executive officer at Foster Farms Dairy in Modesto, he works to ensure that this perishable product gets safely to consumers and that supply matches demand in the volatile dairy industry.
Otis, on the job for seven months, is the first CEO who is not part of the Foster family, which founded the company in 1941.
His duties include completing the transition of Foster products to the Crystal Creamery brand, the name of a Sacramento dairy company acquired in 2007.
"It's simple and — no pun intended — it's clear," Otis said of the new name. "The family would really like us to have a unified brand."
He talked about the industry, and his company's part in it, during a Thursday morning tour of the Kansas Avenue plant. It produces fluid milk for California consumers, as well as butter, powdered milk, sour cream, ice cream and many other products for markets in the United States and export destinations.
A steady stream of tankers delivers raw milk from 23 dairy farms between Manteca and Chowchilla; five of them are owned by the company, the rest by contractors.
Max and Verda Foster founded the company two years after starting a separate poultry operation with the same name.
Otis, 52, has more than 20 years of dairy experience, most recently as president and CEO of the French-owned Alouette cheese company in the United States. In his new job, he reports to a seven-member board that includes four Foster family members.
The Crystal transition started soon after the purchase and is expected to be complete in about a year. The milk jugs, ice cream cartons and other products already have "Crystal" in big letters and "Foster family owned" in a smaller font. The logos on many of the trucks also have been converted.
One thing is not changing: The company remains one of Modesto's largest employers, with more than 600 workers.
"Foster Farms is a very important processor in our state," said Michael Marsh, chief executive officer at Western United Dairymen, a farmer group based in Modesto. "They offer consumers a broad range of dairy products."
The shift to the Crystal label allows the company to leverage "a whole bunch of brand equity," Marsh said.
Crystal was founded in Sacramento in 1901 and long was a prominent part of that area's dairy market. The brand identification there, as well as in the Stockton area, helped prompt the shift, Otis said.
He said Crystal's dairy market share in Northern California — generally stretching from Stockton north to Redding — is about 9 percent. Ultimately, he hopes to boost that to 25 percent to 30 percent.
Foster Farms will remain the name of the poultry company, which has its headquarters and a chicken plant in Livingston and produces turkeys in Turlock.
Foster Farms Dairy's push to become all-Crystal Creamery drew approval from Robert Reynolds, a supermarket consultant in Moraga.
"I became aware that Foster Farms actually owned Crystal within the last week, and I can't tell you exactly why I didn't know that," Reynolds said. "I believe Crystal is a strong brand, especially in the Central Valley around Stockton, but now I'm starting to see it appear in some stores in the East Bay Area."
Reynolds also said the push for Crystal Creamery is smart because, even though Foster Farms' poultry operations are separate from its dairy operations, the public has a mind-set on the Foster Farms name. "For many … Foster Farms stands for chicken. Crystal stands for milk," Reynolds said.
He speculated that gaining market share and shelf space in larger Northern California stores will be a challenge as Crystal Creamery products will compete for attention with well-known national brands and increasing numbers of private-label brands.
However, Reynolds added that Crystal has an advantage in the Northern California market because the brand has been around for so long.
"It stands for local. It stands for quality, in the minds of some people. All of those are strong brand attributes," he said.
Peter Schaub, a marketing and branding expert in New York, also likes Crystal Creamery's chances up the road.
"If you were coming into a part of the country cold with a totally unknown brand, I'd say you're going to have a real fight on your hands to gain market share and opportunities from retailers," Schaub said. "But if the brand already has a certain iconic status in the region, you're ahead of the game."
The dairy company, while drawing inspiration from the past, also has an eye on the future. Otis said it is exploring new packaging, new options for flavored milk and the increased use of "probiotic" yogurt for digestive health. He also noted research into the idea that athletes can re-energize by chugging chocolate milk. "That's the biggest challenge of the milk industry — we need to innovate," he said.
Crystal's regional marketing blitz includes a touch borrowed from Wheaties, the cereal brand that long has featured box covers with photos of nationally known athletes. Crystal's spin on that is putting California Interscholastic Federation Sac-Joaquin Section sports champions on commemorative milk cartons to honor their success. The sponsorship program was launched this fall and will include champions in winter and spring sports in 2013.
The Sac-Joaquin Section includes 196 high schools in 27 athletic leagues representing more than 225,000 student athletes.
Milk is the top-grossing farm product in the Northern San Joaquin Valley and statewide, but high feed costs have squeezed the margins in recent years. Otis said the industry must reform the complex milk pricing system in a way that helps farmers turn a profit.
"I think the industry needs to come to grips with the fact that everybody has to make money at this, and the volatility only adds to the difficulty of doing that," he said.
Dairy might be the most complex of farm enterprises, but it has a simple advantage: It makes tasty products that people have long craved. The CEO's own favorite is chocolate chip ice cream.
"Some people like to have a glass of wine," Otis said. "I like to have a cup of ice cream."
Bee staff writer John Holland can be reached at jholland@modbee.com or (209) 578-2385.
AT A GLANCE
A brief history of Foster Farms Dairy:
• Origin: Founded in Modesto in 1941 by Max and Verda Foster, who also started the separate Foster Farms poultry company two years earlier. The family still owns both.
• Employees: About 1,100, including more than 600 at the headquarters and main plant on Kansas Avenue in Modesto
• Annual sales: About $600 million
• Products: Fluid milk, whipping cream, buttermilk, egg nog, juices, butter, sour cream, yogurt, cottage cheese, ice cream, frozen yogurt and others
• Key acquisitions: Foster Farms bought Crystal Creamery in Sacramento in 2007; it is in the process of transitioning all products to the Crystal label. In 2009, Foster Farms bought Humboldt Creamery near Eureka, including an organic line.
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