Colteryahn family's Carrick dairy owes longevity to diversifying
By Alex Nixon
Published: Tuesday, January 3, 2012
Colteryahn Dairy, a 94-year-old business in Carrick, is the last of its kind in the city of Pittsburgh.
The family-owned milk processing company, along with its co-family owned CoGo's chain of convenience stores, has managed to thrive as other regional processors closed or were gobbled up by larger competitors. The future is bright because it has diversified, said Carl Colteryahn III, CEO and grandson of the business' founder.
"I have a lot of the business that the big dairies don't want," Colteryahn said at the dairy plant's offices on Brownsville Road.
The 50-employee company started in 1917 as a bottler of milk, selling it out of a storefront beside the Carrick plant and delivering it to nearby homes. But that world disappeared as refrigeration allowed suppliers to take their milk farther and then as people shifted their milk-buying to grocery stores. And with those changes, the dozens of small dairies that once dotted neighborhoods around Pittsburgh also disappeared.
"It's so competitive that we got out of the street fights," Colteryahn said, referring to battling for shelf space in grocery stores. The company instead shifted its focus to packaging milk, milk products, juice and iced tea for larger chains and producing small batches of specialty milk products for small food companies. For competitive reasons, Colteryahn declined to release production or sales figures for the company.
The Colteryahn family started a convenience store business in 1962 to create a market for the dairy's milk, which the company still purchases directly from a handful of farmers in Westmoreland County. The stores originally were called Stop-N-Go and grew to about 70 retail locations around Pittsburgh.
In 1986, the Colteryahns changed the name to CoGo's, and today the chain has 44 company-owned stores and 13 franchise locations. CoGo's, which is family owned but run as an independent business from the dairy, employs about 475 workers.
Roughly 30 percent of Colteryahn Dairy's revenue come from sales of milk, juice and tea in CoGo's stores, Colteryahn said.
"It's what we all did to survive," he said of the move by dairy processors to open convenience stores.
A few convenience store chains owned by dairies remain in the state, including Rutter's Farm Stores, based in York, and Turkey Hill Dairy stores, based in Conestoga, said John Frey, executive director of the Pennsylvania Center for Dairy Excellence in Harrisburg.
"The Pittsburgh area is considered one of the most competitive markets in the country" for convenience stores and gas stations because of the large number of chains that operate here, said John Kulik, executive vice president of the Pennsylvania Petroleum Marketers & Convenience Store Association. The Harrisburg-area association has about 300 member companies in the state.
The Circle K chain of stores said last month that it was expanding in the Pittsburgh market, which already has a heavy presence from Giant Eagle's 73 GetGos, Sunoco's 50 A Plus stores and 68 Sheetz operations in Western Pennsylvania.
To deal with that competition, CoGo's tries to "position ourselves as a neighborhood store," said Dave Heisler, chief operations officer for the chain. "You won't find us on the major highways ... we're in a lot of the small towns in the area."
Heisler declined to release sales or growth figures for CoGo's, but he did say the chain is always on the lookout for new locations to open stores.
The tough economy has depressed milk sales this year, said Earl Fink, executive vice president of the Pennsylvania Association of Milk Dealers.
"Sales of milk is off about 3 percent this year," Fink said. "We notice a decline the last week of the month, which tells me people are just running out of money."
Colteryahn Dairy doesn't just rely on milk sales, said Colteryahn, a mechanical engineer by training who spent his first two years in the business in the early 1990s designing and overseeing a complete modernization of the dairy's production plant.
In addition to the CoGo's sales, the dairy derives about 20 percent of its revenue from the packaging business, Colteryahn said. An additional 15 percent comes from selling soft-serve ice cream mix to amusement park vendors in the summer and small cartons of milk to schools the rest of the year. The remainder is made up of various small accounts such as nursing homes, universities, jails and specialty food makers that buy Colteryahn's milk products.
Colteryahn sees particular potential in producing small batches of high-quality unflavored ice cream for shops that create their own specialty mixes.
"We're small enough to do small unique runs" of ice cream, he said.
The number of dairy processors in the state has dropped dramatically since the 1950s, when the Milk Dealers Association had about 300 member companies, Fink said. Today it has about 30.
But the companies that survive are doing well by exploiting niche markets and emphasizing their local brands, he said.
"It seems to work throughout the state," he said. "People buy from them because they're local."
Frey, of the Center for Dairy Excellence, agreed that small dairy operations across the state are benefiting from a resurgent interest in buying local food. And despite the drop in the number of dairies, Pennsylvania has more than many other states.
"Today's consumer is becoming increasingly interested in where their food is produced," Frey said. "We're pretty fortunate to have the strength of the processing industry we have here."Additional Information:
Colteryahn and CoGo's
What: Family-owned milk processor and convenience store chain
Operations: Dairy plant in Carrick, 57 CoGo's stores in Western Pennsylvania.
Founded: Dairy was founded in 1917; CoGo's in 1962.
Employees: 50 at the dairy; about 475 at CoGo's.
Annual sales: Did not disclose.
• Carl Colteryahn III, dairy CEO
• Dan Ennis, dairy controller
• Dave Heisler, CoGo's chief operations officer
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