Organic Valley rolls out ultrafiltered milk, betting on low sugar, high protein drink

Organic Valley, seeking to respond to demand for nutrient-dense beverages, on Monday unveiled the first organic, ultrafiltered milk available nationwide.

Ultrafiltered milk boasts 50% more protein and 50% less sugar than regular milk.

As people experiment with plant-based alternatives or are restricting traditional milk and cheese for health or dietary reasons, U.S. milk sales are in decline, leaving many dairy companies scrambling to lift sales. Organic Valley said it's aiming to bring some innovation to the dairy aisle with their new ultrafiltered milk, named "Ultra."

"We have been working in various ways over the years to bring innovative products to the market, especially because we have the ability to do it organically, and dairy isn't always very innovative," said Missy Hughes, Organic Valley's chief mission officer.

Ultrafiltered milk is a relatively new process that several companies are exploring. Last year, General Mills launched a new yogurt, YQ by Yoplait, made from ultrafiltered milk.

For Organic Valley's Ultra products, USDA-certified organic milk is run through a filter that strains out lactose, reducing many of the milk's naturally occurring sugars. A lactase enzyme is then added to make the product lactose-free. The process concentrates the milk, resulting in a more dense protein ratio.

The company, based near La Crosse, Wis., is the nation's largest organic dairy cooperative with many farmer members in Minnesota. Organic Valley may be one of the most successful organic brands in the U.S., but it's not immune to the challenges faced by the larger dairy industry in recent years.

This spring, the co-op reported its second consecutive annual loss rather than cutting the price it pays its farmers, following decades of solid growth.

"There's still growth in [organic milk] and there's still innovation to come," Bob Kirchoff, Organic Valley's chief executive, told the Star Tribune in April. "Within the organic-dairy world, there are regions where the farmers are not being paid what they should be paid."

The $6.5 billion organic-dairy industry posted growth of less than 1% in 2018 due to an excess supply of skim milk, the rise of new plant-based beverages and consumers trending toward low-sugar, high-fat, high-protein products, according to the Organic Trade Association's annual report.

Hughes said the company believes the lower sugar, higher protein and higher calcium content of Ultra will resonate with health-conscious parents and athletes.

Currently, there's one dominant player in the ultrafiltered milk space: Fairlife, made by Coca-Cola.

"The Fairlife product is a particularly innovative product," Hughes said. "We saw the consumers were really attracted to it and we found consumers really believed Fairlife was organic."

Organic Valley is going directly after Fairlife's market share, calling-out on its packaging the differences between their product's and Fairlife's promises on animal welfare, GMOs, pesticides and hormones.

There are animal-treatment standards and chemical restrictions inherent with Organic Valley's USDA organic certification.

In addition to the nutritional benefits, some of Organic Valley's other claims could give it a leg-up in this challenged milk environment.

Milk products with animal welfare or grass-fed claims grew nearly 12% and 39%, respectively, while overall-milk sales declined in the last year ending June 16, according to SPINS, a Chicago-based research and analytics firm.

"Our small farms in the Midwest region are struggling mightily to stay on their land. This innovation is an investment our farmers are making in the marketplace in order to compete," Hughes said. "We have a real focus on meeting consumer needs in order to save family farms."

Ultra comes in half-gallon options of whole, 2%, 2% chocolate and skim. Organic Valley is contracting with co-packer Agropur in St. Paul to process their milk. Ultra debuts Monday at Whole Foods nationwide and will begin appearing in other national retailers in late October.

Kristen Leigh Painter • 612-673-4767