Industry Editorial: Hedge Your Bets
Read the newspaper enough and you realize people catch on. A story on the in the Chicago Tribune last month says critics are questioning USDA's role in (re)developing the Food Pyramid. Jump to page 8 and Illinois Sen. Peter Fitzgerald (who loves to rail and windmills and airport expansions) spews the old "fox and the hen house" metaphor.
It's an old debate, and anyone who's been in the dairy business a while knows what the outgoing senator is getting at-USDA's main role is that of a cheerleader for agriculture, so the agency may not be completely objective when it tells consumers "what's for dinner."
Sure, grain, sugar and meat interests should feel most queasy about this kind of talk, but dairy is not exempt. Read to the bottom of the story and there's the Cheddar Lovers' Bacon Cheeseburger: "The Dairy Board ‘assisted Wendy's with the development of this cheese-friendly sandwich in 1999'..." the article reports.
Don't get me wrong, generic promotions funded in part by USDA are generally great for the industry and good for consumers who should be drinking more milk (although it's too bad they can't be used to promote yogurt.) But this story confirms two things for me:
- There are some serious changes underway in the way U.S. consumers and their elected officials think about food and nutrition. If the food industry doesn't take these changes seriously, it's in for a nasty surprise.
- Selling commodity dairy products may soon be a bit more challenging than it already is. If some of USDA's nutritional responsibilities are transferred to the Department of Health and Human Services as some advocate, there won't be much money around for assisting Pizza Hut in building cheesier pizzas.
But it might a good idea to hedge your bets a bit too.
Sure, people are always going to buy milk for their cereal and want cheese on their pizzas, but they may not always want so much. In fact that seems to be the simplest answer to the nation's obesity problem. People need to eat less. Our agri-food system as we know it (with USDA playing a major role) was born of a desire to fight malnutrition. For the vast majority of us that is certainly no longer a concern.
If people end up buying less of your commodities, one of the best solutions is innovation. Come up with something that people will buy because it's different; it's better.
For some good examples, read our feature on the best new products of 2003. They are great products that don't rely on the power of generic promotion campaigns. You have lots of ideas for products like this and you should get them into your customer's dairy cases.
Our New Products Company of the Year did just that. SouthWest Foods of Tyler, Texas is at its heart a captive dairy that makes private label products for its parent Brookshire Grocery Co. Among its staple products is a value price milk brand called Econ-o-mize. But it also has developed, manufactured, and marketed-into-Wal-Mart a line of carbohydrate dairy products called LeCarb.
Now that's what you call covering all the bases.