The business was started by Canterbury dairy farmer Glen Herud in 2015 with the aim of creating a more ethical and sustainable model than that offered by large dairy companies.
Herud’s dairy farm at Ohoka allowed calves to stay with their mothers until the optimal weaning time, used mobile milking sheds, and processed milk on-farm for sale in reusable glass bottles. However the enterprise folded in 2018 under pressure from creditors.
The revamped business Happy Herd Milk Company, which trades as Happy Cow Milk, raised $400,000 from a crowdfunding campaign in November 2019 and has hit its minimum target of $500,000 in a second crowdfunding campaign due to close on the PledgeMe platform at 5pm on Monday.
“Happy Cow Milk was built by a community of like-minded individuals who believe in doing dairy differently which is why it made sense to come back to these same individuals who have got us to where we are today,” Herud said.
In the latest equity raising, the company offered to sell 8.7 per cent of the company at $3 a share, with a minimum pledge of $102. Its maximum target would see it raising $2 million for a 28 per cent share of the company.
The funds will allow Herud to build a prototype of his mobile “milk factory in a box” system and run a trial.
The system uses a high-tech mobile unit where milk is pasteurised and then transported to a retail outlet for dispensing. Retailers of the milk could include schools, workplaces, grocery stores, cafes, farmers markets or individuals undertaking home deliveries.
Customers would be able to find nearby dispensers using an app, where payments would also be processed. The app would tell customers where and when their milk was produced and allow them to communicate directly with the farmer.
As part of a trial, Waerenga, North Waikato, farmer Chris Falconer would begin selling his Happy Cow Milk in Te Kauwhata from October.
Since he took over the 250-hectare property seven years ago, Falconer has planted more than 10,000 trees and fenced 30km of waterways. By breeding for more efficient milk production, he has reduced his herd to 420 from 500 without reducing production.
“For me, success will be people enjoying a direct connection with the milk they drink,” Falconer said in the investment memorandum document. “It’s about the consumer having a choice to purchase milk in a way that creates the least harm to the environment.”
In March next year, Happy Cow Milk plans to expand into Auckland and then Hamilton. It plans to roll out its service to commercial farmers throughout the country from March 2023 at the rate of one farmer a month.
“We plan to invest heavily in growth,” the company said in its memorandum.
The company said its pricing will be “mid-range”, at $2.80 a litre including GST, compared with premium brands like Lewis Road Creamery at $4.60 a litre, mid-priced milk like Anchor at $2.34 a litre and budget milk at $1.80 a litre.
A breakdown of the sale price sees the farmer paid $1.41 a litre, while retailers and Happy Cow Milk would each receive 51 cents a litre. The company anticipates farmers will benefit from a 130 per cent increase in revenue.
Happy Cow Milk is targeting a 3 per cent market share, and expects to have 37 farmer suppliers and post its first profit in the year to March 2025. It hopes to pay its shareholders dividends in the future.
It expects to break even when it has independent farmers selling 20,000 litres of milk a day. It has 130 farmers signed up to email updates and 14 have expressed interest in joining Happy Cow Milk.
The company said its system could be replicated anywhere in the world.
In its July investment memorandum, Happy Cow Milk said its system had provisional approval from the Ministry for Primary Industries and expected full approval this month.