U.S. dairy innovations lead to successful partnerships in global food, beverage markets
GREEN BAY – Most Wisconsin dairy producers recognize the need to help promote increased consumption of dairy products by consumers within the United States and throughout the world. They also understand that once milk leaves the farm, they lose control.
Under federal law, farmers are required to pay 15 cents for each 100 pounds of milk they sell into a “checkoff” program that’s overseen by the U.S. Department of Agriculture to promote and advertise their products. Ten cents goes to local and regional programs and 5 cents goes to fund national programs such as Dairy Management Inc. (DMI), a nonprofit responsible for promoting milk and other dairy products.
DMI Senior Vice President of Producer Relations Stan Erwine spoke to the more than 200 dairy producers and other industry professionals during the recent Alltech Dairy School held at Lambeau Field.
Erwine works to ensure that dairy promotion programs and results are communicated, understood and supported by farmer-funders. He seeks to understand concerns, answer questions and share feedback with dairy promotion leaders.
He related information regarding new initiatives his group is undertaking designed to build partnerships that will increase dairy product consumption in the expanding food and beverage markets.
“The checkoff’s purpose is to create more sales and consumption of dairy products, and build trust,” he said, “but we are not allowed to engage in policy, legislation or product pricing. Trust me when I say that we’re frustrated that the good work we’ve done in moving the billions of pounds of milk, cheese and butter has not resulted in a better price for you.”
Dairy challenges
Erwine acknowledged that there’s currently a false narrative being spread that dairy is dying.
“That narrative is being perpetuated by groups with a plant-based agenda like the Socially Responsible Agriculture Project, which is an organization that has brought together all the anti-animal food groups in the U.S. And they’re actively working to eliminate all animal agriculture from the face of the earth,” he related.
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Erwine also briefly addressed a controversy that’s been swirling around the compensation packages of DMI Executive Vice President Tom Vilsack, a former Iowa governor and Barack Obama’s agriculture secretary, Dairy Management CEO Thomas Gallagher and other executives.
According to Fox News, farmers in Iowa also criticized Vilsack during recent campaign stops in that state with Democratic presidential candidate Joe Biden.
Erwine also criticized an article that appeared this past summer in the Milwaukee Journal-Sentinel as “one-sided.” He claimed that two of the people quoted in the article are part of the anti-animal agriculture movement.
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He said that Gallagher’s annual salary is $600,000, and the million-dollar figure in the story included his severance pension when he retires.
“Yes, $600,000 is a lot of money but keep in mind that he is working on your behalf with the CEO’s of McDonald’s, Dominos, Taco Bell, and Pizza Hut, and we’re strong in there, keeping dairy front and center with them,” Erwine stressed.
He expressed disappointment at the regional infighting currently going on within the dairy industry. “We need to celebrate the diversity in the dairy industry. We need to celebrate farms of all sizes because an industry divided will fall,” he emphasized.
Dairy growth
“The true narrative is that dairy is a growth industry,” Erwine said. “We’ve had 25 years of per capita consumption growth, which is 74 pounds per person, and we’ve had 2.5 percent growth through this year. We’ have $100 billion in retail sales. We’re in 98 percent of U.S. households with cheese and in 94 percent with milk.”
Current U.S. cheese consumption stands at 38 pounds per capita, but Erwine sees more room for growth because France consumes 65 pounds. Cheese exports are at 16 percent.
“Our business plan is to reach across the entire industry on your behalf to multiply your voice, your influence and your investment by getting companies to do innovative things,” Erwine assured. “We’re re-doubling our efforts to help create new products that drives additional consumption of dairy products.”
Powerful partners
Erwine stressed the importance of partnering with leading global companies like McDonald’s, Pizza Hut and Fairlife Milk, among others.
“We have powerful partners because for every dollar you invest, our partners invest $10,” he said. “We bring them information and work with these powerful brands to drive innovation in new products. When McDonald’s gets it right it’s because they’ve acted on research done by the National Dairy Council.”
Erwine reported that a dairy scientist working with McDonald’s helped the company make the change from margarine to butter. “That’s an additional 600 million pounds of milk sold every year because of that change.”
He noted that McDonald’s was followed by Burger King and Carl’s Jr., because “when a leader in the industry gets it right, others follow and that leads to an additional sales that will push closer to 1-billion pounds of milk every year.”
National partners also are important because of their reach in the market and the volume of people they serve. “McDonald’s spends $1 billion a year on advertising, and 80 percent of their product line is dairy,” Erwine said. “They’re not promoting generic dairy, they’re bringing people to their drive-up windows for specialty coffees that are up to 80 percent milk.”
He cited Fairlife Milk as a prime example of an innovative partnership that’s creating a value-added product. “Today, 55 percent of the people consuming Fairlife came back to milk after leaving the category. That’s because it’s a high-protein, low-sugar product that’s also lactose free. We’re seeing this type of innovation inspire others,” he emphasized.
Innovation efforts
A group called Global Innovation Partnerships works in fluid milk, food service and dairy co-ops funding export markets.
“They are dairy consultants who provide unparalleled expertise in new product marketing and packaging innovation, because the only way you can have innovative new products is to have enough margin to drive new innovation,” said Erwine.
One of those innovations is a round resealable milk container to fit in a car’s cupholder.
“When we initiated that with McDonald’s they were selling an average of 35 cartons of milk with Happy Meals per store, per day, but as soon as the round resealable containers became available they were selling 350. That’s a change farmers didn’t pay for, but it’s a change that keeps on giving,” Erwine related.
Dairy scientists also worked with Pizza Hut to help them understand the benefits of adding 25 percent more cheese to their pan pizza and helped them develop more efficient oven settings.
Target consumers
Erwine stressed the importance of reaching out to the new customers, those under age 35. “We have to continually bring new products to these consumers because many of them feel disenfranchised,” he explained.
“We have to offer dairy products and beverages that satisfy their need for sensory perception and their desire for flavor exploration,” he said. “They want beverages that provide energy. They’re also interested in animal welfare. We’ve got the best story in dairy, about how we treat our animals, we just have to tell it more.
Erwine mentioned a new product that contains 50 percent cow’s milk and 50 percent almond. “We’re not going to be shifting a cow’s milk drinker to this. But if we don’t give the new consumers who want new flavors a product choice with some dairy, they will leave us,” he stressed. He also noted that cold brews are really in vogue now along with Ready-To-Drink coffees.
“Our team has worked with retail leaders to develop 30 concentric new products that are either in testing or development stages,” Erwin said. “Because of the strength of our relationships with these brands we are now following these partnerships overseas in the Pacific Rim and Latin America, and we’ve written into the contracts that they must use U.S. cheese.”