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Archive for Wednesday, November 21, 2012

Iwig dairy files for bankruptcy, plans to keep retail stores open for reorganization

Tim Iwig, Tecumseh, who owns Iwig Family Dairy, carries a newborn calf on his dairy farm in October 2009.

Tim Iwig, Tecumseh, who owns Iwig Family Dairy, carries a newborn calf on his dairy farm in October 2009.

November 21, 2012

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The Lawrence Iwig Family Dairy store opened in 2012 at 1901 Mass. In addition to fresh milk, butter and ice cream from the family dairy in Tecumseh, the store sells other local produce and food items.

The Lawrence Iwig Family Dairy store opened in 2012 at 1901 Mass. In addition to fresh milk, butter and ice cream from the family dairy in Tecumseh, the store sells other local produce and food items.

Lawrence mother Alisha Swanson engages in an animated conversation with Laurel Iwig Monday at the Lawrence Iwig Family Dairy store, 1901 Mass. Iwig and her husband Tim opened the market in February, in which they are selling their dairy products as well as produce, meats and other products from local producers. Also pictured are two of Swanson's children, Mackenna, 4, and Sam, 11 months.

Lawrence mother Alisha Swanson engages in an animated conversation with Laurel Iwig Monday at the Lawrence Iwig Family Dairy store, 1901 Mass. Iwig and her husband Tim opened the market in February, in which they are selling their dairy products as well as produce, meats and other products from local producers. Also pictured are two of Swanson's children, Mackenna, 4, and Sam, 11 months.

Tim Iwig, owner of Iwig Family Dairy, watches employee Melody Buford while milking cows July 6 in Topeka. There was a time - long before the Internet, cell phones and $3-per-gallon gasoline - when milk, not water, came in bottles. And glass bottles at that. Many older consumers recall glass bottles fondly as providing colder, creamier, fresher-tasting milk.

Tim Iwig, owner of Iwig Family Dairy, watches employee Melody Buford while milking cows July 6 in Topeka. There was a time - long before the Internet, cell phones and $3-per-gallon gasoline - when milk, not water, came in bottles. And glass bottles at that. Many older consumers recall glass bottles fondly as providing colder, creamier, fresher-tasting milk.

In addition to the traditional whole milk, another favorite among many locals is Iwig's strawberry milk.

In addition to the traditional whole milk, another favorite among many locals is Iwig's strawberry milk.

Iwig Family Dairy has filed for bankruptcy but, as part of its reorganization plan, will continue to operate its Lawrence and Topeka retail stores.

Increasing sales at the Lawrence store — bemoaned by some for its difficult-to-access location at 1901 Massachusetts St. — is critical to the dairy pulling through the bankruptcy, owner Tim Iwig said.

“We have to drive people to the Lawrence store,” he said. “And if they refuse to go to that store, then we’ve got to find another location that works.”

Iwig, whose multigeneration family dairy is located in Tecumseh, filed for Chapter 12 bankruptcy Thursday in U.S. Bankruptcy Court, district of Kansas. A few days earlier, on Nov. 12, Kaw Valley Bank filed a petition for foreclosure against Iwig, according to Shawnee County court documents.

Iwig’s bankruptcy petition indicates the dairy had $696,000 in assets and $1.17 million in liabilities.

The dairy faced foreclosure in 2010 but rallied, in part by enlisting members of the public to buy shares in the company.

According to the bankruptcy petition, many Lawrence residents are among at least 150 creditors holding “unsecured nonpriority” claims from stock purchases in 2010 and 2011. Those purchases ranged from $500 to several thousand dollars each, according to the petition.

“Our understanding is they’ll still be shareholders after we come through the bankruptcy,” Iwig said. “We should come through the bankruptcy healthier than we are now, so they should be in a better position.”

Chapter 12 is the portion of the U.S. bankruptcy code that provides for adjustments of debts of a family farmer or family fisherman.

A Chapter 12 plan usually lasts three to five years, and must provide for full payment of all priority claims, according to the U.S. Courts description of the law. The debtor is not required to pay unsecured claims in full as long as the plan calls for all disposable income to be committed to payments and for creditors to receive at least as much as they would if the debtor’s nonexempt assets were liquidated under Chapter 7.

The dairy has operated a retail store at 724 SW Gage Boulevard in Topeka since 2010. Lawrence’s Iwig Dairy Store opened this spring, selling milk, butter, ice cream and a number of grocery products from other local sources.

Fans praise the farm-fresh milk and other dairy products, but not enough of them are coming in to buy it, Iwig said. He said the reopening of the Dillons store across the street hasn’t made a difference one way or the other.

Iwig said selling his milk through larger grocery stores was not a viable solution because it involves more time and work to coordinate for a smaller profit margin.

Iwig said one of the main goals of his reorganization plan is marketing the Lawrence store and, if he found a better location that was feasible, possibly moving.

“So far, the Lawrence store is running behind Topeka pretty measurably,” he said. “My store over on Gage does gangbusters. I don’t know if it’s our location or exactly what it is. If anybody has suggestions, I wish they’d make them if they don’t like it where it is.”

Iwig said he will continue to make milk in the old-fashioned method he has, even though it comes at a higher cost to produce — a pinch felt especially sharply during two years of drought, high feed prices and low milk prices.

He feeds his cattle alfalfa hay from an area farmer who does not treat the crop with Roundup, he said. They also eat spent grain from Free State Brewery and apple waste from Louisburg Cider Mill, which are cheaper than corn right now but still costly to haul.

He also uses vat pasteurization. The low-temperature method takes longer and costs more than the quick, high-heat pasteurization that almost all other dairies use, but Iwig believes it results in a product with flavor and nutrients closer to that of raw milk.

Finally, it’s sold in earth-friendly glass bottles.

“Our milk is head and shoulders above any other milk on the market,” he said.

On Wednesday, Iwig said he hoped hard work would help enable his business to emerge from bankruptcy healthier than it is now.

“The bottom line is, we’re going to keep on going stronger than ever and keep right on plugging away,” he said.

Comments

tomatogrower 1 year, 10 months ago

This is the best milk in town. I hope the bankruptcy saves the dairy.

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dbuehler 1 year, 10 months ago

My family really loves IWIG milk, but once it left the grocery store we found it difficult to make the stop on Mass....when the store was first opened it was not open on Sunday. I was willing to make 2 stops for groceries and the milk, but for us this was Sunday afternoon so that did not work for us. I agree with what others say, the location is awful. If there is even close to a full parking lot, then I don't stop. There is no way I can get out of there when its full because there is no room between the curb and the parking space. So....I would buy it again if it all worked for us, the milk is really good. But we don't live in Lawrence so our one trip a week has to work to get it all. Good luck to Iwig, hope you guys make it.

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shanep 1 year, 10 months ago

"fans praise the farm fresh milk and dairy products, but not enough of them are coming in to buy it" This is something I have experienced in Lawrence. People "support" a great idea, as long as said support doesn't require "using" that service. If you really believe this guys milk is great support him from your wallet, not your mouth! Personally, I think milk is weird and gross so I don't drink it. Sorry Mr Iwig.

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riverdrifter 1 year, 10 months ago

OK, you don't like milk. So what. Why are you even commenting on here?

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Chelsea Kapfer 1 year, 9 months ago

i know, right? this is a mean group of people here on this forum.

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shanep 1 year, 9 months ago

1) You're a troll. 2) Your reading comprehension skills seem to be seriously deficient. The bulk of my comment was regarding how the people of Lawrence really like to talk about how great a product or service is, yet they won't actually spend their money on it. Then, that "great" service disappears. 3) My comment had merit and added to the general discussion, why are YOU even commenting here?

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tomatogrower 1 year, 9 months ago

And don't you use milk for cooking?

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lunacydetector 1 year, 10 months ago

my suggestion....get out of the downtown. those folks said they'd support a small grocery, a drakes, or any vegetarian restaurant. downtowners don't support squat.

case in point: gage isn't downtown topeka

if the rent is cheap but the location isn't good, a business will struggle. more advertising will be spent and the cheap spot becomes expensive.

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Lawrence Morgan 1 year, 10 months ago

I wish you well! But the location has to change.

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antney 1 year, 10 months ago

  1. Drive up window
  2. Loyalty card (buy12 get one free)
  3. Delivery subscription service
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Matthew Herbert 1 year, 10 months ago

Friendliest staff in town! I love the lady who works behind the counter....so friendly and kind

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sjevans 1 year, 10 months ago

Awesome milk. I was excited for the Lawrence store until I tried to park at it. Horrible! Thankfully, The Merc carries their milk. I hope this continues. This is the only milk my daughter has drank since we started her on milk 2 years ago.

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Curtis Lange 1 year, 10 months ago

Good luck to them coming through bankruptcy. Saying that, their milk isn't really that good. Shatto is far and above the better product. Unfortunately it isn't sold in Lawrence though.

+1 to the 19th and Mass store being in an awful location. Bauer Farms at 6th ad Wakarusa might be a better location.

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GardenMomma 1 year, 10 months ago

I love their milk, however, once they stopped selling at Hy-Vee, I found it incredibly hard to drive to their Lawrence store. It is very much out of my way for any errands that I run. I am rarely on that side of town.

The Merc still sells it, but more often than not they are out of stock.

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Richard Heckler 1 year, 10 months ago

Sometimes I walk across the street from the east side where Yellow House was. No problem getting in and out. Might add 1-2 minutes walking time.

Grab a cooler and go for the milk which makes awesome yogurt.

Also other local products for sale such as some produce,tofu,meat(?),salsa etc etc.

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Richard Heckler 1 year, 10 months ago

Is rent on the other side of the street more favorable? Those spaces have been vacant for a very long time.

How about that former laundromat location at 12th and Connecticut? Those folks might be willing to work with Iwig.

We include Iwig on our "errands".

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hipgrrrrl 1 year, 10 months ago

We went in once and it took me forever to manuever out of the parking lot. I'm not excited about braving that again. Plus, while I sympathize with the issues regarding sales at stores, I already make between 2 to 3 stops on my grocery day and making one more (with four children in tow) isn't what I want to do. Generally, we buy milk from a local farmer and I'm much more likely to buy raw grass fed dairy (and butter, and cheese, etc) although there are times when I need some cream or run out of milk...that parking lot is impossible, though.

I've bought Hildebrand cream recently at the Merc, but was informed by them that they feed GMO feed to their cows so now they're off the options list. I just wish Iwigs would move. I also wish they would have some sort of milkshake bar :). I generally make our own ice cream, but if they had milk shakes, well, I just might be more willing to stop in :).

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jhawkinsf 1 year, 9 months ago

I always thought the old Joe's donuts would be a great location for a business such as this. About the same size as their current location, some street parking, a little more around the corner and well within walking distance of many residents. It's vacant/for sale.

7

patkindle 1 year, 9 months ago

ok, let me see, the guy works real hard. folks love his natural product and want him to succeed. but no one will break a sweat to buy from him.. so evidiently it is not so important to them.. perhaps we should get a federal grant, or a ku professor to study this and tell us what is wrong and how to correct it?? s

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Chelsea Kapfer 1 year, 9 months ago

I love the products and will park wherever I need to to purchase them. It's really not that hard.

2

tomatogrower 1 year, 9 months ago

Me too!!! It's not that hard to get out of the parking lot, and it's soooo worth it. Hildebrandt does the fast pasteurization, and tastes like regular old milk. The flavor of Iwig is worth the hassle. But it would be great for them to get another location.

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Noweigh 1 year, 9 months ago

Patkindle.....you nailed it. Iwig is obviously dedicated and hard working. Circumstances put them in a very poor location for retail success. But Bryant's Bar-B-Que on Brooklyn in KC and other out of the way favorites make it....customers like the product enough to support it no matter where they are.....customers pay these businesses "wallet-service" instead of lip service. Love Iwig? Buy and buy a lot and tell your friends. The free market is a wonderful barameter of real value.

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chocolateplease 1 year, 9 months ago

Do you know where your customers live? I suspect west of Iowa. It would be good if the location was near other major grocery shopping areas. What about the shopping center directly across the street from Checkers? Or up along 6th, 15th, or 23rd (west of Iowa) somewhere? I agree with the parking comments. I'm waiting to shop with Iwigs again after they move.

Also, does anyone have trouble pouring their milk without having it dribble down the side of the bottle? I wish we could somehow avoid that.

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tomatogrower 1 year, 9 months ago

They do make skim. It's probably their best seller.

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average 1 year, 9 months ago

As much as '66044' Lawrence may like local and natural, there's darned little disposable income to shake out of it. It's not like the store on Gage is in a substantially higher income area, but the people nearby spend about half of what '66044' does for housing (rent or own), and of the people who do have full-time incomes, a third of them have long commutes (eating up time and gas money).

Unfortunately for Iwig, possibly the best place they could be in Lawrence (central, plenty of parking, reasonable rent small storefronts) is in the same plaza as their main current distributor (i.e., the strip next to and behind the Merc). There's an outside chance the synergy of having those next to each other would outweigh the negative, but I don't think it's a strong chance.

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kubmg 1 year, 9 months ago

In addition to Antney's comments which I completely agree with as viable options, I will add:

Move to a different location - I'd suggest 6th and Wakarusa, near Eileen's Colossal Cookies (milk and cookies, what a great combo). Growing area & adequate parking.

1

msezdsit 1 year, 9 months ago

Great products. That location is terrible and hopefully they survive and find a new and better place. I don't think it really occurs to people that that is a commercial retail building . It seems like the kinda place that would have a phone store or something but not a dairy outlet.

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Tomato 1 year, 9 months ago

Personally I'd buy if they were closer to the west side of town. Even if they were on 6th street, I'd probably go out of my way. But 19th and Mass and WAY out of the way.

I'd also purchase a subscription delivery service, but I don't know if there's a way for that to be profitable for them.

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Tomato 1 year, 9 months ago

Actually, any time I'm at the Merc, I look. But they are often out of stock. And since the Merc is already out of my way, I'm probably not going to drive 2.5 miles further for milk. Other times I already have milk. If I can't reliably buy it in a convenient way, then I won't plan to buy this particular milk.

You might be willing to drive all over the place for your groceries, but I'm not.

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Tomato 1 year, 9 months ago

It would seem that I'm not in the minority. If people were willing to be inconvenienced for milk, then he would not be having financial difficulties.

You're right, I don't care enough to drive all over the place. First I do my groceries on my side of town. Then I might go to the Merc and check. I'd probably stop for some other errands along the way - and by then I'm already at my wit's end with traffic and BS, so I might decide to skip the Merc altogether. Then my choice is to buy whatever's available in the milk aisle or drive another 2.5 miles.

If you drive the extra miles, then you either seriously undervalue your time or seriously love milk.

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Katara 1 year, 9 months ago

So no one is bothered by the fact that he was in the hole in 2010, got out of the hole because people bailed him out by purchasing shares to get him back on his feet and now is back in the hole even more than he was in 2010?

His liabilities are almost twice the amount of his assets. He chose to open a new store in a different location (Lawrence) this year and a mere 8 months later is filing bankruptcy and already has foreclosure proceedings started against him?

And people still want to keep him in business despite the fact that he has demonstrated that he is running a poor business model that has done nothing but get him deeper into the hole?

He seems to be a nice guy and it is nice that he wants to provide a quality product but either he needs to hire someone who is adept at managing money and business accounts or he will be in the hole even deeper than he was before.

1

Katara 1 year, 9 months ago

Go away little sheep...baa baa.

0

Katara 1 year, 9 months ago

Go away little sheep... baa baa. Perhaps after you get bounced for the umpteenth time, you can be born again as an actual human.

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Katara 1 year, 9 months ago

While I generally agree with what you are saying, he was already financially helped by supporters who purchased "shares" in his business. They won't see any benefit from that even if they purchase his products because unsecured creditors in a bankruptcy don't get their money back unless all the priority and secured creditors get theirs. I don't recall what exactly "shareholders" are supposed to get from his business.

From how quickly he went from one foreclosure to this one pending and filing bankruptcy, I seriously doubt that he will be able to keep with his 3-5 year repayment plan.

The drought isn't something new. It already existed for the last couple of years which is why beef and dairy products prices have been increasing for the last couple of years. This was something he could plan for. It didn't come as a surprise.

He would have already had to have been in a precarious financial situation when he decided to take on the huge risk of opening a new store (and one in a consumer unfriendly location). It has only been a matter of months to get to the point of foreclosure and the bankruptcy maneuver was most likely done to stall the foreclosure (according to chapter 12 bankruptcy info here -> http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter12.aspx ).

I really don't think increasing his sales are going to bail him out. I think he is too far into the hole to dig himself out even with a reorganization plan through bankruptcy.

I also find it weird that he seems to be blaming the consumers of his product for his situation rather than re-examining the financial decisions he made that got him to this point. I think he'd benefit more from an honest look at all the factors instead of just focusing on the external factors.

1

Katara 1 year, 9 months ago

Found the article where he offered the shares @ $1000/share. He needed $40,000 then (2009) to avoid foreclosure. The article states that he anticipated paying dividends in 2 years (2011). http://www2.ljworld.com/news/2009/oct...

Since the "shareholders" are actually unsecured creditors, dividends would be suspended until the repayment plan is discharged so it looks like the shareholders are going to have to wait an additional 3-5 years for their dividends.

1

Tomato 1 year, 9 months ago

I enjoy a lot of things that are on Mass street. I still only go there once every month or two. For some us, driving downtown is not a pleasant experience, and it actually does take half an hour.

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cowboy 1 year, 9 months ago

Seems to me this is a failed business. any farmer that has to buy major feed stocks as opposed to raising his own is on the slimmest of margins.

1

John Pultz 1 year, 9 months ago

Tim Iwig, I hope you're reading these comments. Here's a new possible location: the gas station/convenience store at 9th and Ohio is closing. that would be a good location on a major street and near town. It's also an area that still misses the Merc, which used to be at 9th and Mississippi. It you carried your milk plus as many other products as possible (bread, eggs, etc.) you might have a good business there.

I, too, am someone who bought lots of your milk (5 half-gallons at a time) but just don't have the time to add a stop at your store into an already-busy family schedule. Sorry about that.

0

laurennoel 1 year, 9 months ago

I love love love Iwig! I will admit that the Lawrence location is difficult to navigate because of that parking lot, but I'm a devoted customer.

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tomatogrower 1 year, 9 months ago

Or this is just another hard working farmer who hasn't sold out to the conglomerates yet, and the drought hit him hard. I am a share holder and I didn't do it to make money. I did it to help a family farm to survive. If I had more money, I would buy more shares.

2

pkala 1 year, 9 months ago

Great to find out about the Lawrence store. Didn't even know about it, and plan to check out the butter and other products asap as I'm not a big milk drinker. Ice cream WOULD be wonderful.

Lawrence is so tiny, to say it's too much trouble to go anywhere is a bit silly. Comes of living in a small town for too long, I guess. If you like the milk enough, you'll find a way to get there. If he's having financial issues, moving is probably not an option. Come on lazy people and support a local family business. Easy to criticize from a distance.

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BrandonEdling 1 year, 9 months ago

I think one of the biggest issues, besides parking lot size, is curb appeal. Unless someone knows what "IWIG" is, no one would know it's a dairy store. Maybe having "MILK" right under "IWIG" is a good first step.

I agree with the post about the old Joe's donuts location. That would be perfect.

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