Prof. Colleen Collins on getting out of the commodity trap

Farmer rips page from corporate strategy handbook
Bill Vanderkooi has applied the principles of vertical integration as he aggressively expands the family business

David Ebner

Abbotsford, B.C. — From Wednesday’s Globe and Mail
Last updated on Tuesday, Aug. 24, 2010 7:06PM EDT

When Bill Vanderkooi arrived home to the family farm in 1993, with a master’s degree in animal science from Michigan State University, he saw a bounty of opportunity.

It was already in his blood. Mr. Vanderkooi’s grandfather had been a dairy farmer in the family’s native Netherlands. His father immigrated in the 1960s to the fertile Fraser Valley, east of Vancouver, and scraped together the money to buy his own farm in 1970.

But Mr. Vanderkooi’s push to expand the family business didn’t just involve a bigger herd of cows. More unusually, he assembled the pillars of a small agricultural empire, the type of integrated strategy that is generally the domain of large corporations.

The result is a small business unlike most others, one with parts that add up to a stronger whole, said Colleen Collins, the associate dean and a marketing professor at Simon Fraser University’s business school.

Mr. Vanderkooi, said Prof. Collins, “has figured out how to get out of the commodity trap. I can see the motivation of wanting to get out of the grind of milking cows. He’s envisioning a bigger business, not more of the same. He’s taking healthy food to a new level, developing the product and the [sales] channel, too.”

Mr. Vanderkooi started his own specialty feed business in 2000, having developed experience through work at a local milling company. Several years later he acquired another feed business, and soon after started a food company, in part inspired by his own diabetes. A preacher for healthy living, Mr. Vanderkooi saw the commodity businesses of eggs and milk and knew there was no way his own brand could succeed without some marker of difference.

Using his own feed products, he developed free-run eggs and milk infused with DHA, an omega-3 fatty acid linked to a variety of health benefits, including some cancer prevention. And to further distinguish himself for sales to stores in the Lower Mainland region, Mr. Vanderkooi started his own brand, Vitala, on the premise of “natural, healthy and local.”

In 2008, as his father readied to retired, the family’s assets were reorganized and Mr. Vanderkooi created Nutriva Group, which includes the food and feed businesses as well as other connected assets, such as an organic milk trucking company.

Through the depth of the recession Mr. Vanderkooi planned a showcase for his vision at the intersection of the farm and the city. On 80 acres, just south of the Trans-Canada Highway and the City of Abbotsford, facing a Starbucks and other stores at a large strip mall, Mr. Vanderkooi added a grocery to his growing farm business. The site also showcases his own small herd of 50 cows as part of an agritourism offering.

“I have a love of science and an entrepreneurial spirit,” said Mr. Vanderkooi, 41, sitting on the back patio of the grocery on a hot afternoon this month. “It’s been more of an evolution than a grand design.”

The Nutriva Group farm site was built for $4.5-million and Mr. Vanderkooi estimated company sales will reach $10-million next year, up from $5-million in 2009. The predicted gain is underpinned by the grocery store, which opened in June and showcases his and other products, and expansion of the egg business, which he hopes to double in the next year.

The group employs about 50 people and Mr. Vanderkooi hired his core executive team in 2009.

The goal now is to build the food brand. Existing businesses, such as the feed and the trucking companies, as well as a feed analysis consultancy, provide Mr. Vanderkooi with the cash to develop new products, and helped open the grocery store. He is planning for at least two more retail locations.

“We’re just getting out of the fledgling phase,” said Mr. Vanderkooi. “I’m a product developer. The less I can be involved with the actual equipment, the manufacturing, the happier I am.”

A key underpinning of Nutriva Group’s early success is Mr. Vanderkooi’s sense of mission, said Trevor Throness, owner of Strategic Corporate Resolutions Inc. in Abbotsford, a business strategy group, and a business adviser to Mr. Vanderkooi.

“The best entrepreneurs are not doing it for money, they’re about trying to fix a problem, and convinced they have a better solution,” Mr. Throness said. “They don’t view money as something to spend on themselves, they see it as capital to invest.”

The next line of products are slated to include a milk-based sports recovery drink, and yogurt and eggs enriched with additional vitamin D.

But small businesses have to be careful not to overextend themselves, advised Becky Reuber, a professor of strategic management at the University of Toronto. While she likes how the Vitala products complement the retail business, she is skeptical of the sports drink idea, pointing out that a student several years ago considered a similar concept.

“It was really hard to get the taste, texture and flavour right,” Prof. Reuber said by e-mail. “I’m not sure that many people want a milky product after they work out.”

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