A friend introduced him to Mr. McCloskey, whose passion for reinventing dairy farming and the milk industry was enough to get Mr. Jones to move to Chicago, become chief executive of Fair Oaks Farms’ designer products division and build out a 12,000-square-foot corporate office in the West Loop.

“I understand the cow” but not retailing, says Mr. McCloskey, 59, a veterinarian-turned-farmer. He knows PR, though: The 30,000-acre Fair Oaks Farms he co-owns in Northwest Indiana draws thousands of visitors a year to its restaurant and $10-million visitors’ center, which extols the environmental mission of the farm and subsequent health benefits of its hormone-free products.

Based in part on those numbers, Mr. Jones is convinced they can turn a commodity into designer beverages for children, women, athletes and other groups, at $2 to $4 for 12-ounce and 16-ounce bottles. The shelf-stable Fair Oaks Farms milk products already comes in flavors such as chocolate, strawberry-banana and coffee; six varieties are planned for next year.

The milk separation process—already used to produce milk with varying fat content—is the key. By breaking down milk into its basic components of water, minerals, lactose, protein and butterfat, it can be reformulated to target specific markets.

Five years ago, Select Milk Producers Inc., the Artesia, N.M.-based parent of Fair Oaks Farms, began selling a milk blend, Mootopia, with higher calcium and protein and less fat and sugar to HEB Grocery Co. L.P., a San Antonio-based grocery chain with more than 150 locations in Texas. The men have pitched a similar designer milk beverage to Kroger Co. The Cincinnati-based supermarket chain declines to comment on future merchandise deals. HEB did not return calls for comment.