Soured – Mounting quality problems put Kleinpeter in difficult position

© Copyright, Louisiana Business Inc., 2014

Few companies in Baton Rouge engender as much customer loyalty as Kleinpeter Farms Dairy. The 101-year-old operation is a family-owned business and a local institution, one of just four remaining dairies in the state and the only one still locally owned.

So beloved is the Kleinpeter brand, customers are willing to pay a 25% premium, on average, for Kleinpeter products—which they genuinely believe taste better.

But over the past year, problems with Kleinpeter’s quality—the taste and shelf life of its signature milk products—have surfaced. Although no one, including the Louisiana Department of Health and Hospitals, is suggesting Kleinpeter products pose any health issues, the company’s image and carefully cultivated customer relations may be on the line.

The problems have been mounting for months, and now the company is aggressively trying to address them. In recent weeks Kleinpeter has hired consultants, contracted with an LSU dairy scientist, fired several employees, replaced older equipment and called in top management to work round-the-clock to determine why milk is spoiling before it should and, also, why some batches have what customers report as a peculiar, chemical taste.

The problems are no secret. Grocers say customers have been returning Kleinpeter milk in greater-than-usual quantities all year, complaining it tastes bad. DHH has also received complaints about the taste of the milk and its shortened shelf life. The Diocese of Baton Rouge, with just four weeks left in the school year, canceled its contract with Kleinpeter to supply milk to Catholic schools for breakfast and lunch. Even the dairy’s own Facebook page contains a litany of posts from frustrated customers, who invariably say the same thing: I have always bought Kleinpeter milk … but lately something is wrong.

Jeff Kleinpeter, president of the company and a fourth-generation dairy farmer, says the dairy has identified problems in its processing facility responsible for the chemical taste. The problem, he says, has recently been corrected.

As for the milk’s shortened shelf life, they’re still trying to figure out the cause. He suggests several possible contributing factors: refrigerators at grocery stores and convenience stores Kleinpeter claims aren’t kept cold enough; company employees that haven’t been performing up to par; and older equipment in the plant that could have been harboring bacteria and needed replacing.

Kleinpeter says there is another contributing factor: Customer expectations are so high—given the brand’s reputation and higher price—that they feel it should not be having these problems.

Kleinpeter concedes he does not have a single answer for why his milk has been going bad. “I think there are a bunch of things,” he says. “So we’ve got to fix them all.” It is an uncomfortable position to be in for a company that has built a brand around impeccable service and exceptional quality.

“We’re all anxious to get this behind us—more than any customer can imagine,” he says. “I want to be as open and honest as I can with everyone and … let them know how sorry I am we let them down.”

Complaints about Kleinpeter milk started early this year and have gradually been building. In early January, customer Tommy Dedon posted on the Kleinpeter Facebook page, “Just dumped ANOTHER bad gallon of Kleinpeter milk down the drain.” In late February, Treasure Smith wrote, “I just dumped one gallon of milk out then opened the other gallon I had, and it was also spoiled.” By early May, there were dozens of posts, such as this one from Chad Keith, who wrote, “We too, as I see many have reported are having milk go bad well before the expiration date.”

Grocers are accustomed to dealing with returns of spoiled milk of all brands, but they say the Kleinpeter returns in particular have been excessive over the last several months. One Associated Grocers supermarket manager says he gets three gallons of Kleinpeter milk back per day on average—so many, he no longer requires customers to bring in a receipt.

Invariably, though, his customers swap out their bad milk for a fresh jug of Kleinpeter, which speaks to the brand loyalty the dairy has in this market. It also helps explain why this store manager does not want to use his name—or remove Kleinpeter milk from his refrigerator case, as at least one other locally owned supermarket recently did.

“Imagine the bad publicity we would get,” the store manager says. “A local grocery not supporting the local dairy? It would be terrible.”

As with other Kleinpeter customers contacted for this story, the Diocese of Baton Rouge is also reticent to discuss the problems it had with Kleinpeter products. The issues were significant enough, though, that the diocese pulled, mid-semester, its contract with the dairy to supply dozens of Catholic schools with milk for the Child Nutrition Program. A diocesan spokesman will say only that the contract was terminated.

But among Catholic school students and parents, the quality issues with the taste of the milk were well known. There were also supply and distribution issues, according to Kleinpeter, who says among the reasons the diocese gave him for cancelling the long-standing arrangement were containers with missing caps, cases with missing bottles, and a broken-down delivery truck that, one day, caused a delay in deliveries.

“Come on,” he says. “There is no plant that is 100%. … I was very disappointed by their decision.”

DHH also received several complaints, though none were linked to illness. In addition to its regular monthly inspections, the state agency visited the dairy twice this spring, specifically in response to the complaints. The first time was in March, following a complaint about the chemical taste in the milk. Records from DHH show Kleinpeter voluntarily recalled a batch of reduced-fat milk after that visit.

In late April, the dairy followed up with DHH in an email saying it had identified the cause of the chemical taste. According to the email from the dairy’s quality control manager, Jackie Goudeau, the problem was with the “clean-in-place” system used to sanitize the tanks where milk is processed. The problem was partly due to operator error and partly due to a malfunction with the mechanics of the system. The upshot was that a chlorine-based sanitizing solution was “often leaving residue in the milk tanks before milk is put into them,” according to the DHH inspection report.

Kleinpeter says at least one employee was not following standard operating procedures and has been let go over the issue. He also says the processing system has been repaired. A DHH spokesman says the agency is satisfied there were no health issues related to the trace amounts of Chlor-mate, as the solution is known, that was found in the tanks. Likewise, DHH has no health concerns about consuming Kleinpeter products.

The second time DHH made a special trip to the plant was in early April after the agency received several consumer complaints about milk that had soured before its expiration date. Though no cause was identified at the time of that inspection, the inspector subsequently held a conference at the dairy with Jeff Kleinpeter, Goudeau and production manager Wes Stewart. He recommended they request help from the LSU Dairy Science department to test milk for the presence of certain psychrotrophic and psychrophyllic bacteria that, if present, could contribute to a shortened shelf life. Kleinpeter agreed and hired Chuck Boeneke, an associate professor of dairy science from the LSU AgCenter.

“He came out and tested our milk and said everything was fine,” says Kleinpeter.

Psychrotrophic and psychrophyllic bacteria do not pose a health threat to humans. However, unlike the deadly listeria bacteria, they are not killed during the pasteurization process. A DHH spokesman says the agency has not followed up on the issue with Kleinpeter because there has been no evidence of any health problems related to the prematurely souring milk.

While the March and April inspections from DHH did not identify the causes of the shelf-life problems at Kleinpeter, reports from the agency’s regular monthly inspections of the plant show there have been chronic problems with sanitation, at least until very recently. According to inspection reports from January 2013 through April 2014, Kleinpeter had multiple sanitation violations, some of which were deemed critical, though all were non-hazardous in terms of public health.

In May 2013, DHH’s inspector found enough problems during his routine inspection of the plant that he sent the company a follow-up email requesting a meeting to discuss “recommended corrective actions … and to develop a routine cleanup program.” The report lists dozens of areas in the plant that needed cleaning, including “walls and tops of valves at valve clusters near pasteurized storage tanks … capper hoppers on the half-gallon, gallon and pint/quart fillers … splash and mildew on walls and ceiling in the vault … mildew on ceiling in the silo room … and a ledge behind a cleaning vat, which was cluttered, dirty and (had) roaches.”

Though the plant agreed to implement the corrective action, just four months later, in September 2013, DHH again cited the dairy for several violations, including one that was deemed critical—”insufficient information on a vat pasteurizer recording chart.” That is potentially significant because pasteurization is the most important step in the processing of milk, and a recording chart indicates the product being pasteurized and the number of gallons in it. The lack of such basic but critical information may suggest a lack of quality control in some plant operations.

In February, DHH was still citing the dairy for numerous sanitation problems, one of which was deemed critical. According to the report, raw milk was being kept for more than 72 hours in holding tanks, which are required to be emptied and sanitized every 72 hours. Though the violation was potentially serious, DHH deemed it non-hazardous because raw milk is eventually pasteurized.

A DHH spokesman says the violations for which Kleinpeter was cited are not alarming or even all that unusual for a dairy plant. Inspection reports obtained by Business Report show that other Louisiana dairies have also had problems, though to a lesser extent. In any case, DHH says Kleinpeter has never had any problem with its pasteurized products or any health issues related to its milk.

But the number of violations over so many months and the fact that corrective action was suggested as far back as one year ago suggests that something has been amiss at the processing plant. Are poor sanitation procedures directly related to the shortened shelf-life issues?

Kleinpeter says he doubts it. But he also concedes the plant had problems in 2013 that directly affected the quality issues it is reeling from now.

“We had some management turnover in our milk plant 8-to-10 months ago and people were just not on board … that’s why they’re not here anymore,” he says. “We’ve also been so focused on trying to avoid out-of-stocks with the production increase we’ve seen that we lost a little sight of quality.”

In the past two months, Kleinpeter says the plant has begun refocusing on quality. It has hired three consultants to help identify problems and also to advise on everything from production to distribution to sanitizing.

“We have picked up the pace in response to the urgency I feel for our customers,” he says.

Among the immediate changes the dairy is implementing is a monthly acid wash of every piece of equipment in the plant. It’s a stepped-up sanitation measure designed to better clean the stainless steel tanks that can harbor bacteria. The dairy also has contracted with a sanitation expert, who will visit the plant every three weeks to check the strength of its chemical cleansing products and make sure they’re sanitizing properly. Also noteworthy, the dairy has purchased several new delivery trucks with colder refrigeration systems.

Additionally, Kleinpeter says all the valve stems that control the flow of raw and pasteurized milk through the processing plant are being replaced. The valve stems were old and some were deteriorating, creating a situation where bacteria could have been entering the product. The dairy also cleaned the cooling tower that supplies chilled water to the milk cooler, the idea being to increase its effectiveness and lower the temperature of the dairy’s milk to 34 degrees from 39 degree.

“Our consultant said that could increase shelf life,” Kleinpeter says.

Finally, the dairy will begin conducting its own shelf-life study. It will sample every bottle of milk and place the sample in a special refrigerator, where it will be able to make sure it is staying fresh past its code date.

Already, Kleinpeter says he has noticed a difference, though he acknowledges it will take time to rebuild trust among his customers. “That’s part of the challenge,” he says. “Rebuilding the trust and restoring the image of the brand.”

Kleinpeter is good at branding. The company has always excelled at promoting itself as the paragon of high quality and wholesome products. Though it was initially slow to admit to the problems it has been having, it is now trying to get out in front of the issue. On Facebook, Kleinpeter answers complaints and apologizes to its customers. The next day, some of them post again, praising Kleinpeter for sending to their homes a company representative bearing complimentary ice cream and milk.

In anticipation of this article, a company representative said Kleinpeter is also implementing a public outreach campaign. They are unaccustomed to negative publicity in this market. No one has ever questioned Kleinpeter’s quality before.

But the issues are legitimate, and the problems are real, Kleinpeter acknowledges. He says in more than a century in operation the business has been through tough times, but none, in his memory, as tough as this.

“All of us are having sleepless nights trying to solve this and make it better than it ever was, better than ever,” he says. “That’s our goal.”

This article has been updated from its original online publication on May 20, 2014.

© Copyright, Louisiana Business Inc., 2014

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