By Eleanor Kinney, Slow Money Founding Member
A recent multimillion-dollar investment in MOOMilk, an L3C based in Augusta, Maine that produces organic milk from dairies around the state, is enough to stabilize a company whose story includes an admittedly rocky start. Slow Money Maine facilitated just over $3 million of the $3.9 million equity round.
The inception of MOOMilk was a leap of faith. Born out of crisis in 2009, when 10 organic Maine dairy farms lost their contract with HP Hood, a national milk company, MOOMilk launched as an undercapitalized startup on a shoestring budget. With little infrastructure of its own, MOO, which stands for Maine’s Own Organic Milk, relied on partnerships with other businesses for processing and distribution. The company was little, with a big vision: to build a brand as an organic Maine milk business, whose milk would taste fresh like the local milk people once knew and come from farms whose names they recognized. Formed as a low-profit limited liability company (L3C), one of MOO’s primary goals was to deliver a fair price to the farmers so that the success of the company would be built on the sustainability of its suppliers.
In the beginning, MOO had more milk than markets. The cows continued to produce every day, regardless of contracts. Early investors were needed to provide the working capital that would allow the company to sell milk, at a loss, while it secured shelf space in grocery stores throughout New England and built its sales volume to profitable levels.
MOO’s launch coincided with the formation of Slow Money Maine, and the company drew on this developing network to raise its first $500,000. Equity investments were sought from accredited investors who could provide a minimum of $25,000 to get MOOMilk off the ground. The company had ambition but no track record. It was entering a crowded field, hoping to differentiate itself with a fresher pasteurized product, rather than an ultra pasteurized taste, with Maine quality, and with its mission to support organic dairy farmers. The exit strategy was unclear; only patient investors with an appetite for risk needed to apply!
Investing in MOOMilk was about saving family farms in areas that really need them. MOO farmers inhabit remote parts of the state, bringing the benefits of working land and jobs to some of the poorest regions of New England. This distance presents challenges, and for MOO to profit, the milk truck needs to be full when it leaves Washington and Aroostook counties and travels about five hours south to the processing facility at Smiling Hill Farm.
Half-full trucks, leaky cartons and too short a shelf life plagued the company in its early days. Early investors were asked to reinvest, and additional investors were brought in as the company sought to improve its processes and survive long enough to make a profit. MOO was like a roller coaster, with a group of tenacious farmers, a committed CEO and dedicated investors hanging on for the ride.
Starting in January 2012, MOO’s prospects showed steady improvement. Sales more than doubled, and the company added supply through the addition of new farms and the expansion of existing ones. In partnership with Whole Foods and Slow Money investors, MOO started a buy-a-cow loan fund to help its farmers expand their herds to meet growing demand. The fund provides loans at 5 percent, with payments directly deducted from the farmers’ milk checks. Cows serve as collateral. The milk truck got fuller, and MOO increased distribution of its products to more than 200 retail stores in Maine, Massachusetts, New Hampshire, Connecticut and Rhode Island, as well as organic cheese, yogurt and ice cream producers in Maine, Connecticut, Rhode Island and New York.
With no advertising budget, MOO relied on word of mouth and the growing commitment to local food and organic milk. The debut of “Betting the Farm,” a Maine-made documentary film that profiled three MOO farms during the company’s turbulent first two years, boosted sales in the state by 20 percent. The movie brought to life the faces on the carton and portrayed the sheer grit needed to be a dairy farmer. There was light at the end of the tunnel, but MOO was still losing money. The company needed a new infusion of investment to pay its bills and a marketing campaign that would finally grow sales to a profitable level.
This past winter, a member of the Slow Money Maine network introduced MOOMilk to Norman Cloutier, founder and former CEO and chairman of United Natural Foods. Cloutier took a keen interest in MOO and became the primary investor in a $3.9 million equity round that recently closed. Cloutier brings both capital and experience to the table. He, along with representatives of the two other major investors, joined three farmers and MOOMilk CEO Bill Eldridge on a newly reorganized board of directors. With several years of working capital in hand and the funds to market itself, MOO can now operate from a stable platform. It is redesigning its carton, diversifying its milk products and looking to enter new markets, particularly in southern New England.
Brighter prospects for the company mean greater security for its farmers, made possible by investors wanting to put their money in local, sustainable agriculture. As Maine and other regions around the country seek to rebuild their local food systems, companies like MOOMilk that bring the value back to the farmers and put good food on the table are a big piece of the puzzle. These companies need all the capital and faith that Slow Money investors can provide.
Author bio: Eleanor Kinney is a founding member of Slow Money, a member of the Slow Money Maine steering committee, a co-founder of No Small Potatoes Investment Club and an early investor in MOOMilk, as well as several other local food businesses.