Dairies invest to keep up with demand
A Dairy Foods survey finds that 60% of dairy executives plan to buy processing equipment in 2017.
With raw milk prices low and demand for cheese, yogurt and other dairy foods high, America’s dairy processors are opening up their checkbooks to buy new equipment. A survey by BNP Market Research (Dairy Foods’ research arm) found that 56% of dairy processors are buying equipment this year and 60% plan to buy in 2017.
The purchases include processing equipment such as pumps, valves, ice cream freezers and fillers, as well as equipment such as vats, tanks and racks. Dairies also plan to invest in refrigerated and dry storage.
Individuals responding to the survey said they were the primary decision maker on purchases or influenced what their companies purchased. Survey respondents represented all aspects of dairy manufacturing: fluid milk, ice cream, yogurt, cheese, powders and nondairy beverages. An average of 4.5 people are involved in the purchasing decision.
The main reason dairies are buying equipment in 2017 is to accommodate increased business, said 61% of those surveyed. Half said the reason is to accommodate new products or new product lines. Less than half (47%) said they are replacing older equipment and 16% said they are buying to replace broken equipment.
By far (68%), dairy executives said they plan to buy new equipment. Only 24% said they plan to purchase used equipment and 8% said they plan to lease it. Sources of the equipment include manufacturers (61%), dealers/distributors (50%) and brokers (24%). Dairies also responded that they will acquire equipment from one of their other plants (11%), from another food and beverage manufacturer (8%) or at auction (3%).
Dairies say they are spending more in 2016 than they did last year. Sixty-six percent said their spending has increased while 34% said spending has remained the same. For 2017, 66% said their spending will increase over 2016, while 34% said it will stay the same.
The top factor influencing the purchasing decision is product quality and durability. Dairies also look for equipment that is easy to operate and that can be easily integrated into their existing systems. Dairies also like to do business with companies they know.