United Dairy Farmers, Inc.



3955 Montgomery Road
Cincinnati, Ohio 45212
U.S.A.

Telephone: (513) 396-8700
Toll Free: (800) 833-9911
Fax: (513) 396-8736
Web site: http://www.udfinc.com

Private Company
Incorporated:
1940
Sales : $300 million (2004)
Employees: 3,000

NAIC: 31151 Dairy Product (Except Frozen) Manufacturing; 311511 Fluid Milk Manufacturing; 311520 Ice Cream and Frozen Dessert Manufacturing; 424430 Dairy Product (Except Dried or Canned) Merchant Wholesalers; 445120 Convenience Stores; 447110 Gasoline Stations with Convenience Stores

Founded by the Lindner family in 1940, United Dairy Farmers, Inc., remains a closely held family business managed by Robert Lindner, Sr., and his sons Brad, Robert, Jr., and David. The company manufactures and distributes branded milk, ice creams, and dairy products under the United Dairy Farmers trademark, as well as the following branded items: Homemade Brand Premium Ice Cream, Krazy Kreams, and Micro Shake. In addition, the company owns and operates almost 200 dairy/convenience stores in with ice cream parlors, which are famous for their made-to-order, hand-dipped malts, shakes, freezes, sundaes, and ice cream sodas.

Early Years: Revolutionizing the Dairy Industry

In 1940, Carl Lindner introduced an innovative dairy concept in Norwood, Ohio. At the time, almost all milk was delivered in quarts to customers' front doors and paid for on a weekly or monthly basis. Identifying a business opportunity, Lindner created a new model for milk distribution: milk and other dairy products sold cash-and-carry at his company's onsite store.

Lindner called his company United Dairy Farmers in acknowledgment of its milk suppliers. Lindner's entire family (his wife Clara and their four children, Dorothy, Carl, Jr., Robert, and Richard) dedicated themselves to making Lindner's company a success. They rebuilt used dairy production equipment and fashioned cabinets and signs for the company's new store.

On May 8, 1940, Lindner's dairy plant and adjacent 20- by 50-foot store opened. It was the first of its kind, as were its gallon and half-gallon bottles of milk. Store hours were from eight in the morning to ten at night seven days a week. The store sold its milk for 28 cents a gallon, half the cost of home-delivered milk. It also sold other dairy products, such as butter, cottage cheese, eggs, and buttermilk. Although Lindner's dairy did not extend credit to its customers, his business model enabled him to sell dairy products at a much lower cost than home-delivery dairies because he had done away with delivery expenses. For many customers, this reduced cost was a welcome break. On opening day, the store's sales topped eight dollars, a definite success.

In fact, the store was so successful that its competitive presence displeased local home-delivery dairymen. After business hours on opening day, two dairymen attacked Carl Lindner in the store's driveway. Fortunately, he was able to break free, and he later settled out of court with his attackers for $1,000.

1940–50: Company Growth and Diversification

UDF soon became a local favorite. The company's popularity and success helped it to expand throughout the 1940s. The Lindners subsequently opened a second store in Norwood, a third in nearby Silverton, and a fourth in St. Bernard. As the business grew, the family remained in active control of company operations: Dorothy managed the books from an office in the corner of the boiler room; Carl, Jr., directed market expansion efforts and real estate acquisitions; Robert oversaw ice cream and milk production; and Richard managed the physical facilities and maintenance.

UDF undertook plant expansions and renovations that increased production capacity throughout the 1940s. By 1950, there were nine UDF stores, and the company's office had relocated to the building next door to the original plant. After the untimely death of Carl Lindner, Sr., in 1952, his children took over the company, which continued to grow. By 1958, the company's most major plant expansion to date was complete. Its plant was equipped with two continuous ice cream freezers, half-gallon and pint ice cream fillers, a half-gallon bottle filler, a bottle washer, and 12 stainless steel milk-holding tanks adjacent to a new receiving dock. By this time, the company owned 22 stores.

In the late 1950s, the Lindner family's interest in the financial aspects of business ownership led to the formation of American Financial Corporation (AFC) and the purchase of the Thriftway grocery chain. While her brothers remained in charge of UDF, Dorothy Lindner took over management of AFC. By 1960, UDF owned and operated about 30 stores in and around Cincinnati, many of which sold lines of bread, cookies, lunch meat, and cheeses as well as the original UDF fresh dairy products.

A change in management roles took place among family members in the 1960s. Richard Lindner left UDF in 1965 to take over Thriftway. Carl, Jr., and Robert focused on expanding AFC holdings while also operating UDF. They used profits from their dairy business to help finance acquisitions of banks and insurance firms. Toward the end of the decade, they oversaw a major UDF store remodeling program that added merchandising space for approximately 1,200 convenience grocery products in the dairy and food sections. Throughout the 1970s, the business continued to grow, and in 1977, some UDF stores began to sell UDF brand gasoline.

1980s–90s: A New Generation Focuses on Specialization and Expansion

The second generation of Lindners entered the family business in the early 1980s. Robert Lindner's sons, Jeff and Brad, focused their attention on expanding ice cream sales by adding the Homemade Brand premium ice cream line in 1982. Homemade Brand was also introduced in local stores and soon began to garner awards: People magazine rated its Cookies 'n' Cream the Number One "Exotic" Flavor in 1984, while shortly thereafter, Cincinnati Magazine named Homemade Brand "Best" for its Cherry Cordial ice cream. By 1986, Homemade Brand ice cream sold in major grocery chains and independent stores in five states, firmly establishing the company's wholesale operations. In 1987, UDF introduced another first, the MicroShake frozen milkshake, which thawed and became ready to eat in the microwave.

The company's retail chain also grew under the direction of Robert Lindner, Jr., who succeeded his father as president in 1985. By the early 1990s, there were about 200 UDF stores, and the company's new superstores sold fast-food as well as ice cream in sit-down parlors and pumped UDF brand gasoline. The company was rated as one of the 100 top privately-owned companies in the Tristate area that included Cincinnati, northern Indianapolis, and northern Kentucky; its ice cream was considered among top 15 American brands. However, the Lindner family was still not content to rest and planned to offer new services and products in order to maintain the company's leadership role in the dairy and convenience store markets.

Thus, in 1994, UDF joined a national buying association, Convenience Equipment and Supplies Enterprises (CEASE), to gain access to greater buying power. By 1995, the company was distributing its full line of dairy products in Ohio, West Virginia, western Maryland, and Pennsylvania. That same year, UDF bought Borden's Valley Bell Dairy's four operations, which manufactured frozen desserts and other dairy products. Part of the purchase deal specified that UDF would continue to manufacture Borden's products under the brand names of Borden, Meadow Gold, and Valley Bell. Winn-Dixie also purchased Thriftway stores from the Lindner family in 1995.

UDF continued to grow during the late 1990s despite a steep increase in the cost of soybeans, corn, hay, and other feed grains that put a damper on milk production and led to a jump in the cost of milk. These market forces affected modest annual increases in dairy consumption overall, and no growth in fluid sales. In 1997, seeking to overcome these obstacles, UDF sought to tap into the adult and young adult on-the-go markets by introducing 16-ounce, resealable jugs of milk, tea, spring water, and sports drinks.

That same year, UDF became the focus of unwelcome publicity when civil rights groups called for a boycott of the company on the grounds that UDF stores discriminated against black workers. UDF countered that nearly 19 percent of its 3,000 employees were black. and pledged to improve its existing anti-discrimination policies. However, the company became embroiled in a series of lawsuits brought by two black workers in Columbus who said they were fired and called derogatory names at work because of their race. Although ultimately, UDF was found not guilty of racial discrimination in two separate jury trials, one juror was quoted in a 2000 Columbus Dispatch article as saying that hiring and firing within the company appeared to be arbitrary: "UDF has a lot of personnel problems. They have bad policies or no policies for dealing with rape, sex, and age discrimination. They need to get their house in order."

Company Perspectives:

Since our family opened the first United Dairy Farmers cash-and-carry dairy store in Norwood, Ohio over 60 years ago, we have been committed to making affordable, quality ice cream and selling it with fast friendly service in clean, bright stores. Three generations later, with almost 200 UDF stores and ice cream sold in numerous states, we still make our milk and ice cream on the site where the first store stood. At United Dairy Farmers, if we put our name on it, you can be sure we're proud of it!

Another hardship occurred for UDF in 1998 when it began to face greater competition as a result of industry consolidation throughout the greater Cincinnati area. Prior to that year, the company's main milk competition came from other independent dairies, but Suiza Food Corporation and Dean Foods bought up the last of the independent dairies in the region and began muscling in on UDF territory. In June, Thriftway, owned by Winn-Dixie Inc. since 1995, switched to Dean Foods as its dairy supplier, and although UDF picked up a contract with IGA Supermarkets, this did not offset the Thriftway loss. "We're going to have to figure out how to generate more fluid business without knocking on one door and getting a huge account," announced Brad Lindner, who became UDF president and chief executive officer in 2000 in a Business Courier article of that year. "So we have to look to go a bit further outside our geography, or look to another channel of business."

In 2001, UDF began to sell Mobil branded gasoline at 108 of its dairy/convenience store locations in Ohio and Kentucky, after upgrading pumps and underground storage tanks, adding canopies and Mobil signs, and switching the stores' credit card processing system. The partnership meant that UDF would be assured a supply of gas from Mobil in the event of a petroleum shortage and could bank on greater profits form gasoline sales since some customers had regarded UDF gas as suspect. In addition, national statistics showed that people who bought braded fuel were more likely to buy the more profitable premium and mid-grade gasolines. According to Brad Lindner, the partnership also meant a change for the company internally. "We've been independent and could so whatever we wanted," he said in a 2000 Business Courier article. "Now we're going to be joined at the hip with a huge organization . . . That's going to be an adaptation culturally."

In 2001, the company also expanded its business into the Dayton, Ohio market. The expansion included the construction of new stores and the conversion of existing stores into a larger format, some of which would include car wash facilities. In the years following, the company continued to grow with the addition of new stores and by introducing new ice cream flavors under both the Homemade Brand and United Dairy Farmer labels. In 2005, it placed first for its Homemade Brand Chocolate Ice Cream in a survey conducted by the Cincinnati Enquirer.

Key Dates:

1940:
Carl Lindner, Sr., and his four children open the first United Dairy Farmers (UDF) store in Cincinnati, Ohio.
1952:
Lindner dies and his children take over the company.
1958:
UDF expands and modernizes its plant.
1961:
The Lindner family buys Thriftway Inc.
1977:
UDF stores begin to sell UDF brand gasoline.
1982:
The company introduces its Homemade Brand Premium Ice Cream.
1984:
People magazine rates Homemade Brand Cookies 'n' Cream ice cream its Number One "exotic" flavor.
1985:
Robert Lindner, Jr., succeeds his father as president of the company.
1995:
UDF buys Borden's Valley Bell Dairy operations; Winn-Dixie buys Thriftway from the Lindner family.
1998:
Brad Lindner becomes UDF president and chief executive officer.
2001:
The company begins to sell Mobil branded gasoline.

Principal Competitors

7-Eleven Inc., Kroger Co., Sheetz Inc.

Further Reading

"Banana Republican: Man in the News, Carl Lindner," Financial Times , November 14, 1998, p. 15.

Melcer, Rachel, "Mobil Could Fuel UDF Growth," Business Courier , November 17, 2000, p. 3.

Ruth, Robert, "Allegations of Racism at Center of Lawsuit in Third UDF Case," Columbus Dispatch , April 25, 2000, p. 6C.

——, "Jury Clears UDF in Racial Suit," Columbus Dispatch , February 18, 2000, p. 1 D.

——, "UDF Wins in Federal Court; Race Not a Motive in Firings, Jury Finds" Columbus Dispatch , October 6, 1998, p. 1A.

"UDF Joins CEASE Family," National Petroleum News , October 1994, p. 96.

Williams, Brian, "Milking a Package For All That It's Worth," Columbus Dispatch , September 25, 1998, p. 1F.

—Carrie Rothburd



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