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Churning up growthTurkey Hill Dairy planning $30 million refrigerated warehouse

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Jenna Dutton loads cups into an ice cream filler machine at Turkey Hill Dairy in Lancaster County. The Manor Township-based subsidiary of The Kroger Co. is eyeing storage and potential production expansions to keep up with growing distribution nationally. Photo/Amy Spangler
Jenna Dutton loads cups into an ice cream filler machine at Turkey Hill Dairy in Lancaster County. The Manor Township-based subsidiary of The Kroger Co. is eyeing storage and potential production expansions to keep up with growing distribution nationally. Photo/Amy Spangler

With an ever-expanding lineup that ranges from year-round favorites such as Blitzburgh Crunch and Dutch Chocolate to limited-edition flavors like Whoopie Pie and Salty Caramel, Turkey Hill Dairy Inc. continues to tickle America's sweet tooth.

Today, the Manor Township-based subsidiary of The Kroger Co. has grown its ice cream empire to 30 states.

The nation's leading producer of refrigerated iced tea also is distributing its beverage line in 49 states.

"I'm not going to die trying to get to Hawaii," company President Quintin Frey joked.

All kidding aside, as the Lancaster County company has expanded its product line and sales territory, storage capabilities at its River Road plant overlooking the Susquehanna River have dwindled.

The 25-acre facility has about 48,000 square feet of freezer space and 34,000 square feet for its refrigerated products.

With a very major portion of the refrigerated drink side tied to direct store deliveries where orders are picked — ice cream is stored by pallets — change is necessary to keep up with demand, company officials said.

To create more flexibility for its finished inventory and to potentially expand production levels, Turkey Hill is expected to break ground this year on a projected $30 million building that will span 90,000 square feet.

The addition will house refrigerated products — more than doubling current capacity — and include offices and a fleet service garage.

"Our most significant interest would be using the space vacated to expand production capacity," said John Cox, the company's executive vice president, who noted additional freezer space inside the plant is possible.

The new warehouse, which is planned for an adjacent 38-acre tract, could get under way by late spring or summer, Cox said. It should take about a year to complete.

"We're still here for the long term," said Frey, who has led the company since 1991, overseeing several facility projects, including sustainability initiatives tied to wind power and landfill gas.

Turkey Hill has started using Kroger plants across the country to make its formulated products and to keep up with regional demands.

"There is still growth in the Northeast for this plant to serve," said Cox, who is anticipating a boost in both fluid and ice cream production to support sales growth.

The new facility is not expected to create jobs, he added.

"I think the people we have will be able to work more effectively," he said.

'Hustle and hard work'

Despite the challenging economy over the last few years, Turkey Hill Dairy saw its sales expand, Frey said, citing average growth of 5 to 10 percent annually. He said the company generates about $300 million in annual sales.

Even though it's owned by a publicly traded company, Turkey Hill's actual sales revenue is not reported. Keith Dailey, a Kroger spokesman, said the company does not provide sales figures from its manufacturing facilities.

Collectively, the U.S. ice cream industry generated total revenues of $10 billion in 2010, with take-home sales representing the largest section of the market at $6.8 billion, according to the International Dairy Foods Association.

"It's a very competitive industry, and people change their eating habits during a recession," Frey said.

He equates Turkey Hill's success to "a lot of hustle and hard work."

"We stay focused on the category and our market," which is predominantly the Mid-Atlantic and Northeast, Frey said. "Lancaster and Philadelphia are very important to me."

Turkey Hill also introduces new flavors every year. Some are seasonal or limited-edition products, while others might be part of the regular lineup.

"Flavor ideas come from a million different places," said Frey, who tries everything that will be launched into the marketplace.

Even non-dairy items are being tested to find that next trendy flavor and grow market share, he said.

"It's a battleground," he said of the limited space in the frozen-food aisles of grocery stores. "That area is pretty locked in, unlike the dry-grocery areas."

Growing the brand

Like its peers, Turkey Hill faces ongoing challenges tied to regulations, commodity costs and natural disasters.

"Our focus is really around our brand," Frey said. "It's the only true asset that we own."

Everything the company does should add to its reputation, he said.

The wind turbine project at the Frey Farm landfill neighboring its plant is one example of that.

In conjunction with PPL Renewable Energy, the Lancaster County Solid Waste Management Authority in 2010 installed a 3.2 megawatt wind-generating facility. The two turbines provide about 25 percent of the annual electricity needed to power Turkey Hill's manufacturing operations.

"We think that matters to consumers. We think that builds the brand's reputation," Frey said.

The dairy also relies on co-branding initiatives to foster growth. It has established several sports partnerships in Lancaster and York, as well as with the Phillies, Yankees and Steelers.

In 2011, Turkey Hill opened the Turkey Hill Experience in the old Ashley & Bailey silk mill in nearby Columbia.

The idea for the corporate attraction, which the company had been discussing for years, was to showcase its business. Turkey Hill gets many requests for plant tours, but the facility on the ridge is not designed to accommodate tourists.

"It felt right," Frey said of the concept in Columbia, which was where his grandfather's milk delivery business started.

The Turkey Hill Experience opened in June 2011 and drew about 75,000 visitors that year, the company said. The company opened the attraction hoping to bring in about 250,000 visitors per year.

"We think we can make money and it can contribute to the bottom line," Frey said of the attraction. "I don't ever expect it will be a significant part of our business, but it's one more thing to build our brand."

Multiple sites could help do that, but there are no plans for additional corporate attractions, he said.

Turkey Hill also markets its products through other Kroger subsidiaries, including Turkey Hill Minit Markets, which was started by the Frey family but has always been a separate company.

About 25 percent of company sales come from Kroger-related companies, Frey said.

Kroger trades its shares on the New York Stock Exchange under the ticker symbol KR.

Turkey Hill Dairy by the numbers

1931: The year Armor Frey established Turkey Hill Dairy in Manor Township.

1985: The year Turkey Hill Dairy was sold to Dillons, a Kansas-based grocery division of Cincinnati-based The Kroger Co.

1991: The year Quintin Frey, Armor’s grandson, is named company president. Quintin is 52 today. He has three sons who work at the dairy.

$300 million: Dairy’s estimated annual sales revenue. A quarter of dairy sales come from Kroger-owned companies, including Turkey Hill Minit Markets, which also was started by the Frey family.

50: Percentage of the dairy’s sales that comes from ice cream. Another 40 percent is iced tea and about 10 percent is tied to milk products.

20: Percentage of the dairy’s income that the Frey family donated to church and charity before the company was sold to Kroger. Kroger is one of America’s most charitable companies.

4th: Turkey Hill Dairy claims to be the fourth-largest premium ice cream producer.

26 million: Estimated gallons of ice cream the dairy produces annually. Turkey Hill Dairy has two other production plants in California and Utah. About 95 percent of its ice cream is produced in Lancaster County.

52 million gallons: Estimated annual production of iced tea. Turkey Hill Dairy has five other plants making iced tea in California, Kansas, Oregon, Tennessee and Virginia. About 85 percent is produced in Lancaster County.

49: The number of states where Turkey Hill Dairy’s iced tea is sold.

30: The number of states where its ice cream is sold.

8 million gallons: Estimated annual milk production at the dairy.

140: Number of delivery trucks the dairy receives each week.

100: Estimated number of ice cream flavors produced by Turkey Hill Dairy.

40,000 to 50,000: Gallons of basic ice cream mix the dairy makes each day, which is then flavored and packaged.

1st: The top-selling ice cream flavor is vanilla. Turkey Hill also is the producer of the nation’s top-selling refrigerated iced tea.

5: Estimated miles of stainless steel pipe at the Turkey Hill Dairy.

30: Estimated number of iced tea and other beverage flavors.

75,000: Number of visitors to the Turkey Hill Experience in 2011, which opened in June that year.

$30 million: Amount of the warehouse expansion the company is planning at its Manor Township facility. The 90,000-square-foot expansion is expected to start this year with a spring 2014 opening.

800: Number of full-time employees at Turkey Hill Dairy, including the Turkey Hill Experience. The company has added about 50 since 2008.

Source: Turkey Hill Dairy Inc.; Quintin Frey, president; Ernie Pinckney, special projects coordinator

 

Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin County. Have a tip or question for him? Email him at jasons@cpbj.com. Follow him on Twitter, @JScottJournal. Circle Jason Scott on .

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