/Despite growth in dairy, industry execs strike a cautious tone

Despite growth in dairy, industry execs strike a cautious tone

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SCOTTSDALE, Arizona — Executives from North America’s top dairy companies struck a surprising sense of urgency Wednesday that the industry isn’t doing enough to promote the work it’s doing to help farmers and the environment or to tout the nutritional benefits of its products as consumers abandon milk or shift to plant-based alternatives.

“What is our response? What are we doing about it?” Lino Saputo, Jr., CEO of Saputo, a maker of cheese and other dairy products, said on a panel at the International Dairy Foods Association’s annual forum. “Leaders have to stand up and make a difference for the survival of the industry.”  

Michael Dykes, president and CEO of IDFA, whose organization represents 550 companies in the industry, said its members need to take a bold course of action that may rattle those who are used to doing things a certain way. He noted that transparency and details about the industry’s efforts to protect the environment and improve animal welfare are “going to come under greater and greater scrutiny.” 

“I think the changes we are going to need to make, I don’t know if our organizations are going to be comfortable with,” Dykes told the audience. “What we maybe need to start with is a clean peace of paper and think differently.”  

The comments were a stark contrast from an otherwise upbeat tone struck at the industry’s annual four-day gathering in Arizona where dairy farmers, processors and product manufactures expressed a bullish outlook for the multi-billion dollar category. 

Feeling bullish

Despite ongoing challenges facing milk, a gloomy picture underscored by the recent bankruptcies of Dean Foods and Borden Dairyoverall consumption in the dairy space is higher than it’s ever been. Per capita dairy consumption increased from 539 pounds in 1975 to 646 pounds in 2018, due in large part to the growing popularity of yogurt, butter and cheese, according to data from the USDA. Even certain segments within milk, including whole and flavored fat-reduced varieties, have risen in recent years.

“We should all feel bullish about dairy. It’s a $60 billion category that’s performing at record levels,” Ron Dunford, president and CEO of Schreiber Foods, a manufacturer of cheese, yogurt and cream cheese, told those attending the forum.

The underlying concern, executives said, is that while dairy is beset with a slew of trendy attributes important to consumers, not enough is being done to promote them, which could help draw people back to the category or boost consumption among existing users. The debate is how to best go about doing that.

 

The panelists noted that dairy products are loaded with protein, calcium and vitamins. They also promote the feeling of freshness, can be consumed during different parts of the day and are compatible with snacking. All these factors give the segment an arsenal of ways to promote itself — especially with millennials and Gen Zers who are increasingly abandoning milk, the iconic beverage that has come to define the category.

“Our biggest mission that we have together is to regenerate excitement of milk” among younger generations who may not be aware of its nutritional benefits, Thierry Clement, CEO of Lactalis North America, the maker of Siggi’s and Stonyfield yogurts said. “Milk is an incredible product by itself.”

Finding a fix

Clement and others said the industry’s success also is dependent on more than just its products.

They said its members should do more to publicly promote the steps they are taking to help the environment when it comes to sustainability and to assist producers in rural America, many of whom have fallen on hard times. This week alone, Danone North America made a pair of announcements on the work it’s doing with producers on regenerative or organic farming and to improve the economic resiliency and soil health of farms. 

The panelists said consumers are pressuring food and beverage companies to be more upfront about where the products they purchase come from, the ingredients that go into them and whether the values they have are being reflected by corporations in their day-to-day operations.

In addition, dairy is under pressure as more consumers turn to plant-based options in milks and yogurts that are made from oats, almonds, coconut and soy. About 44% of milk-consuming Americans are purchasing both dairy and plant-based milk, according to a survey in 2018 by Dairy Management Inc. Retail headwinds also are weighing on the industry. Companies such as Walmart, Kroger and Albertsons have started processing their own milk, allowing them to offer cheaper options and reducing the shelf space for branded milk items.

“Never in history have we been challenged by so many angles,” said Mariano Lozano, president and CEO of Danone North America. “That is a massive amount of change from the consumer point of view.”

The executives offered a handful of broad-stroke ideas on how to improve the perception consumers have of the industry without agreeing on the best path forward to do it. 

Dunford from Schreiber said dairy groups must work closer together and promote their message in a “unified voice.” Saputo said more needs to be done to promote what the industry is doing when it comes to sustainability efforts such as waste, water usage or packaging. Dykes at IDFA said the industry needs to step up its transparency and work closer with its critics.

“The biggest threat we have in our industry is misinformation,” Saputo said. “We have a great product … but we’re not talking about it enough and we’re allowing the narrative to be told by people who are not scientists. To me, that’s our biggest threat and where leaders in the industry have to stand up and start taking action.” 


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