Smith Brothers Farms’ unique business model delivers daily to customers

Kent, Wash., located in the Seattle suburbs, is home to Smith Brothers Farms, which is all about its long history, as well as a huge differentiating factor that few dairy processors still pursue: home delivery.

Dusty Highland, CEO of Smith Brothers Farms, is a fourth-generation family member and shareholder. “My great-grandfather started the business in 1920. We have been going strong in the Pacific Northwest for the past 105 years,” Highland affirms. “The business has always been dairy farming and direct-to-consumer home delivery. We are known as the ‘Milkmen of Puget Sound.’”

In 2019, the company expanded following its purchase of Alpenrose, a midsized family-owned dairy based in Portland, Ore., which produces butter, sour cream, and ice cream mixes. But at the Kent location, Smith Brothers Farms primarily processes fluid milk: skim, whole, half and half, whipped, chocolate, strawberry, buttermilk, eggnog, organic, lactose-free whole and 2%, and more. Milk sales are broken down by channel: home delivery: 30%, schools: 25%, retail grocery: 25% and foodservice: 20%.

Highland reveals that milk sales are growing as people are again seeing the nutritional value of the beverage. “Protein is the big, hot nutritional food trend today. Milk is a great and affordable source of natural protein,” he says. “Consumers taking GLP-1s need to focus on calories and protein, and milk, cheese and yogurt are great to serve those needs.”

VIDEO | The difference maker for Smith Brothers Farms

From 1905 until the 1990s, home delivery was a staple for many dairy processors, but that changed as customers started visiting supermarkets more. Hence, many manufacturers shifted their focus to just processing. Smith Brothers Farms kept the delivery business going however, and it still stands strong today, something that is no small feat as Amazon and Costco are based in the company’s backyard.

“We like to say that what is old is new again. We have a dedicated milkman or woman come to a customer’s house once a week. We still deliver fresh milk that comes straight off of our line. But we expanded our offerings to also deliver produce, baked goods, meats and proteins, and other dairy products that we don’t produce like yogurt and cheese. Our goal is to deliver all the fresh, weekly essentials that people need,” Highland reveals.

The CEO adds its goal is to serve families who lead busy lives. A huge staple at people’s homes in Smith Brothers Farms’ service area, which extends from several towns in Washington State all the way to Portland, Ore., is a porch box, featuring the company’s classic logo.

“Customers used to leave a ticket in the porch box to tell us what they wanted on their next order. We now have an app where they can update their orders up to the day before. It arrives on time, like clockwork, every week,” Highland stresses. “I think it is more convenient than on-demand delivery, because it is something you never have to worry about. You don’t need to think about it much.”

Quality delivery once a week

Supermarkets have their own delivery services, which provides staunch competition, but Highland asserts that “a rising tide lifts all boats.” “COVID was our big kick starter that pushed eCommerce grocery to another level. We were the recipients of some of those benefits,” he says. “Especially for the younger consumers, ordering online has become much more commonplace. We have also seen excellent growth with the older generation who have more difficulty leaving their homes.”

The CEO continues that although Smith Brothers Farms competes with Amazon Fresh and Instacart, those services cater more to consumers who forget grocery items or need something immediately, whereas Smith Brothers Farms is a planned, weekly essential service. Other differentiating factors include that, whereas Instacart may need to replace unavailable items, Smith Brothers Farms works hard to provide reliable inventory, so its customers rarely face substitutions or disappointment. Quality of product is also a differentiator.

“Fresh milk, directly from the farm, is the best milk I have ever tasted. The thickness and creaminess of it is great,” Highland states. “We have the next best thing you can get. We get milk from the farm to your fridge in 48 hours or less. It is not sitting in coolers or on store shelves for several days. We also make sure to work with local farms to best serve our communities.”

Another big draw is the experience of someone delivering milk directly to a customer’s door. Gone are delivery people clad in a white uniform and bowtie that Smith Brothers Farms offered in the past, but drivers still have identifiable uniforms and raincoats with reflective lettering and patches.

“Seattle in the winter definitely requires raincoats,” Highland jokes. “And they start very early in the morning (often 4 a.m.) and each deliver to about 175 customers per day. Milkmen are so familiar with their routes that they could almost run them blindfolded. A great way for us to keep it cost effective is milkmen delivering to the same neighborhood week after week.”

Smith Brothers Farms employs 85 milkmen and women, all of whom are full-time employees, among some 300 employees companywide. About 50 employees work in the Kent plant, and the company also has administrative jobs, eCommerce executives and more.

Seventy milkmen go out on a daily basis in trucks — which as we saw when we visited Smith Brothers Farms’ Federal Way, Wash., location (see Inside the Plant feature) — meet all of the company’s cold chain needs. The company delivers to 60,000 customers in Washington State and an additional 5,000 in Portland, the latter of which delivery service began during COVID.

“During COVID, a lot of food delivery companies were maxed out and could not handle all of the orders. We had a built-in routing technology that allowed us to prop up and start delivering to customers in Portland quickly,” Highland recalls.

Although the company could have stopped at just delivering milk it processes daily at the Kent plant, Highland said offering many other food, beverage and dairy items was a natural expansion of the business. “We were already stopping at your house every week. So, we asked what else customers needed on a weekly basis. [For example], do you need a pound of ground beef, onions, lettuce, carrots? We can deliver it for you. We have about 30 different dairy SKUs for home delivery and a total of about 600 different products we offer.”

The home delivery model is so unique that it drew the attention of The Today Show, which visited the company’s facilities. The news program had seen a feature on the company in the Seattle Times and thought that “a day in the life of a milkman” feature would be entertaining for the TV audience.

“It really piqued their interest that this was a model that was not only alive and well but thriving,” relays Sunshine Morrison, principal at Radiance Communications, which handles public relations for Smith Brothers Farms. “They were able to feature the special relationship the milkmen have with their customers.”

Highland adds he is often the face of the company regarding interviews but the The Today Showfeature allowed a longtime milkman to be the star of the show instead. “Rob, a milkman for 30 years, asked some of his customers if he could come over to their homes with The Today Showcameras. It really showcased what makes our service as special as it is. It is that connection with the community,” he maintains. “Having the porch box is a badge of honor. Our milkmen have a strong level of trust with a lot of customers. That is something you do not see a lot these days.”

Attracting talent

Attracting talent to work at a dairy manufacturer is a challenge many processors face. Smith Brothers Dairy has an excellent brand awareness in the Pacific Northwest, a major plus for the processor.

“It is tough at times regarding the plant. For example, finding maintenance engineers to service the equipment is a huge challenge. I believe most dairies feel that way,” Highland says. “It requires a lot of hands-on training. We have had long-time employees start to retire on the manufacturing operations side and on the maintenance side. For new employees, we are placing a big emphasis on training them and giving them the skills they need.”

Once properly trained, employees are well rewarded for their efforts. Highland confirms they are paid well with excellent benefits. “We are proud of all the employees we have. I certainly hope and assume they are proud to work here,” Highland notes. “You don’t get a lot of new employees who possess the prerequisite skills we need.”

Adds Production Manager Nicholas Pace, “We never have a lack of applicants. … But you don’t run into a lot of licensed pasteurizers or raw milk receivers out in the wild,” he says in jest. “So, we really make our money when it comes to training.”

Continues Highland: “We have brought in some new talent who have really reinvigorated us. They have a lot of energy and are bringing new ideas to the table. They are going to take us to the next level.”

Highland has been part of Smith Brothers Farms for more than a decade, joining two of his cousins, Todd and Craig, in continuing the family legacy. Highland knows succession planning will be important to envision what future leadership will look like.

“Our fifth-generation ranges in age from a newborn to 25, so there’s still time before they’re ready to take part in the business,” Highland says. “What is exciting is the incredible talent we have in our leadership team and some rising stars in the company. I never planned to join the family business, but I truly love it, and it has been one of the most rewarding experiences of my life.”

The CEO acknowledges running a family business can be difficult at times when people have different wants, needs and ideas of where the business should go. “We have done a good job of making sure people know the direction we are going and working together toward those goals,” Highland says. “We will see where the next generation takes it, but the fact we have made it for four generations is a testament to the commitment the family has for the business.”

Highland is confident several more generations will be able to run Smith Brothers Farms, as he opines that dairy’s future is excellent. “Dairy is going to be a staple of the American diet for many years to come. It is not going away,” he concludes.