Berkeley Farms, Inc.

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Berkeley Farms, Inc.

25500 Clawiter Road
Hayward, California 94545
U.S.A.
Telephone: (510) 265-8600
Fax: (510) 265-8754
Web site: http://www.berkeleyfarms.com

Wholly-Owned Subsidiary of Dean Foods Company
Founded: 1910
Employees: 557
Sales: $158 Million (1997)
NAIC: 112120 Dairy Cattle and Milk Production; 311511 Fluid Milk Manufacturing; 311512 Creamery Butter manufacturing; 311520 Ice Cream Manufacturing

Berkeley Farms, Inc. processes and markets a complete line of fluid milk and other dairy products in northern California. The company obtains milk from independent dairy farms in northern California and from its own dairy ranch in the San Joaquin Valley and uses milk free of recombinant bovine growth hormone (rBGH). Berkeley Farms produces and distributes more than 135,000 gallons of milk daily, including whole, 2 percent lowfat, 1 percent lowfat, and nonfat milk, and chocolate and strawberry flavored milk. Milk is sold in packaging as small as a one-half pint chug and as large as a five-gallon bag-in-box, used in food service institutions. The company’s line of dairy products include ice cream and ice cream novelties, heavy whipping cream, sour cream, butter, cottage cheese, yogurt, buttermilk, and seasonal egg nog. Berkeley Farms owns Bud’s Ice Cream, its brand of premium ice cream, with many flavors named after San Francisco landmarks, such as Golden Gate Vanilla, Alcatraz Rock Road, and Market Street Mint Cup. The company distributes its products to supermarkets, independent grocers, convenience stores, large discount stores, and food service businesses throughout California. Companion products for distribution include eggs, fruit drinks, and popular brands of orange juice and other fruit juices.

Company Origins

Berkeley Farms founder John Sabatte immigrated to the United States in 1895 at the age of 17. He found employment in an Oakland, California, restaurant, quickly becoming the maitre d’. Several years later, after a prolonged illness, Sabatte turned to milk distribution, working with an uncle. He and a business partner purchased a milk distribution route in South Berkeley in 1908 and named their business the South Berkeley Creamery. At that time milk distribution involved transporting raw milk in large containers and transferring it to containers owned by the customers. The company purchased milk from farmers in Alameda and Contra Costa counties and transported it by horse-drawn cart in ten-gallon milk cans. At the customer’s home, they ladled milk into pitchers.

When Sabatte started his own business in 1910, he retained the company name. The company expanded to serve new distribution routes, requiring Sabette to relocate the Creamery to Oakland, near South Berkeley. Sabatte operated the business with the help of his wife, Mary Sarraute Sabette, who was also a French immigrant. In addition to caring for their five sons, she prepared meals for the company’s ten employees who lived on-site and, later, helped with the milk bottling operation.

During the 1910s and 1920s, technology transformed the milk processing and distribution business. Compulsory pasteurization required milk processors to install appropriate equipment, which meant that the milk remained fresh longer. The use of Ford Model T’s to deliver milk and the ease of distribution that came with milk storage in bottles allowed the creamery to expand its distribution over greater distances. The creamery expanded its product offering to include a complete line of dairy products, such as whipping cream, sour cream, ice cream, and buttermilk, then under the brand Lady Berkeley. By 1932, the company employed twenty men and served 11 delivery routes.

The Great Depression brought great difficulties to the California dairy industry. Retail stores engaged in a price war for milk, selling a quart for as low as a penny. To guarantee higher prices from milk processors, dairy farmers dumped their milk. The State of California stabilized prices by enacting a law that set a minimum resale price on milk at $0.12 per quart for home delivery and $0.09 per quart at retail stores. Despite the challenges of the era, the South Berkeley Creamery grew to serve 28 routes with 40 employees in 1940. Home delivery of milk was at its peak during the 1930s, 1940s, and into the 1950s. By 1947, the company needed to relocate to a larger milk processing facility in Emeryville, which was near Berkeley. The new, $500,000 plant processed 10,000 gallons of milk per day initially and was expanded several times over the next 50 years.

Sabatte’s five sons were instrumental in the growth of the creamery and took leading positions at the company. George P. became transportation manager; Albert M., sales manager; Frank E., general manager; John A., ice cream and milk plant operations manager; and Remond C., office and restaurant manager. In 1953, the Sabatte sons took full control of the company, and four years later John Sabatte died.

In 1955, the company operated branch distribution centers in Hayward, San Mateo, and Walnut Creek. The company counted 240 delivery routes and 305 employees. Berkeley Farms fountain restaurants provided another outlet for the company’s dairy products, particularly its ice cream. In addition to serving basic American diner food, Berkeley Farms restaurants served ice cream dessert specialties, such as the popular Berkeley Farms Derby, made with chocolate and black walnut ice cream topped with fudge, nuts, and a cherry. The restaurants offered hand packed or pre-packed ice cream for customers to take home. Berkeley Farms fountain restaurants opened throughout the company’s milk delivery territory, including Alameda, Walnut Creek, Navoto, and Tracy. The South Berkeley Creamery became Berkeley Farms in 1956.

Adapting to Industry Changes in the 1950s–60s

During the 1950s, home delivery of milk declined in the face of increased competition from retail grocers, as dairies owned by supermarkets competed with companies like Berkeley Farms. Berkeley Farms felt the effects of retail competition. The company hired James Plessas, Inc. in 1965 to develop advertising for the company. The firm developed what may be the longest running and most memorable advertising slogan in the San Francisco Bay Area. To the tagline, “Farms in Berkeley?,” a cow responded, “Mooooo.” Berkeley Farms had the advertisement painted on its delivery trucks and used it in radio and print advertisements. In 1970, the radio advertisements featured the voice of Mel Blanc, a native of San Francisco and famous for providing the cartoon voices of Bugs Bunny, Elmer Fudd, Porky Pig, and many other Loony Tune characters.

By 1967, the decline in home delivery milk sales caused the Sabattes to call a meeting of family members involved in the business, including several grandchildren of the founder, to chart the future of Berkeley Farms. They determined to adapt to the changing conditions of the dairy industry by repositioning the company for the institutional and grocery wholesale milk business. Berkeley Farms sought new customers among supermarkets, small grocers, convenience stores, and food service providers, and they phased-out its home delivery service.

The founder’s grandchildren were involved in the renewal of the company, with sons taking positions in sales and dairy operations and daughters in the office and restaurant operations. Donald Sabatte managed operations in Hayward and San Mateo and expanded business into Santa Clara and Monterey counties, eventually becoming executive vice-president as he became responsible for labor and operations. Norman Sabatte sought new business in Contra Costa County and Gary Sabatte in the highly competitive San Francisco market.

Changes at Berkeley Farms involved expansion to adjacent markets through acquisition of other small dairy companies, beginning with Tomales Bay Creamery in 1968 and the Christopher Dairy in 1970. Later acquisitions included the Edelweiss Dairy, Arden Farms, and Adohr Farms. In 1975, Berkeley Farms began operations of a dairy cattle ranch in Firebaugh in San Joaquin Valley, managed and partly owned by Sabatte granddaughter Michelle. The company owned a closed herd of Holsteins, employing dairy experts and nutritionists to care for the animals. Berkeley Farms grew its own feed on 1,500 acres to ensure its nutritional value for the herd. Also, the company practiced integrated pest management to minimize use of pesticides on cattle feed crops.

By 1986, Berkeley Farms listed at number 58 of the top 100 private companies in the San Francisco Bay area, recording $98 million in revenues the previous year. Growth continued steadily to $115 million in 1989, when the company had 450 employees.

In 1990, Berkeley Farms concentrated on expanding its ice cream business when Roger and Randy Sabatte formed a separate ice cream division. As premium ice cream with rich flavor and high butterfat content became popular among consumers, Berkeley Farms tried to develop and promote its Lady Berkeley premium ice cream, but without success. Instead, in 1991 the company purchased most of the assets of Bud’s Ice Cream, a well-known, premium ice cream maker founded in San Francisco in 1932. In recent years, the Bud’s brand had been weakened by competition from new brands, such as Haagen-Daz, Dreyers Grand, and Breyers, and by less consumer awareness as the owners decreased spending on advertising. In 1990, a group of Wisconsin investors purchased Bud’s Ice Cream, then in bankruptcy.

Company Perspectives:

As California’s oldest continuous milk processor, we pledge to continue our commitment to provide customers with the highest quality products and services. The foundation of this pledge comes from the two pillars of pride and respect. We take pride in our ability to consistently deliver the finest products through our family farms and our advanced animal husbandry.

Berkeley Farms purchased the company’s brand name, ice cream formula, product line, trademarks, and a production facility in South San Francisco. Ownership by Berkeley Farms gave Bud’s Ice Cream access to distribution throughout California. The investment group retained control of 140 ice cream parlor franchises in California and a joint venture to operate Bud’s in China, where it was the only ice cream brand with a license to do business, and in Thailand. Berkeley Farms shared in the profits of the overseas ventures as well as in Bud’s gourmet quality egg nog, produced in the United States.

Berkeley Farms followed the acquisition of Bud’s with an advertising campaign to reestablish the brand name quickly. Advertising included radio spots, print ads in Bon Appetit and Better Homes and Gardens magazines, and limited television exposure. The company sought to establish new markets for the product, particularly with small grocers not yet committed to Haagen-Daz or other brands of premium ice cream. Bud’s became the only ice cream served at the 75 Penguin Frozen Yogurt Shops in California. Plans for national distribution began with entry into Nevada and Arizona markets. In 1993, Bud’s introduced Mocha Bean Crunch ice cream, a coffee flavored ice cream with chocolate-covered coffee beans, as its signature product.

Late 1990s: A New Facility and New Ownership

In the late 1990s, Berkeley Farms required a new facility for its milk processing, packaging, and distribution operations. The company maintained its commitment to remain in the San Francisco Bay area and found a 20-acre site in Hayward. Berkeley Farms completed construction on the $55 million project and relocated operations in March 1998. The 228,000-square-foot facility processed 135,000 gallons of milk per day, with a capacity to process 200,000 gallons per day, the largest rBGH-free milk processing facility on the west coast. The nine packaging lines included the addition of a new plastic bottle filler, with a capacity to fill 105 gallon-bottles per minute, and two new fillers for table-top milk cartons. Berkeley Farms planned to relocate ice cream production to the Hayward site; at a cost of $15 million, the facility would make 30,000 gallons of ice cream per day.

State-of-the-art technology involved an automated order entry and picking system (SAM) to simplify distribution in the 50,000-square-foot refrigerated milk holding room. SAM used an automated vision sortation device which directed stacks of plastic milk cases to one of 26 conveyor lanes. Each lane had the capacity to carry 136 six-high stacks of plastic cases, a total of 21,000 plastic milk cases per lane. SAM handled half-gallon, school-size milk cartons, plastic gallon bottles. The system allowed four people to unload for distribution more than 4,000 plastic milk cases per hour. Order preparation for yogurt, cottage cheese, and other dairy products were handled manually in a different area. Over those lanes, light displays informed order pickers the amount of product needed for each order.

In November 1998, Dean Foods Company, the largest processor of milk in the country, acquired Berkeley Farms, in part to capitalize on the new plant. Berkeley Farms continued to operate as they had before the change in ownership, adding $158 million in annual revenues to Dean Foods $3.3 billion in revenues. In May 2000, Dean Foods closed the San Leandro milk processing plant and consolidated operations at the Hayward plant. Also, the company installed three packaging lines for filling chugs (re-sealable, single-serving, plastic milk bottles) in half-pint or one-pint sizes. In March 2000, the company installed a new cooler at the Hayward plant to support distribution of the new chugs line. The Krispy Kreme chain of donut shops carried Berkeley Farms chugs in stores in northern California.

While Berkeley Farms continued to use the long-running tag line, “Farms in Berkeley?” to advertise the company, Dean Foods hired a new advertising agency and initiated an advertising campaign using the tag line, “Pure. California.” Advertising outlets included radio, newspaper inserts, and outdoor locations, such as bus shelters.

Principal Competitors

California Dairies, Inc.; Horizon Organic Holding Company.

Key Dates:

1910:: John Sabatte forms the South Berkeley Creamery.
1956:: The South Berkeley Creamer is renamed Berkeley Farms.
1965:: The company’s long-running advertisement—“Farms in Berkeley?”—is initiated.
1998:: Dean Foods acquires Berkeley Farms.
2000:: Berkeley Farms introduces milk chugs—re-sealable, single-serving, plastic milk bottles.