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Beyond High Heels: Executives Offer $9 Designer Milk

Katie Little, News Associate
Sunday, 23 Dec 2012 | 12:54 PM ET
Manolo Blahnik executives, George Malkemus & Tony Yurgaitis.
Jin Lee | Bloomberg | Getty Images
Manolo Blahnik executives, George Malkemus & Tony Yurgaitis.

The same executives who hope you add $595 Manolo Blahniks to your holiday shopping list also want a spot in your grocery cart.

Having achieved success in the world of high-end shoes, Manolo Blahnik CEO George Malkemus and Vice President Tony Yurgaitis have entered the highly competitive dairy industry on their farm in Litchfield, Conn., named Arethusa.

Although they have owned the farm for more than a decade, the pair began their own bottling operation just last year and the milk, like the price tag of a pair of Manolos, isn't cheap.

A gallon will set buyers back $9 (more than twice the national average) at stores, including Stop and Shop, Whole Foods and Dean and DeLuca. (Read More: How Small Vendors Hit the Grocery Jackpot)

Beyond the high price tag, the company faces another headwind — Americans just aren't drinking as much milk as they used to as they turn to newer products such as soy milk, vitamin water and energy drinks, to quench their thirst.

Weekday 'Heels', Weekend Heifers
Retail executives, Tony Yurgaitis and George Malkemus, of Manolo Blahnik, discuss the outlook on luxury retail this holiday season and how they are fashioning a market for high-end dairy products.

Milk consumption has fallen almost 30 percent since 1975 following its high point around World War II, according to U.S. Department of Agriculture data, although sales of cheese, yogurt and other dairy products have increased.

(Read more: Holy Cow! Milk Prices Are Set to Soar)

Despite the decline of milk consumption, Malkemus and Yurgaitis told CNBC's "Squawk on the Street" recently that their local community has supported them.

They first began their side project to protect Arethusa from developers. The property is across the road from a country home they own. (The name "Arethusa" refers to a pink orchid that grew wild on the farm's wetlands.)

After buying the property, which was then a horse farm, in 1999, they initially sought to breed cattle. But they later expanded their operation to include dairy production. Since buying the farm, the pair's operation has grown to include 230 cows, and Arethusa milk is now sold in 45 different locations in Connecticut and New York.

The farm has broken away from the traditional dairy model, which combines milk from several different cooperatives to create a blended milk product.

"Our milk is picked up from our farm, only from our cows," Malkemus said. "Five minutes from our farm is our bottling plant where it's bottled and shipped to the stores so it's truly a local product, it's really milk like it used to taste."

Although farm workers knew the couple owned the Manolo Blahnik company, it was not until the hit T.V. show "Sex and the City" made the shoes a household name that the farm's workers realized how popular the brand had become.

"Carrie Bradshaw and Sarah Jessica Parker, thank you very much," Malkemus said. He named the brand's most popular shoe, a pump called BB — yours for just under $600 at Saks Fifth Avenue (or about 66 gallons of Arethusa milk.)

As the holiday shopping season kicks into full swing, Malkemus sees similarities between the dairy business and the stiletto trade. In both, consumers demand quality.

— Written by CNBC's Katie Little. Follow her on Twitter @katie_little_

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