If the headline is vaguely reminiscent of an early 1960s movie filled with comic scenes of cocktail parties, maybe it should be.
If the headline is vaguely reminiscent of an early 1960s movie filled with comic scenes of cocktail parties, maybe it should be. The story that we’re telling lately at Dairy Foods could be almost as much fun as watching Breakfast at Tiffany’s, at least for you folks in the dairy business.
Yes, it’s milk we’re talking about. Milk-the hot commodity.
With our continual preaching about innovation and adding value, readers might get the impression that we’re inclined to spell the word commodity with four letters. Sometimes we are, especially when commodity thinking stifles progress. And yet, we realize that the commodity gallon jug of milk is still the core of the industry. We also recognized the honest value of regular ol’ homo. This month’s special feature is the annual Milk and Beverage Outlook. We take a hard look at milk (as well as juice, tea and water, which dairies have a large role in), and we let you know how your products are stacking up against the competition.
But first, allow me a couple of observations on how the world of milk has changed in the year since we last put it under this particular microscope. A few recent items in the news and some bits of the ongoing dairy dialogue serve as the perfect framework.
IDFA’s Chief Economist Bob Yonkers recently looked back at 2007 and outlined a year of sustained highs in raw milk prices and commodity prices. He also noted the significant growth in the export market. The connection between the surge in world demand for dairy and high milk prices has been made many times in the last year. Milk is a hot commodity.
One of the leading food ingredient companies in the world recently predicted that frozen soy desserts will grow substantially in coming years, in part because soy is now “more economical” than milk and cream. This could be the dark lining in the silver cloud, but still, it’s remarkable that milk’s value has risen to the point where it is the hot commodity, rather than the cheap commodity.
Progressive Grocer a trade magazine for grocery retailers, recently dedicated a few yards of space on its website to a story that characterized milk as the “most cutting-edge beverage around these days.” Sure the reference was to organic milk, and the piece looked at other value adds in conventional and organic milk, but these “niche” products are now a measurable part of the business, and the article noted that they are elevating the entire category in the eyes of consumers and retailers.
Organic milk, by the way, experienced double digit growth again in 2007, despite the broad availability of conventional milk made without the use of rBST.
Add these nuggets to what we’ve always known about milk-to what we were talking about a year ago with the introduction of the Think About Your Drink campaign-and it’s no wonder that milk is the hot commodity. It is a natural, nutrient-dense food that also makes a great beverage.
Yonkers notes that there is nothing in the forecast for 2008 to indicate a swing back to low prices. As for a drop off in demand thanks to higher prices at the supermarket, there is some evidence of that already, but it’s not drastic, and hopefully it’s an issue that can be dealt with in some fashion.
For the long-term, we may have already-more than a year ago, perhaps-entered a new era of global dairy trade in which the playing field has shifted. The rules of supply and demand may have to be interpreted differently now that milk is the hot commodity.
The Hot Commodity
February 1, 2008