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November 2, 2018
Despite a very challenging year for the U.S. dairy industry, Dairy Management Inc. (DMI) leaders this week shared highlights of checkoff-led successes -- such as growing export sales, the results from partnerships with leading brands and the Undeniably Dairy campaign -- during the 2018 joint annual meeting of the United Dairy Industry Assn., National Dairy Promotion & Research Board and National Milk Producers Federation, held in Phoenix, Ariz.
Addressing nearly 800 dairy farmers and industry representatives, DMI chief executive officer Tom Gallagher acknowledged the economic hardships facing producers.
“Your staff, nationally and locally, understand how tough and devastating the times are,” Gallagher said. “We don’t understand the pain the way that you do, but I want you to know we feel it. I want to express how humbling it is to work for the hardest-working people, and we truly appreciate you all being here.”
DMI president Barb O’Brien shared the checkoff’s partnership strategy and how its key foodservice partners – Taco Bell, McDonald’s, Pizza Hut and Domino’s, which collectively feed 40 million Americans daily – answered the call this summer to support dairy and farmers through their fall marketing and promotions.
“My conversations with these executives illustrated just how strong our partnerships are,” O’Brien said. “These are people who truly care, and each one committed to look back at their menu, marketing, advertising and promotion plans to see what more they could do to build incremental opportunities for dairy sales on top of what was already planned and to showcase dairy farmer stories.”
She provided examples of what will be a dairy- and “cheese-centric” fall with the launch of McDonald’s Triple Stack breakfast sandwich that has two slices of cheese and Pizza Hut’s new pan pizza featuring 25% more cheese.
Despite low milk prices, Gallagher said total dairy sales increased 2.5% this year, which was stronger than last year’s rate over the same period, according to U.S. Department of Agriculture data. He credited this to ongoing growth in cheese and butter as well as strong dairy exports due to the work of the U.S. Dairy Export Council (USDEC).
USDEC president and CEO Tom Vilsack launched the “Next 5%” initiative to build export volume from 15% of U.S. production to 20%. Through the first seven months of 2018, almost 17% of U.S. milk production moved out of the country, the largest percentage in history. U.S. exporters have moved record volumes of dairy ingredients, while cheese sales also have been excellent.
Gallagher said there is a significant opportunity for long-term success for U.S. dairy around the world over the next 40 years. Major population growth in the Middle East, Africa and Asia, including an emerging middle class, underscores the need to expand the industry’s export capability and product mix, he said.
“As people live longer and economies in those countries get better, the middle class grows,” Gallagher said. “When the middle class grows, the demand for animal protein grows with it. The key to the international market is the same for the domestic market: Give the consumer what they want, where they want it and how they want it.”
One other aspect of the checkoff’s business plan that is delivering results for farmers is its modern marketing strategy. To grow trust in dairy, the Innovation Center for U.S. Dairy – founded by farmers through the checkoff in 2008 – launched the Undeniably Dairy campaign last year with the goal of uniting the industry to proudly reintroduce dairy to consumers. More than 300 dairy companies and organizations have engaged with the campaign.
“The Undeniably Dairy campaign is visible. You see it everywhere, and that’s exactly what we set out to do, and I thank all of you for your engagement in helping to bring the campaign to life,” DMI chief marketing communications officer Beth Engelmann said.
“When consumers engage with Undeniably Dairy content that features dairy farmers, there is a strong and positive emotional response that is translating to stronger trust and a deeper connection to where their food comes from,” she continued.
Engelmann also noted that when people have engaged with Undeniably Dairy content, their intent to purchase dairy alternatives decreases, according to campaign research data commissioned by DMI.
Fluid milk revitalization
Looking ahead to 2019, Gallagher stressed the need to address the challenges and opportunities for fluid milk, referencing a plan to convene cooperatives and other companies to push for a commitment to revitalize the category.
He pointed to the success of the brand fairlife as an example for what is possible for fluid milk through a commitment to innovation and marketing. DMI established a partnership with fairlife four years ago to ignite the category and create a national brand. Fairlife is bringing people back to the milk category and is projected to be a $420 million brand by the end of 2018.
He said DMI is committed to working with partners who have a similar vision. The checkoff’s fluid milk strategy focuses on two key pillars:
Infrastructure investment that can create innovative products and packaging, and
Stimulating non-traditional dairy and major food and beverages companies to enter the milk business.
DMI has other fluid milk revitalization efforts that include partnerships focused on innovation around lactose-free, flavored milk, packaging, value-added products, ingredient use, brand market spending and plant infrastructure. Gallagher said a dairy case pilot study reinforced fluid milk’s value in the grocery store and saved 4 ft. of storage space that would have otherwise gone to other beverages.
He also shared early results of an e-commerce pilot with home grocery delivery service company Peapod that is increasing sales of dairy purchases by those customers.
Gallagher concluded by saying there is a clear vision within the dairy checkoff for the opportunity that lies within the domestic and international markets to grow U.S. dairy. A united dairy community and the courage to lead will help realize that vision.
“We have unity like never before in this industry,” Gallagher said. “Now, all we need are leaders to execute the plan and to help assure a great future for dairy farmers. Let’s all be those leaders.”
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