DAIRY DELIGHTS.

Producers Embrace Their Own Destiny in the Global Marketplace

Editor's Note: Dairy Management Inc. (DMI), Rosemont, Ill., is the nonprofit domestic and international planning and management organization responsible for increasing demand for U.S.-produced dairy products on behalf of America's dairy farmers. DMI manages the American Dairy Association (ADA), National Dairy Council (NDC) and U.S. Dairy Export Council (USDEC).

Agri-Marketing recently visited with Julian Toney, DMI's executive vice president, domestic marketing and David Pelzer, the organization's vice president, industry relations, to discuss current dairy strategies and successes.

AM: How's the dairy checkoff structured?

Pelzer: When producers pay into the 15 cent per cwt. checkoff, 10 cents goes to the qualifying state or regional promotion organization and five cents goes to the National Dairy Board, whose budget is managed by DMI. The programs of the ADA, NDC and USDEC, which help expand U.S. dairy markets in the Pacific Rim, Latin America and other regions, are all managed by DMI.

DMI works in concert with producer-funded state and regional dairy promotion groups across the country through a unified marketing plan that these groups help develop and implement.

AM: What are the current trends in U.S. dairy product consumption?

Pelzer: In brief, both cheese and butter sales have climbed steadily over the past several years, as consumers have returned to enjoying products richer in butterfat. Fluid milk sales have remained relatively stable.

Cheese demand continues its upward growth first established in the 1980s. Genetic promotion campaigns such as "Ahh, the power of Cheese'" complement substantial branded promotion and advertising efforts. DMI also works with national restaurant chains such as Pizza Hut, Taco Bell, Burger King and Wendy's to feature more cheese on their menus. Today, more on-farm milk goes into cheese than any other product.

Fluid milk sales have remained relatively stable over the past five years, while per capita consumption has continued to slip. Fluid milk has encountered increasing competition from alternative beverages, including soft drinks, juices, teas and bottled water.

As consumers eat more meals away from home, milk has not traveled well compared to these other beverages. However, over the past several years, fluid milk processors have begun introducing portable, single-serve plastic resealable packaging (i.e. "Chugs") and an increased number of consumer-friendly flavors. Also, the "milk mustache" and "got milk?" campaigns jointly funded by dairy producers and milk processors have helped make milk "cool" again among target audiences.

Kids and teens remain a vital fluid milk target audience, as they represent not only a high percentage of total fluid milk consumption today, but our future consumers as well. This month DMI will launch a major aggressive school marketing and promotion pilot campaign in more than 100 middle and high school cafeterias across the country to help increase kids' milk consumption.

AM: What is dairy doing to assess consumer needs and demands?

Toney: DMI conducts a bi-annual consumer Attitudes and Usage Trend Study analysis to assess impending changes in the marketplace. It also conducts consumer focus groups and other program-specific consumer research, and analyzes dairy market channel sales (through retail grocery and restaurant sales data) as needed. Further, the dairy checkoff has established key partnerships with major food manufacturers and processors, in part to share consumer market information about dairy product usage trends.

AM: How do you know the dairy checkoff is working?

Pelzer: Each year the USDA produces a report to Congress evaluating the success of the generic dairy promotion program. The most recent report indicates that cheese and fluid milk advertising programs alone were responsible for selling an additional 1.5 billion pounds of milk annually over the past three years.

In addition, DMI plans and measures the effectiveness of all of its programs, including public relations, retail and foodservice promotions, export market development, research and technology transfer, and nutrition education.

AM: What is the current public perception about dairy products?

Pelzer: Our research tells us that public attitudes about dairy remain very strong. Cheese consumption is at record levels, and milk is still consumed in more than 90 percent of all U.S. homes. And the U.S. dairy industry produces and delivers products that are among the safest and most nutritious in the world. That said, our products have undergone an increasing number of attacks by anti-dairy special interest groups, including animal rights advocates who try to attack the health and safety of our products.

To maintain and enhance the image of dairy products in the minds of consumers, DMI has launched a "Dairy Confidence Campaign." This comprehensive effort is designed to involve the entire industry in aggressively countering anti-dairy myths, while continuing to remind consumers about the benefits of dairy products and the responsible on-farm practices dairy farmers employ to produce these safe and wholesome products. This consumer information is driven by the sound science of NDC-funded nutrition research showing how dairy products can reduce the risk of heart disease, obesity and certain forms of cancer, among other maladies.

AM: What is the most important thing agribusiness marketers should know about the dairy industry?

Toney: Dairy producers know that their success in increasing dairy demand depends largely on their ability to work with others in the dairy marketing channel and all of agriculture. On one hand, producers know that they can't rely on others to do all their market work for them--that's why they formed the dairy checkoff in the first place. On the other hand, dairy producers also know that marketing success can be achieved only by finding and maintaining meaningful partnerships with other organizations that have common goals.

Overall for us the dairy checkoff has come to represent the power of collective strength, innovation and the drive to be successful in marketing our products.

For more information on dairy checkoff programs, contact David Pelzer, at 847/803-2000 ext. 233, E-mail [e-mail] or visit the DMI Web site at www.diaryinfo.com.

Linda L. Leake is a freelance journalist who covers the dairy industry from her home base in Wilmington, N.C.