The Dairy Community Can Turn Around Fluid Milk

Tom Gallagher Chief Executive Officer, Dairy Management Inc.

Bank of America. Intel. Walt Disney Co. Citibank. Each of these companies share something in common. They all are $25 billion to $30 billion brands, each investing in innovation, infrastructure and brand marketing to anticipate and meet the changing needs of their target consumers.

At the recent annual meeting of dairy farmer leaders of the checkoff and the National Milk Producers Federation, I outlined the significant and similar opportunity the dairy community has with fluid milk. Today, fluid milk is in 95 percent of American households and represents a $25 billion brand category with a diverse product portfolio. But as with any brand, when there are not ongoing investments in product innovation and retail and brand marketing, consumers begin to lose interest and turn elsewhere. That is what we are seeing with fluid milk, especially with youth.

Some examples:

  • Kids up to 12 years old drank 38 gallons of fluid milk per person per year as late as 2003 – but this year, they only drink an average of 26 gallons
  • In that same time frame, consumption among teens dropped from 26 gallons to 23
  • And adults 18 and over dropped from 11 to seven gallons a year

Despite these facts, fluid milk represents a significant opportunity for the dairy community. It’s our foundation, our heritage and it’s ripe for innovation and meeting consumers’ evolving needs. Where we’ve done just that, we’ve seen results.

Lactose-free milk is up (+9% YTD), as are flavored (+0.2% YTD) and whole milk (+1.6% YTD) – all three of which are $1 billion or greater categories. We can learn from and replicate this success in other areas if we are committed as a broader dairy community.

What is needed is for the industry to come together to look at how we can accelerate much-needed innovation (flavors, formulations, packaging), how we can form the right brand and retail partnerships and how we can collectively invest in infrastructure and marketing to turn around decades’ worth of down sales.

Your dairy checkoff has led great strides in boosting overall dairy consumption, primarily through cheese-focused partnerships with fast-food partners such as Domino’s, McDonald’s, Taco Bell and Pizza Hut. That commitment to collaboration with an eye on shared goals can work for fluid as well.

Total community effort needed

The checkoff already has helped bring excitement and attention to the fluid milk category by working with companies such as fairlife, a partnership between Coca-Cola and Select Milk, which invested heavily in innovation and infrastructure to produce a game-changing product that is on track to become a $1 billion fluid milk brand.

At our annual meeting, farmers and fairlife founders Mike and Sue McCloskey talked about how their product has brought consumers back to fluid milk. For the past three years, fairlife has grown faster than the plant-based milk alternative category. fairlife is a strong example of the success that can be achieved through a combination of product innovation, values-based storytelling and marketing leadership.

The checkoff has other partnerships with forward-thinking co-ops and processors that are willing to invest in the resources to bring innovation and brand and retail marketing back to fluid milk. That benefits them and their farmers, but, more important, it raises the tide for all boats, and makes fluid relevant for all consumers, which helps all dairy farmers.

Yet, we need more. We need others that wouldn’t necessarily get into fluid milk to understand the potential and get into the business. We need more high-quality fluid milk and milk-based products that consumers want, in places and in forms they haven’t had before. We need brand and retail spending. We need to expand our thinking.

Are we serious?

And, we need commitment. That’s why, in the next few months, the checkoff is planning to bring together fluid milk players and ask the very basic question: “Are we serious about fluid?” The checkoff has been doing everything we can on our own – but we need the entire community to invest and commit to improvement.

We can turn fluid milk around on behalf of America’s dairy farm families, but it requires that the industry pull together to seize the opportunity.

As I said at our annual meeting (and elsewhere), fluid milk is way past the crisis point. The question is: Can the dairy community get together and fix it? I believe we can.

If you have any thoughts or questions, please reach out to us at [email protected].

Tom Gallagher is Chief Executive Officer of Dairy Management Inc.™, the domestic and international planning and management organization that works to increase sales of and demand for dairy products and ingredients on behalf of America’s dairy farmers and dairy importers. He is also chief executive officer of the Innovation Center for U.S. Dairy®, which was established by dairy farmer checkoff leaders to bring together the dairy industry to work together pre-competitively to address barriers and opportunities to foster innovation and increase sales. For more information on the dairy checkoff, visit www.dairy.org.

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