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Since launching Cowgirl Creamery in 1997 in Point Reyes, Sue Conley and Peggy Smith have turned their small Bay Area dairy business into a nationally distributed artisan brand to be reckoned with. Now, just eight months shy of Cowgirl’s 20th anniversary, the two owners have told The Chronicle that the company will merge with the far larger Swiss dairy company Emmi.
Cowgirl Creamery is only the latest in a string of local artisan brands being bought out by big companies. Last fall, humane-focused meat supplier Niman Ranch was bought by Perdue. Around the same time, in early September, Petaluma’s Lagunitas Brewing Co. sold a 50 percent stake in the company to Dutch beverage behemoth Heineken.
The Cowgirl merger, which also includes its distribution arm, Tomales Bay Foods, comes six months after Emmi’s acquisition of Sebastopol goat dairy Redwood Hill Farm and Creamery. (Emmi also owns Arcata’s Cypress Grove Chevre, which it bought in 2010.) The Swiss company, founded in 1907 and operated by a cooperative of dairy farmers, is the largest Swiss milk processor and exports cheese and other dairy products to approximately 60 countries. In 2015, Emmi posted net sales of nearly $3.3 billion.The terms of the deal have not been disclosed.
When Conley and Smith launched Cowgirl in the mid-’90s, there were only six cheesemaking operations in Marin and Sonoma counties. As the local craft food scene has boomed, so has Cowgirl’s business. Today, there are over two dozen cheesemaking companies in the region, and Cowgirl has helped bring many of their products to the attention of shoppers nationwide via Tomales Bay Foods. The company now has approximately 95 employees; a product line of nearly a dozen cheeses, including its flagship triple-cream Mount Tam; two retail outposts (a third location in Washington, D.C., closed in 2013); two cheesemaking facilities, plus a third in the works; and a Ferry Building restaurant, Sidekick.
Conley and Smith will continue to operate Cowgirl Creamery and Tomales Bay Foods; Smith will take on the title of president and Conley will be vice president.
For a smaller company like Cowgirl, the benefits of a merger or acquisition with a larger corporation may include capital infusions and increased distribution capacity — while allowing it to stay focused on its craft, says George Geis, faculty director for the mergers and acquisitions executive program at the UCLA Anderson School of Management.
“When a large company buys a small company that has a loyal customer base, they have to be very careful that the loyal customers don't get scared off,” says Geis.
Conley and Smith have long been familiar with Emmi — and have carried several of its cheeses over the years. They looked closely at how it has worked with its other local acquisitions. “Mary Keehn (Cypress Grove’s former owner) took a big chance when she merged with Emmi,” said Smith. “We talked with Mary a lot about this, and she has confirmed that they run their business exactly the same way they did before they started with Emmi.”
The Cowgirl founders, both now in their 60s, said the decision to merge with the Swiss company has been a very considered one.
“For us it’s been a little bit of a journey,” Smith said. “Getting older, Sue and I are looking at the future. We want Cowgirl Creamery to remain in Sonoma and Marin. This will help provide that platform for the future.”
Conley said that partnering with Emmi will give them access to capital they need to open a facility in Petaluma that will enable them to increase production and bring back their cottage cheese, a fan favorite that has been unavailable for some time. They also envision developing other products.
“We invented the way we make cheese without the benefit of engineers and dairy scientists. These are traditions that started in Europe, and now we will actually have experts who can help us refine some of our processes and help us create new cheeses,” said Conley.
Conley and Smith said they also view Emmi as having a strong allegiance to dairy farmers, as well as respect for the value of organic production and sustainable agriculture.
“I don’t have a crystal ball, but I feel very secure,” says Smith. “They’re a different kind of company. We’re a different kind of company. This one fits our model much closer than anything we’ve seen.”
Conley agrees, “This company understands the craft and traditions of cheese making.”
Some of the sophisticated cheeses sold by Cowgirl require a final stage of care known as “affinage” as they mature. For fans of the cheesemaker, they too will have to watch the combination of Emmi and Cowgirl ripen over time.
“The whole trick is integration,” said Geis. “The worst thing that can happen is for the larger company to try to change the smaller one and take away its significance.”
Sarah Fritsche is a San Francisco Chronicle staff writer. Email: sfritsche@sfchronicle.com
