Return of the milkman - Home deliver makes small comeback

Thursday, July 22, 2004

CONCORD, N.H. -- When he became a milkman in 2002, Ron Panneton knew the numbers weren't good.

Everything indicated he was jumping into a dying industry. Home delivery once accounted for most milk sales. By 1963 it was about a third. By 2001 it represented a paltry 0.4 percent.

Two years later Panneton is indeed struggling -- to keep pace with demand.

Interest in his glass-bottled milk is so strong that his Barnstead-based Catamount Farm is turning away customers until he and his wife add a second truck and hire their first employee later this summer. His customer list has doubled to 200 from a year ago.

It's a story repeated nationwide as dairy delivery bucks the supercenter trend and grapples with an unexpected demand that industry officials attribute to a combination of nostalgia, convenience and taste.

"I don't know why, but in the glass bottle, it just tastes so good," said Robin Hempel, a Gilmanton woman who stopped Panneton on the street recently to arrange home delivery after seeing the sign on his truck.

The U.S. Department of Agriculture has tracked the steady -- and sometimes speedy -- decline of home-delivered milk since the 1960s, a fate dairy officials blame on the rise of the supermarket, better home refrigeration and longer-lasting milk.

But John Rourke, a dairy marketing specialist at the USDA, said the market has changed recently, albeit slightly. Though new data won't be available until fall, he expects to see home-delivered milk sales plateau or even increase slightly.

He said it likely is due to greater consumer interest in local and organic products, not to changes in milk consumption, which fell half a gallon to about 21 1/2 gallons per person last year, part of a decline that began in the 1970s.

Most dairy delivery companies don't raise cows or produce their own milk. Like Panneton, they often tout milk from local farms, much of it produced organically or without the use of added hormones. Such products are part of a growing natural foods market.

This isn't the milkman of yesteryear, and part of the success may be a willingness to branch out. In addition to cheeses, eggs and ice cream, many also offer specialty meats, breads, jams and even frozen pizza and cut flowers.

Convenience also plays a role in the milk's appeal. Though the cost of delivery and the higher price of the milk make it too expensive for many families, more people are willing to trade money for time, said Katie Koppenhoefer, spokeswoman for the International Dairy Foods Association.

And most home milk delivery customers apparently have the money. For example, a half-gallon of whole milk from Catamount Farm is $3.85, which includes $1.50 deposit on the bottle. Delivery costs $2 per trip.

Companies said most of their customers are middle- to upper-class families.

The bottled milk boom is benefiting big companies, too. H.P. Hood, a national dairy company based in Chelsea, Mass., has been delivering milk in New England since 1846. Today it has 12,000 home delivery customers.

"There's a lot of interest, a huge amount of interest, and we don't even advertise," said Stephen Vigneau with Hood's home delivery division.

The industry's growth also has meant more business for some dairies. Howard Hatch, owner of Hatchland Farm in Haverhill, N.H., provides milk to Massachusetts delivery companies. He recently had to build a new processing plant.

"We used to go down once or twice a week with a small delivery truck," the lifelong dairy farmer said. "Now we're going three days a week with 48-foot trailers."

And remember the metal boxes that kept milk cool on the porch? They're back, too, along with more business for the handful of sheet metal companies that make them.

Daffne Temple, sales and marketing manager for McShane Metal Products in Erie, Pa., said dairies urged the company to sell its medical laboratory boxes as milk boxes. Now they sell thousands a year.

But growth hasn't come without challenges. Despite the new trend, Panneton notes that few people are getting into the business, so resources for people like him are rare.

And though customer rosters are increasing, finding those customers can mean driving many miles. When milk delivery was more common, a company could be profitable with just a few small communities.

Modern delivery companies must significantly expand their coverage areas to get the same customer base.

"Once I had maybe 400 customers in one city," said Mike Forbes, who owns a delivery service in Elk Grove, Calif. "Now I've got 800 in two counties."

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