Making Milk Great Again
April 12, 2019
Written By Adam Buckallew
As Barb Shatto strolls through the freestall barn where dozens of her family’s dairy herd are busy feeding, she occasionally pauses to greet friendly cattle. “How are you doing this morning?” she asks while bending down to affectionately scratch behind the ears of a curious Holstein.
This ritual plays out daily on the farm in Osborn, Mo., that’s been in Barb’s family for more than a century, but its continuance was in doubt 16 years ago.
In 2003, Barb and her husband, Leroy, were struggling to keep the dairy afloat. The price they were being paid for their milk was not enough to cover their expenses, and the couple faced a difficult decision: they could either sell the dairy or risk everything by betting on themselves and drastically changing their operation.
“At the time, we were getting paid the same price for our milk as my father had been paid 20 years earlier,” recalls Barb, owner and president of Shatto Milk Company. “We knew we had to do things differently if we were going to survive.”
A Bold Plan
Unwilling to give up, the Shattos went all-in on a new approach – transforming their traditional dairy into a milk company. Instead of selling their raw milk to a dairy co-op, Barb and Leroy chose to bottle their own milk and sell it directly to supermarkets.
Cutting out the middle man offered the Shattos the opportunity to set their own milk prices, but the path was also fraught with uncertainty. A sizable loan was needed to build a processing plant, outfit it with the necessary equipment, and acquire the trucks that handle the dairy’s deliveries.
Matt Schapelar, who works as the dairy’s farm manager and senior herdsman, still marvels at the guts and determination it took to embark on such an undertaking.
“It’s a massive gamble with major risks to do something like this, because if you don’t find a market for your milk, you are going out of business in a hurry,” Schapelar says. “Once you leave a milk cooperative, you burn that bridge as soon as you cross it. They are now your competition, and you’ve got a product with an incredibly short shelf life that needs to be sold.”
Convincing a lender to back the Shattos’ vertical integration idea was among the harder parts of setting the plan in motion.
“Most banks just didn’t have any interest in talking to us, much less any other dairy farmer,” Barb says. “They told us there was no money in it. But, finally, we found a local bank that believed in us.”
When the Shattos began to independently market their milk, they had 80 cows and were supplying only eight stores. However, their milk quickly caught on with consumers, and it wasn’t long before their demand began to outpace their production. By the end of their first year of business, the Shattos had doubled their herd and their products were being sold in 44 stores. Today, they work with more than 100 retail outlets and are milking 300 cows.
Despite the larger herd size, Schapelar says the dairy still can’t ship milk fast enough to keep up with stores’ requests.
“We get calls all the time from supermarkets wanting more milk,” he says. “I guarantee we haven’t even touched the bottom of the barrel on the demand side, but our production is pretty much maxed out at the moment with the facilities we have.”
There’s no mistaking the milk that comes from Shatto Milk Company with other options in the dairy cooler at grocery stores. The Shattos knew they needed something to set their milk apart and selected sleek glass bottles with a nostalgic vibe. Besides looking great on the shelf at stores, Barb says the retro bottles keep milk colder than plastic jugs or paper cartons and milk in a glass bottle simply tastes better because there is no taste transference.
The Shattos adorn each bottle with their logo and a large single word like “Local,” “Family,” “Pure” and “Yummy” inscribed in black lettering.
“We keep our branding really simple,” says Barb. “We’re local, our dairy is family-owned and the milk is always fresh. That’s what we are all about and it resonates with our customers.”
All the dairy’s milk is sold within a 100-mile radius of the farm with most of it heading about an hour down Interstate 35 to Kansas City, Mo. The farm’s proximity to the Kansas City metro area and nearby St. Joseph, Mo., allows the Shattos to tap into the growing consumer demand for local foods.
“Most of our milk goes from the cow to the consumer in 24 hours, and many times our trucks are waiting for us to process our milk before they can deliver the next load because the stores have already sold out,” Barb says. “You can’t get milk fresher than that unless you have a cow in your backyard.”
Barb says one of the keys to building the brand’s customer base has been putting a fun twist on dairy products. Non-traditional milk flavorings like banana, cotton candy, root beer, and cookies and cream, in addition to classics like chocolate and strawberry, are popular with all ages.
To celebrate the milk company’s 10th anniversary, the Shattos introduced new limited-edition flavors like blueberry, apple pie and birthday cake each month of the year to much fanfare.
Special releases tied to events like the Kansas City Royals World Series championship and welcoming Kansas City Chiefs quarterback Patrick Mahomes to the area have been hot commodities.
The “Mahomes” milk, which had a red velvet flavor, came in a bottle emblazoned with yellow lettering and red tinted milk that matched the Chiefs’ colors. Shatto fans lined up at grocery stores and the dairy for their chance to buy one of the bottles.
“People were following our delivery trucks to get the red velvet milk,” Barb says. “It sold out like wildfire within 45 minutes everywhere it was available, and we received hundreds of calls about it.”
The Shattos have gradually expanded their portfolio of products. In addition to milk, they sell cheese curds, aged artisanal cheeses, ice cream, butter and bottles of non-dairy drinks like lemonade and fruit punch. Many of their products have received top honors at international dairy competitions like the World Dairy Expo.
The Shattos research and develop all of their own products and are currently working on string cheese and a line of spreadable cheese dips they hope to release later this year.
On an overcast early spring morning, a throng of teenagers has descended on the Shattos’ farm. The students have been bussed up from Oak Park High School in Kansas City for a field trip, and they are not alone. A group of parents escorts their toddlers around the premises. It’s all part of a normal day on the dairy where tours are conducted by appointment five days a week.
From the get-go, Barb knew she wanted to offer tours of the farm and milk bottling facility and open a country store for visitors. Though Leroy was initially skeptical, Barb won out and now the Shattos host 150,000 guests on their farm each year.
“The tours help our customers to see how much we care for our cows and what it takes to prepare our products,” Barb says. “They’ve also been instrumental in creating customer loyalty and provide us with opportunities to gather valuable feedback.”
For $6 per person, guests are guided on an hour-and-a-half-long tour that includes a stop in the dairy’s milking parlor, an opportunity to milk a cow, and visits to the calf barn and processing plant before concluding in the country store where milk samples are available.
Built to Last
As the company has grown from a two-person operation to one that employs 50, the Shattos remain grounded and committed to continuing to please their legion of dairy devotees.
“We’re just simple people who love what we do,” Barb says.
Barb credits her parents, Ivan and Georgia Cox, with instilling in her the values and work ethic she has relied upon to keep their family’s farming legacy going strong. She and Leroy have been careful to pass those same standards on to their son, Matt, who runs the family’s home delivery business, which launched in 2015.
“Someday this will all be Matt’s, and we’re hoping his three sons will carry on the tradition,” Barb says. “We’ve got the milk company, the home delivery business and Matt’s in the process of creating a third business. Our intent is to eventually have a piece of the pie for each of our grandsons.”