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U.S. dairy leaders call for collaboration

Checkoff efforts paying off in domestic, global marketplace.

The importance of increased collaboration across the dairy community, defending the good name of dairy foods, and pursuing innovative new marketing strategies were key themes this week at the National Milk Producers Federation’s (NMPF) 101st annual meeting, where 800 attendees heard from their policy and promotion organizations on how to create more opportunities for the U.S. dairy industry.

Hosted jointly by NMPF, the National Dairy Board and the United Dairy Industry Association, this year’s event was themed “We Are Undeniably Dairy,” building on a campaign launched earlier this year. NMPF’s leaders, in their remarks to members, stressed the need for America’s dairy companies to do more in collaboration with other marketing cooperatives.

“We have to stop looking at other U.S. cooperatives as if we’re competitors,” said NMPF chairman Randy Mooney in his remarks. “We have to recognize that in a globalized dairy market, our competitors are outside of America’s borders, and we have to work together to fight for a larger share of those markets.”

NMPF’s annual Town Hall event featured presentations from staff on the latest policy issues affecting the industry, including efforts in Congress to address immigration reform, the fight against misbranded dairy imitators, and NMPF’s extensive work this year to achieve a positive outcome in the ongoing NAFTA negotiations. Later in the day, NMPF president and chief execute officer Jim Mulhern discussed the organization’s work this year to improve the dairy safety net in the coming farm bill, as well as its new campaign, Peel Back the Label, which challenges the misleading marketing practices used by certain food companies.

“To surmount the hurdles that we face, and carry these efforts across the finish line, we must stand together as a united industry,” Mulhern said. “Our dairy community is unstoppable when we engage on these important issues.” He said major grassroots efforts will be needed in support of proposed congressional reforms to immigration laws.  He also discussed how NMPF will be working more closely in the coming year with dairy processors on farm policy improvements.

Keys to industry’s future

The checkoff’s mission of growing sales and building trust is also key to assuring a prosperous future for the dairy industry, Dairy Management Inc. (DMI) CEO Tom Gallagher said during the meeting.

He showcased how the checkoff has grown per capita consumption through several key areas, including exports and foodservice partnerships.

Additionally, he shared how DMI’s “go-to-market” approach proactively works in partnership with the supply chain to expand dairy markets and helps to fill a market need. He said DMI, which oversees the checkoff, allocates funds to stimulate unmet demand through product development, innovation and marketing.

“Our job is to figure out where to use resources in the market chain,” Gallagher said. “Unmet demand is the key. Demand is not the function of what people buy – it’s the function of what we offer them. If we offer innovative products, whether it’s global or domestic, we know we can increase consumption.”

Gallagher said, according to NMPF, U.S. per capita dairy consumption reached 591 pounds in 2016 – up from 566 in 2010 – and credited cheese and butter as the primary drivers for this growth.

Cheese reached its highest consumption level ever in 2016, fueled by at-home use and out-of-the-home ingredient use, especially at foodservice. Per capita cheese consumption in 2016 was 36.3 pounds.

“It’s growing and will continue to grow. In fact, domestic cheese has carried the day in terms of sales the last four or five years,” Gallagher said.

Butter also is enjoying a comeback, thanks to consumers’ acceptance of dairy fats and their desire to consume real foods. Butter reached its highest consumption mark since 1968 at 5.7 pounds per capita in 2016.

Gallagher said the long-term trajectory of per capita dairy consumption remains on a positive path thanks to the checkoff’s work with partners, including McDonald’s, Domino’s, Taco Bell and Pizza Hut. He said since the start of DMI’s partnerships, dairy sales have grown 25%.

Beyond dairy consumption growth domestically, Gallagher said exports of U.S. dairy are providing a boost. They have more than quadrupled since 2000 – to nearly $5 billion in 2016 – thanks to growth in the top five markets: Mexico ($1.2 billion), Southeast Asia ($671 million), Canada ($632 million), China ($384 million) and South America ($280 million).

“As we look to the future, exports will play an increasing role in growing dairy sales,” Gallagher said.

Beyond sales, Gallagher said the need to continue growing consumer trust is equally as important to the dairy industry’s future.

“What keeps me awake at night is trust and the farmers’ right to farm,” he said.

Key to building trust is educating consumers who want more information about where their food comes from. They want to know about nutrients. They want to know their food is responsibly produced and locally sourced. They want delicious taste and enjoyment.

Gallagher said the Undeniably Dairy campaign will help set the record straight and build trust.

The Undeniably Dairy effort was created through the Innovation Center for U.S. Dairy, a forum that leverages the collective power of the dairy community to address the expectations of consumers through shared best practices and accountability.

The industrywide collaboration is beginning to make a difference, with 170 companies actively engaged, said Barb O’Brien, who serves as president of DMI and the Innovation Center for U.S. Dairy.

“We need to continue to build two-way engagement with consumers,” O’Brien said. “We are operating in an environment where negative marketing and absence claims are taking the day. Many of those claims cross the line.”

She continued, “With our campaign, we have launched a very positive and proactive way of communicating. It starts with listening and understanding what is on consumers’ minds. We’re working to shift the tone and tell our story in a meaningful way. Undeniably Dairy truly does establish that two-way dialogue.”

A new extension of Undeniably Dairy is a partnership with Discovery Education. Beth Engelmann, chief marketing communications officer for DMI, said the school-based program aims to connect kids to where their food comes from through tools such as a virtual tour of a dairy farm and social media interaction between classrooms and farmers. Discovery Education works with 50% of all K-12 schools with the potential to reach 38 million students.

Gallagher concluded his remarks by emphasizing the need to embrace change that he says is inevitable and goes “right to the heart of trust.”

“We don’t need to fear change,” he said. “We need to lead the change, and when we do, we’ll be at the table when consumers, retailers and others have misperceptions. We’ll be at the table talking to them, educating them and influencing their decisions.”

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