CHICAGO — Standing in the dim basement of a meatpacking plant in the West Loop neighborhood, a 35-year-old start-up founder named Travis Pyykkonen conjured up a wholesome vision that was almost bucolic.
In one corner, Mr. Pyykkonen imagined a milk bar where customers could add blackberry-basil or banana-almond butter to fresh milk pasteurized on site. Over by some derelict filing cabinets, he saw a case for yogurt parfaits and house-made ice creams.
“What do we call ourselves?” he asked. “A microdairy. Like a microbrewery.”
His company, 1871 Dairy, already supplies grass-fed cow’s milk to Chicago’s top restaurants, including Alinea, Next and Blackbird. In the coming months, Mr. Pyykkonen will move his processing operation from Wisconsin to this au courant neighborhood a mile west of downtown, where meatpackers and fish smokehouses are making way for small-batch salumerias and coffee roasters.
Add milk to the long list of traditional foods that are being rediscovered by young entrepreneurs and reintroduced in small-batch — and often high-priced — form. That 1871 Dairy aims to process organic milk in a city, far from the dairy industry’s rural roots, makes it unusual in its ambition.
But the advent of high-end milk is about more than just a fashionable business venture. As historically low milk prices leave many mom-and-pop farmers struggling, some are choosing to ride the wave of the nation’s new food awareness. They are eschewing the traditional model of selling to commercial processors, instead bottling their own milk (and ice cream and yogurt) and selling it directly to customers. And they are heralding the various ways it may be different from conventional milk — whether unhomogenized, organic, from grass-fed cows or locally produced.
Milk, by its perishable nature, has always been a local product; most milk in this country travels less than 100 miles from farm to bottling plant, according to Dairy Management Incorporated, a national trade organization that helped promote the “Got Milk?” advertising campaign. Yet only in the last few years has it been widely marketed to consumers striving to “eat local.”
Now many restaurant menus cite the provenance of their dairy products in the same way they boast of grass-fed rib-eyes and hydroponic tomatoes. And consumers are willing to spend more for boutique milk at farmers’ markets and upscale grocers. At Whole Foods Markets nationwide, sales of grass-fed cow’s milk — much of it locally produced — have experienced “high double-digit growth during the past two years and will likely increase in 2016,” said Julie Blubaugh, the manager of local products for the company’s Midwest division. That surge is even more remarkable given the long slump in overall milk sales. Annual fluid-milk consumption has fallen to 159 pounds per person in 2014, from 247 pounds in 1975, according to data from the United States Department of Agriculture. (Yet American milk production is at an all-time high, buoyed by demand for cheese, yogurt and butter.)
In East Homer, N.Y., a half-hour drive south of Syracuse, a small dairy called Trinity Valley began bottling its own products in 2014 in addition to selling its raw milk to larger commercial processors. Branden Brown, who runs the farm with his wife, Rebekah, and her parents, Ken and Sue Poole, said they were losing money after several years of record low prices, and saw the chance to charge more for premium products.
“In this day and age, with the milk market so volatile, farmers have three options: You get a niche and process your own milk, you get bigger, or you get out of dairy farming,” said Mr. Brown, 26.
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