Demand for products like protein-packed yogurt and high-quality butter, along with big investments in processing, is changing the outlook for Pennsylvania’s dairy industry.

Pennsylvania has long been a dairy-producing powerhouse in the U.S., ranking eighth in the country in milk production and boasting more dairy farms than any state except Wisconsin. But the same challenges that have affected America’s dairy industry overall during the past four decades have also hit here in the Keystone State, causing small-scale dairies to close and contributing to farm consolidation.

After decades of decline, though, the outlook for Pennsylvania’s dairy industry is looking up. A new wave of social-media-fueled health and wellness trends, coupled with an embrace of full-flavored, full-fat dairy products, have supercharged demand for cottage cheese, yogurt, and aged cheeses like feta and butterkäse.

As recently as five years ago, dairy processors— who bottle fluid milk from dairies or transform it into other products—were limiting the amount of milk they purchased from the farms they hold contracts with, according to Jayne Sebright, executive director at the nonprofit Center for Dairy Excellence in Harrisburg and a dairy farmer herself. As demand has increased, processors have opened new plants or converted existing facilities to make these value-added products.

“There’s more opportunity for Pennsylvania dairy farms right now than there has been, which is really positive,” she says. “The growing demand is coming from new processing infrastructure being built in the Northeast right now.”

New processing capacity throughout the Mid-Atlantic is meeting demand not only for cottage cheese, Sebright says, but also for sour cream, Greek yogurt, Icelandic skyr, and lactose-free milk. And entrepreneurs are creating the kinds of products today’s consumers want—whether to make a viral pasta recipe, up their protein intake, or participate in a TikTok trend.

STARTING SMALL

Murat Hokka grew up milking goats on a dairy farm in his native Türkiye. Today, he’s the founder of Orontes Yogurt, which makes a thick, unstrained Mediterranean-style yogurt that’s fine-tuned for nutrition, digestibility, and richness.

Before coming to the U.S. in 1995, Hokka worked in five-star hotels in Antalya, the country’s tourism capital. There, he saw well-heeled guests avoid dairy products for digestibility reasons.

After partnering in the restaurant business and exporting dairy cattle, he helped the former Penn Cheese plant in Winfield, about an hour’s drive north of Harrisburg, convert to yogurt production. Hokka has since bought into the business, now called Penn Dairy, which he now owns with another investor.

The plant made its first batches of Orontes yogurt in 2023. Penn Dairy also produces private-label yogurts for retailers, but Orontes stands out in the dairy case. It’s made from the milk of a single nearby herd of mostly Jersey cows that produce milk containing the A2 beta-casein protein, which some find easier to digest than conventional milk, and it’s lactose free. The yogurt is unstrained, which both increases yield and retains much-wanted whey protein—but it’s pleasantly thick and smooth, curling as you scoop it with a spoon. Prebiotic fiber in the form of chicory root boosts nutritional value and digestibility while adding rich texture and subtle sweetness.

“We’re not necessarily trying to follow a trend,” says Shayne Reed, the company’s brand manager. “We want to bring back people who have veered away from the dairy aisle and give them more of an authentic yogurt.”

Since launching, Orontes has grown rapidly, featured in Costco and sold at chains like Market Basket in New England and Food Bazaar in New York and New Jersey as well as independent grocers in eastern Pennsylvania. Penn Dairy is now at capacity, so Hokka is expanding the facility, with plans to relaunch its line of drinkable yogurts later this year as well as quarts of plain and vanilla.

All that growth means lots of milk from Hill View Farm, located just eight miles from Penn Dairy. For farmer Cameron Snook, partnering with Orontes to sell his 500 cows’ A2 milk at a premium has been key to long-term sustainability.

“The industry is very much trending toward ‘get big or get out’ to capitalize on efficiency and economies of scale, unless you have a niche market,” Snook says. “Most farmers don’t set out to milk 10,000 cows. They want to be able to make a living and do what they love, not run a mega business. Niche marketing opportunities like this one can help more people do that.”

THE MISSING MIDDLE

Hokka isn’t the first enterprising immigrant to stake a claim in the dairy aisle. Fellow Türkiye native Hamdi Ulukaya founded Greek yogurt giant Chobani in 2005—the same year Siggi Hilmarsson changed the game with his eponymous skyr. But 20 years into skyr’s mainstream presence in American supermarkets, Iceland-born Gunnar Birgisson believes that the market’s love of cultured dairy won’t stop any time soon.

“We are obviously benefiting greatly from it, as are the farmers,” he says. “There is a reason why we doubled our capacity from last year, and it’s all taken already because there’s so much demand, we haven’t been able to keep up.”

A former executive of Iceland’s Coca-Cola bottling plant, Birgisson wanted to strike out on his own with skyr, whose thousand- year Icelandic tradition and protein-rich nutritional profile made it the perfect product for health-conscious consumers. He initially planned to launch his own label, then refocused on creating the processing infrastructure to support entrepreneurs building brands of their own.

Reykjavik Creamery uses ultrafiltration, which enables processors to fine-tune components; it’s used by brands like Fairlife to remove only the lactose from fluid milk. But Birgisson filters skyr to capture fat and both whey and casein protein, leaving water behind. The result is a thicker, higher-protein product that packs more of a nutritional punch without added protein powder.

“We at Reykjavik Creamery are that part of the infrastructure that perhaps was missing in Pennsylvania to take this high-quality milk and process it into another high-quality product,” he says. “Bottling fluid milk is a declining business, and consumers are looking for other products now, so I think the timing was pretty good to set up this kind of plant.”

After opening in Newville, PA, in 2019, Reykjavik Creamery has also seen rapid growth. Birgisson and his 50 employees produce skyr and Greek yogurt for four different brands sold in major retailers nationwide. The facility currently processes the equivalent milk output of around 3,300 cows, sourced by Reykjavik’s clients from local dairy farms. After a $50 million expansion to be completed in the next two years, they’ll triple that capacity, processing about 2 percent of the state’s milk supply— most of it certified organic milk for which dairy farmers receive a premium.

“There has been a permanent shift in yogurt consumption in the U.S.,” Birgisson says. “It’s moved from the traditional, sweet yogurt to high-protein, low-sugar, premium products that have clean labels. That is what people will be eating for decades to come.”

CHURNED BY THE AMISH

Amid the demand for high-protein dairy products, lush, fatrich butter remains not only popular but trendy. Splurging on high-end butter offers consumers a little taste of the finer things, whether it’s small-batch and local or world-renowned and imported.

“Food is the one product that runs across every demographic. It’s remarkable in a way that travel isn’t, cars aren’t, luxury goods aren’t. But food is that everyday luxury,” says Pierre “Pepe” Issa, who founded Australian butter company Pepe Saya with his wife, Melissa Altman. “You’ll talk to people from all walks of life, and they’ll say, ‘I never skimp on butter. I buy the best butter I can.’”

Issa and Altman sold their first wheel of Pepe Saya cultured butter in Sydney in 2010 after being disappointed with the quality of conventional butter using Australian milk; high-end chefs and gourmands bought imported French butter, which takes three months to travel from Europe via cargo ship. As the business grew—they now make flavored butters, caramels, and butter sheets for laminating pastries, too—they set their sights on the U.S., which has high butter consumption and plenty of cows.

After initially importing their butter from Australia, Pepe Saya sought to partner with dairy farmers here in the States. A chance encounter with a group of Amish dairy farmers in 2023 led to the buildout of a production facility in Lancaster County in 2024.

There, a team of Amish workers trained by Issa and led by head buttermaker Daniel Lapp now churn three tons of cream into butter each week. Rather than the “sweet cream” butter that’s commonly available in American and Australian stores, Pepe Saya’s cultured butter is made in a process similar to yogurt, with beneficial bacteria adding complex yet subtle flavor.

“We’re making this weekly, so you’re buying butter that’s just been made,” Issa says. “It has to be packed by hand because once you pack this in a machine, you lose the texture.” He was excited to work with an Amish community because they’re used to making things by hand rather than with machines. “The labor is more expensive, but it’s so important that care be put into it because it’s such a beautiful product.”

Issa spends about half the year in the U.S. managing the Pennsylvania operation, and Pepe Saya’s signature rounds of butter are distributed to restaurants, cheese shops, and grocery stores on both coasts. In addition to Whole Foods, their cultured butter is available at Mighty Bread in South Philly, where it’s sold in rounds, served on the menu, and worked into croissants; Evergreen Cheese and Weaver’s Way Co-op in Chestnut Hill; Carlino’s Market in Ardmore; and online direct from Pepe Saya USA HQ in Christiana, PA.

Issa believes he and Altman could spend the rest of their lives building up Pepe Saya to meet the huge potential of the U.S. market. And although he agrees that dairy brands can benefit from large-scale consumption changes or wellness trends, he’s cautious about riding the wave of any one viral fad. “You will not see anything on our social media about health,” Issa says. “You do not want to be pigeonholed, because when that fad’s over, you’re cooked.”