Facing high costs, lower demand, Grafton Village Cheese Company considers consolidation

Grafton Village Cheese Company is looking at a plan to consolidate its manufacturing from two spaces into one, and hopes to sell the 29,000-square-foot cheesemaking production facility it built in Brattleboro in 2008.

Increased competition in the national artisan cheese market has suppressed revenues for the last several years at the iconic Grafton-based cheesemaker, which is owned by the Windham Foundation. When Covid-19 emergency measures went into place in March, sales to restaurants and specialty stores all but halted, dealing the company another blow.

Now, “with the loss of business due to COVID 19, and the economic challenges facing GVCC prior to that, the management of the GVCC and the Windham Foundation, along with the Foundation’s Trustees, have been taking a serious look at permanently consolidating GVCC manufacturing in Grafton,” the foundation’s president, Bob Donald, wrote to employees on June 10.

“We are optimistic that we can meet our production needs and achieve positive business results operating primarily from the Grafton plant,” Donald wrote. “We expect to make a final decision by the end of July.”

Grafton Village Cheese Company was founded by farmers in 1892.  It makes and ships premium cheddar cheese around the country. 

The Windham Foundation, which has a mission of preserving rural vitality in Grafton and the surrounding area, took over the company in the mid-1960s and built the second plant at Brattleboro’s 180-year-old Retreat Farm – now a 600-acre educational nonprofit with a similar mission – in 2008. 

The plant was constructed to fit in aesthetically with the mid-19^th century buildings of the Retreat Farm, but “meeting the historic preservation aspects of the building did not result in an optimum internal flow of work design,” Donald said in the letter to employees. “Over the years our volume and growth ambitions for the plant have unfortunately never been realized. Including paying off the debt borrowed to build the structure, it is a very expensive building to operate.”

Donald said the foundation has had to spend money from its endowment to cover losses at the production facility. He noted that Grafton’s retail store, and its operation where cheese is cut and wrapped, will stay in place at the Brattleboro facility after production moves.

The foundation is talking to Buzz Schmidt, the president of the Retreat Farm, to see if there might be a way for the farm to acquire the production facility.  

Schmidt said June 16 that he would like to see the 29,000-square-foot space used as part of a local food system project. The factory building has a significant amount of refrigerated storage, shipping space, and loading docks, he noted.

“This is an exploration only at this point,” he said of a possible sale. “We’re in conversation with a few organizations, but literally this became something I could even only talk about last Friday" (at the release of Donald’s letter to employees).

Schmidt added that the Windham Foundation would be a partner in any operation that advanced the local food economy.

Grafton Village Cheese Company has about 35 employees now, and that number is not expected to change if the consolidation takes place, said Ruth Flores, the company’s president. Grafton in May finished construction on new cheese caves for its cave-aged cheeses, most of which are produced to be sold to specialty retailers who cut them to order. The week of June 15, it also rolled out a new logo and branding that had been in the works for a year. 

The company won nine medals at last year’s Big E Gold Medal cheese competition, and took home top honors in 2018 and 2019 from the U.S. Championship Cheese Contest, the Good Food Awards and the American Cheese Society awards.

“We need to support Grafton; they make some of the best cheese in the world,” said Agency of Agriculture Secretary Anson Tebbetts, who would like to see the governor’s proposed $50 million of CARES Act money go to dairy and dairy processors. Lawmakers who are working on their own proposal have earmarked less than that for dairy.

“They are a legacy cheesemaker, and it would be a shame if the state doesn’t support them with these stimulus dollars,” said Tebbetts.

Flores said Grafton’s production will probably go down slightly after the merger. Increased competition is something all cheese companies have had to face nationally as the local food movement has bloomed in the last 15 years.

“There are so many regional producers now, and small producers, of any number of products,” not just cheddar, said Flores. “The bulk cheddar market outside of our region – where we are very strong – is met with a fair amount of competition. And with a fair amount of just all sorts of different cheesemakers nationwide that are producing what we call American originals.”

Also, the market has changed considerably since Covid-19 closed stores and restaurants. While shoppers are buying a lot of pre-wrapped cheese in supermarkets, business at the specialty retail outlets haven’t returned. Grafton had decided in April to temporarily stop cheese production in Brattleboro and move that production to Grafton. The company is now focusing on producing more pre-wrapped cheese.

“And we did feel it was going to be temporary,” Flores said of the move. “However, given the state of the market now, as a result of Covid-19, and the food service business, we do believe it is going to take quite some time for the market to rebound.”