Friday, November 2, 2012

Collaborate to Innovate

I challenge you to answer the question: Do you work in the dairy industry because it’s a job or do you believe it is your job to work in the dairy industry? It is my belief it will be those in the latter group, those folks with the passion and dedication to dairy that will help grow the industry.

Earlier this week, many dairy industry innovators—those folks in the latter group--explored the halls of Chicago’s McCormick Place to discover the latest and greatest in dairy packaging and processing at Pack Expo. At nearly the same time, chief executives from many of the companies who sent their innovators to Pack Expo met in Orlando during the 2012 National Dairy Promotion and Research Board (NDB)/National Milk Producers Federation/United Dairy Industry Association (UDIA) Joint Annual Meeting.

A panel of industry leaders agreed that it is time for the entire industry to reevaluate and reinvent how it invests in fluid milk. I say we must collaborate to innovate.

During Gary Hirshberg’s early years as president and CEO of Stonyfield Farm, he was a media maniac. He would talk to anyone, anywhere willing to listen to his passion for organic dairy. He openly shared his vision for growing the dairy business, even with the competition. His passion for better-for-you yogurt was contagious and I truly believe that Stonyfield is responsible for making yogurt a household name. Thank you Gary!

More Garys will do the industry good!

Comments from the meeting

According to Barbara O’Brien, president of the checkoff-funded Innovation Center for U.S. Dairy, fluid milk “is now at a crossroads” following four decades of declining sales. But she believes there are solutions. “But we need the will and commitment (of the industry) to carry them out,” she said at the annual meeting.

In September, the board of directors of Dairy Management Inc. (DMI), which manages the national dairy checkoff, approved six proposals with individual fluid milk processors to accelerate product innovation, extend milk’s availability in new channels, and secure additional resources to market fluid milk.

The total checkoff investment is $9 million to date; the combined investment by processors is $80 million.

Mike McCloskey, CEO of Select Milk Producers, pointed to several reasons for declining sales, including a lack of innovation throughout the value chain, competition from other beverages and antiquated plants that result in distribution and packaging challenges. “We can do more things to affect the desirability of milk,” McCloskey said. (Check out was some processors are doing HERE.)

Jim Wegner, president and CEO of Darigold Inc., said an aging U.S. population also is a factor, adding that 57 million people are 30 or older. “We must re-invent milk,” he said, adding innovations such as Greek yogurt and products featuring probiotics and low carbohydrates are solutions that meet the demand of today’s young consumer base.

John Kaneb, chairman of HP Hood LLC, said a natural division between producers and processors has slowed progress during the years.

Let’s stop this nonsense and collaborate to innovate. If you’re in the dairy industry because it’s a job, find another and make room for someone who cares. Us old timers have the passion and are working to keep dairy shining.

“As (DMI CEO) Tom Gallagher said (in an industry white paper), we need to take a ‘trustee approach’ to grow fluid milk sales,” Kaneb said. “We must not (maintain) a rigid system that smothers innovation. We must work to give oxygen to (the development of) new products. Milk should be the leader (in the beverage category).”

DMI has created an Innovation Fund Task Force to explore the fundamental factors inhibiting fluid milk sales, including barriers and lack of innovation, among others. DMI will work with industry leaders to identify potential pilot programs to rejuvenate gallon and half-gallon milk sales through product formulation, packaging, placement and branded marketing/promotion at retail. (Hmm, if you had been at Pack Expo this week, you would have seen that many packaging companies are ready and willing to collaborate in these efforts. Many folks want to work for dairy.)

Collaboration at work

The dairy checkoff gives producers a voice in the marketing chain after milk leaves their farms, and that helps grow sales, according to Gallagher. While brands are focused on market share, producers need growth in all dairy product categories.

Gallagher said the checkoff is engaged in image-building efforts that are designed to reach consumers who he considers to be “more complex to market to than ever before.”

“For years, it was taste and price,” Gallagher said. “Consumers make purchase decisions very differently today. For them, it’s also value, nutrition, convenience, on-the-go and sustainability.”

Now more than ever, he said, consumer trust is the foundation of sales. For example, consumers want to know that their food is safe, and that producers are good stewards of the land, and treat their animals well. “If something goes wrong, and trust in these matters is shaken, consumers want to know that policies and procedures are in place to prevent animal abuse and ensure a safe milk supply,” he said.

Gallagher said transparency is mandatory with consumers today. While consumers previously trusted government and businesses, all that has changed. “Trust barometers tell us that people trust those who seem most like themselves,” Gallagher said. “In our case, they trust the people behind the product--dairy farmers and their families. In other words, they want to hear from producers.” They want to feel the passion.

Among the checkoff’s priorities, Gallagher said, is to work with partners such as McDonald’s, Domino’s and Quaker, and encourage them “to do something they wouldn’t do otherwise, or to do it faster, to meet consumer demand and grow sales for everybody.”

California producer Steve Maddox, NDB chairman said the checkoff’s partnership with McDonald’s directly contributed to an additional 1.7 billion pounds of milk sold between 2009 and 2011. Producers can expect continued growth in McDonald’s dairy sales, he said, pointing to menu development efforts driven by checkoff employees who work at McDonald’s headquarters.

Beyond McDonald’s, the checkoff’s partnerships with Domino’s and other pizza companies and suppliers have moved more than 6 billion pounds of milk since 2009, according to USDA. Pizza innovation continues with the recent introduction of Domino’s Handmade Pan Pizza, which uses up to 40% more cheese than the chain’s two-topping, hand-tossed pizzas.

A new partnership with Quaker will explore other opportunities. Quaker has committed to building consumer awareness of preparing oatmeal with milk instead of water. Gallagher said nine billion servings of oatmeal are prepared annually but less than 30% of those are made with milk. (The difference also happens to be delicious.)

“Our checkoff program cannot do it alone,” said Paul Rovey, Arizona dairy producer and chair of DMI. “We need the added muscle and backing of powerful partners through an industry-wide approach.”

Local checkoff organizations are critical to protecting and promoting dairy’s image. Image efforts are focused on having more conversations--especially through social media channels--with consumers who are generations removed from food production. These consumers are interested in learning more about the work that occurs on dairy farms. Research shows they will be more loyal to products whose values--real or perceived--mirror their own.

Dairy’s story is one that “consumers tell us they want to hear,” said Bill Siebenborn, Missouri producer and UDIA chair. “It’s a story about our commitment to provide safe, nutritious foods to feed our country and the world. It’s a story about our dedication to environmental stewardship and caring for our animals. It’s about our involvement and leadership in local communities across this nation.”

The dairy checkoff is working with its partners to help connect producers to consumers. “It’s about sharing a story, and listening to their questions. It’s about building relationships,” he said. “Connecting to consumers is as important to your sales, your growth, and your freedom to operate as any other work we do. And only you can do it,” he said.

Do you have the passion that it takes?

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