VILLAGE Dairy was a well-established niche player in the dairy market, having long since tapped into Gippsland milk as the main source for its yoghurt and cheese, when its owner, Omer Huseyin, grabbed an unexpected opportunity.
Omer decided four years ago to check out a failed dairy factory in Traralgon that had gone into receivership.
He went looking for equipment that he may have been available to buy.
Instead, he bought the factory.
Thus, Village Cheese & Yoghurt found itself with a prime site on the Princes Highway in Traralgon – you can’t travel through the city without seeing it – in the heart of Gippsland dairy country with a large factory as a vehicle for expansion.
It was a typical act of gambling courage by Omer, who has a reputation as a visionary entrepreneur.
It was this quality that led Omer, the son of a Turkish Cypriot immigrant, to found the family-owned Village Dairy business about 20 years ago.
As Gavin Hunter, Village’s business manager explained, the family started out making Halloumi, a traditional Cypriot cheese.
“Omer, one of six children, saw an opportunity back then to expand and develop into the local Indian market for pot-set yoghurt, which can be used for cooking, and a cottage-like cheese, Paneer,” he said.
Pot-set yoghurt is yoghurt produced and poured into its container, where it sets.
Fundamentally this is the main different in production to stirred yoghurt.
Village believes pot-set yoghurt makes the best tasting yoghurt, being firmer than most yoghurts, which makes it flexible for use in cooking recipes, dips and simply mixing with fruit.
Village’s early days were frantic, with delivery vans on the roads in metropolitan Melbourne supplying independent supermarkets.
Omer and his three daughters Sezen, Demet and Sevda, along with Mum, all helped with production and deliveries in the early days.
Sevda Huseyin, Omer’s youngest daughter, is managing director and currently manages the business with the general manager, Lee Pironelli, her brother-in law, on a day-to-day bases under the watchful eye of her father Omer.
“The business grew organically for a number of years as the Indian community grew, by word of mouth. They liked the cheese and the quality of the yoghurt,” Gavin said.
The original factory and warehouse were in Springvale, however the company outgrew that and moved to its current location in Dandenong South in 2012.
Omer’s daughter, Demet Yalaz, who deals with customers and distributors, said Village started to manufacture products for other companies. “Some who are now our main opposition started with us; we produced under their label and then they got to a size and went separate ways,” she said.
In late 2019, Omer went to Traralgon and came back with the ‘surprise’.
“He saw the potential; we were landlocked here in Dandenong South,” said Demet.
Then COVID arrived.
“That was a difficult period,” said Gavin, who was hired by Village Dairy at this time.
A 30-year dairy industry veteran, he had worked at Bonlac Foods, Fonterra and Warrnambool Cheese & Butter before the Saputo takeover.
“One of the opportunities – and why I came on board – was some equipment suitable for contract packaging. We secured a contract with a multinational and still supply them today,” he said.
“Importantly, it has given us the ability of obtaining an export licence for Traralgon as well.
We went into a new dimension with ‘contract pack’. That gave us a different direction as a company to expand.”
Contract pack involves manufacturing a product for the customer’s brand, size, specifications, and parameters, producing it under contract for a number of years. Demet said simply: “Contract work kept us going during COVID”.
The growth of the business has been through the Indian community, supermarkets and Indian wholesalers.
“We supply throughout Australia to wholesalers in the main who provide a distribution service to the independent Indian community, cafes and restaurants.
These wholesalers have their own customer bases, we supply them. We also deliver to our own customer base in metropolitan Melbourne,” said Gavin. Another growth area is foodservice wholesalers in Victoria and across all capital cities in Australia.
“We are not strong traditionally in retail. We have had product in Woolworths – our two- litre natural pot set yoghurt – for six years but have struggled to expand on that.”
Gavin said it depends on what buyers wanted and the retailer’s strategic direction.
“A buyer came to us wanting something different in the drinking milk category,” he said. Village came up with a yoghurt drink, labelled as a ‘Cultured milk drink’, that fitted into the milk category – vanilla, mango and berry yoghurt drinks.
“Mango lassie is the strongest of our yoghurt drink products. The mango is thicker and suited to the traditional meal as a “pallet-cleansing drink” made with mango pulp. We also produce a yoghurt drink called ‘Ayran’, ideal for traditional Middle East cuisine – spicey food.
It helps digestion when having this type of meal. Our other yoghurt drink suits a broader spectrum of customers. We are looking to expand this area in the future,” Gavin said.
Village Dairy is still engaging with Woolworths and Coles and exploring opportunities with both retailers. Gavin said dealing with major retailers was different from dealing with independents.
“With independents, you deal with the owners, which aligns with our family business. Village Dairy has a great opportunity for the brand in front of the retail consumer – we will encourage and develop that – but the base of the business is still independent stores. They tend to be loyal; once they buy and like a product, you must do something bad to lose that business,” he said.
Village works with Gippsland Food & Fibre to promote the products from its Traralgon factory. Sevda and Lee shot a documentary on the Village business and family history. It showcases the products and production at Traralgon along with a new packaging logo marked, ’Gippsland Trusted Provenance’, that highlights Gippsland and milk sourced locally.
Village Dairy emphasis it is an Australian, family-owned company.
Gippsland’s countryside, which gives a perception of green pastures and healthy food, is a powerful marketing tool. “It signifies anything produced here is off good quality,” said Gavin.
Village employs about 25-30 people at the Traralgon plant and a similar number are also at the Dandenong South operation in Melbourne. Village received a grant a few years ago from the state government to expand the Traralgon factory and employ locally.
“The majority of production staff that lost their jobs in the previous business were re-employed, most have remained. We find new people and gave back jobs to the community to people who lost jobs. We also regained a level of past experience,” Gavin said.
Village does not directly buy its milk from farmers; it goes through a brokerage company.
Buying direct from a farmer, as the company did in the early days, meant having to take all the milk produced, even if it could not be used. “Our requirement for milk is up and down – more up than down – but as the business has grown, we have secured milk supply that has ensured the continuity of production at all time,” Gavin said.
“Milk supply is our lifeblood, and we ensure it comes from Gippsland region. The only exception is the organic milk we purchase direct from farm, which is more of a boutique product in the market.”
Village Dairy has eight varieties of yoghurt in 10kg, 5kg, 2kg and 1kg packs.
“The 10kg and 5kg are mainly for catering, but some Indian supermarkets sell 10kg to the general public.
They have big families!” said Demet. “Our Paneer cheese is used in cooking; it holds its shape, does not melt or get soft.”
The company’s main export from Traralgon is into South-East Asia under contract pack.
Gavin emphasised how important it is to diversify the customer base between retail, wholesalers, independent stores and contract pack. “We make sure there is a spread to protect our vulnerability from changes in the market. Our business strategy where possible a target of about 30 per cent into retail, 40 per cent to wholesale and Independent stores and 30 per cent to contract pack. However, that is always changing,” he said.
As with many small businesses, there are clouds on the horizon. The cost of transport has gone up, as has the cost of milk, which went up 30 per cent last July.
“Farmers have been doing it hard and need the extra income, however it was the level of the increase in one ‘go’. This affected sales in the short term until general prices in the market caught up with these increases,” Gavin said.
The company has also installed solar energy at Traralgon to reduce increased energy costs.
Gavin said yoghurt, as a healthy food source, was still underutilised. “People look at yoghurt as a dessert, but we feel it has greater market possibilities. It has got potential as a probiotic, health and good food source for the gut, having yoghurt as part of a balanced diet.
Kefir has exploded for that reason,” he said.
In Traralgon, Village Dairy works with Gippsland Food & Fibre to try to support local produce and labour.
“They understand the local area. GFF are targeting local manufactures that truly source and produce product out of Gippsland region, not just use the regional name,” Gavin said.
“As a family-owned business, we are focussed on quality. Our owner Omer and the family in general will not comprise on quality. You live and die by your reputation.”