Fifth Town Artisan Cheese Company
This blog was originally posted at http://socialventureexchange.org/?p=360
Small scale can be successful and sustainable
When Petra Kassun-Mutch set out to start her own dairy, her goal was to revive small-scale cheese making in Ontario. Fast-forward just two and a half years and Fifth Town Artisan Cheese Company (Fifth Town) is a $1.3 million enterprise, producing handmadegoat, sheep and cow milk chesses in a 4,800 square foot facility on the eastern ridge of Prince Edward County. Fifth Town is a social purpose business with social and environmental consciousness embedded into its DNA. It wasthe first dairy in the world and the only industrial project in Canada to qualify for LEED’s (Leadership in Energy and Environmental Design) top platinum standard.
Fifth Town has won over 30 awards for its cheeses and sustainability initiatives, such as using Local Food Plus (LFP) certified milk, which is produced in accordance with humane animal management practices. The dairy is equally conscientious about packaging its products with biodegradable and recyclable materials, printed with water-based ink on post-consumer paper.
Going local and going green
Petra chose to locate Fifth Town in Prince Edward County because of the County’s growing reputation as a culinary tourism destination. She saw Fifth Town as a lever in overcoming some of the County’s economic challenges. Today, by sourcing all the required milk supply from local, family-owned, small-scale dairy farms, Fifth Town is directly contributing towards the economic well being of the County and its residents. Currently, 93 cents of every dollar spent in the making of Fifth Town cheese stays in the local area. In addition, the facility that constitutes the dairy’s processing, retail and educational space is a model for substantiality. Having undergone an intensive third party audit to ensure it meets the highest environmental and social responsibility best practice standards, the facility further formalizes Petra’s commitments to environmental and social responsibility.
Green Initiatives
The choice to go “green” did not come cheap. The LEED certified facility cost $400,000 more than a conventional dairy with identical specifications. The additional investment went towards eco-friendly materials and alternative energy sources. The 9,000 square foot geo-thermal field and 12 tonne heat exchanger reduce heating costs, while wind and solar installations provide hydro. As a result of these investments, Fifth Town runs on approximately 69% less energy and uses 62% less water than a conventional facility.
The challenge of seeking patient capital investors
It was difficult for Petra to secure financing from angel, venture capital or private investors to start the business. A traditional, capital intensive, manufacturing-type of business such as Fith Town is not a popular undertaking for those looking for low investment, fast return, Internet-style ventures. Petra therefore had to rely mainly on family savings and a variety of conventional loans to invest into the business.
However, once the facility was operational and the Fifth Town’s reputation started to grow, the dairy successfully applied for and received an interest free loan under a federal government stimulus plan, allowing it to expand operations.
Looking ahead
With growing demand for its products, which are sold nationally at select gourmet grocery stores and cheese boutiques, Fifth Town has additional capital requirements to put towards its working capital and near-term expansion needs. However, access to capital still remains an important challenge. Petra believes that the traditional risk/reward analysis as undertaken by investors is not applicable to businesses like hers.
First of all, the payback takes longer. “This is not the type of investment for someone looking for exceptional returns in 18 months. If you have heard of Slow Food, you can think of this as Slow Business,” she explains. However, as a resourceful and energetic eco-entrepreneur, Petra is optimistic about the Ontario’s small scale dairy sector and Fifth Town’s role in it.
Special thanks to Alexandra Pattee, SVX Research Associate, for research support, and Petra Cooper, Founder and CEO, Fifth Town Artisan Cheese Company.
