UPDATE: This column was recognized in the 2017 Azbee Awards for excellence by the American Society of Business Press Editors.
At first glance, it appears these two milk companies have nothing in common. fairlife LLC, this magazine’s Processor of the Year, is one of the 100 largest dairies in the United States with a gleaming new processing facility in Michigan. In southeast Ohio, Snowville Creamery operates out of a small pole barn filled with a lot of second-hand equipment.
fairlife’s milk supply comes from Select Milk Producers (a co-owner of the company, along with The Coca-Cola Co.). The dairy cooperative carefully blends nutrients into a ration that it feeds to cows in barns. Then fairlife separates the milk into various components and recombines them into different formulas to make extended-shelf-life milk and recovery milkshakes. (Read more in the December 2015 issue.)
Snowville, on the other hand, buys milk from cows that forage grass and legumes in pastures. The dairy minimally processes the milk (forgoing homogenization) and packages it in half-gallon paper cartons. The shelf life is 14 days.
The two dairies are different in scale and processing techniques but their CEOs are similarly ardent proponents of milk. Fairlife CEO Steve Jones says he is making milk better with more protein and less sugar. Snowville co-founder Warren Taylor, who believes milk from grass-grazed cows is best, says “God didn’t make milk wrong.”
What I’m trying to say is that there is more than one way to bring milk to market. The dairies are pursuing the same end result (consumer sales) but come at it from different directions.
All of this is a long preamble to four ideas that I think every dairy company executive should commit to in 2016. These ideas could make a big difference in your financial performance. You owe it to your employees and shareholders to grow your business by finding new customers, developing new foods and promoting dairy products to consumers. Here goes:
1. Stand up for yourself. Some special-interest groups have it in for dairy foods. They want to denigrate (or deny) the health and nutrition in milk, cheese and yogurt. The fact is, the dairy industry makes good products and makes them safely. Yes, some foods are more nutritious than others. Some have more sugar, fat and salt, too. The ingredients and Daily Values are clearly labeled, allowing consumers to make informed decisions. All dairy foods start with milk, and that counts for a lot. Dairy is an economical source of protein and other nutrients of concern.
Don’t let others define what you do for a living. You know the role of dairy foods in a well-balanced diet. Support and use the marketing materials from state dairy boards (like those in California and Wisconsin) and national groups, like MilkPEP and the National Dairy Council.
2. Build business in foodservice. Americans spend a lot of their dining dollars away from home. If they don’t buy your cheese in a grocery store, perhaps they’ll buy it at a restaurant in the form of a sandwich.
Restaurants, schools, nursing homes and prisons serve dairy foods, so they might as well be yours. These new accounts can help you run underutilized equipment in the plant.
Attend restaurant trade shows to learn what forms and formats these accounts need. Foodservice accounts buy in bulk. You might have to invest in new packaging, such as totes or pails. Help these customers develop recipes with your dairy products. If you have a well-known consumer brand name, that helps. Restaurants can market your name on their menus.
3. Extend your consumer brands. Add a new flavor. Sea salt caramel and bacon have been done to death, but dairy processors continue to churn out products in these flavors. Instead of following the herd, break new ground. Go on store checks in your town’s ethnic neighborhoods and study the menus of ethnic restaurants. You’ll find more ideas than you can produce in a year. Mainstream consumers are adventurous eaters and are open to trying new flavors.
Develop products for different dayparts. Consider yogurt, for example. Besides making mixed-berry versions for breakfast, develop bolder and savory flavors to be eaten for lunch. Create sweeter and higher-fat versions and market them as desserts.
Package your foods in a new format. If you don’t have single-serve or snack-size portions, you are missing the boat in a big way. Use smaller, single-serve bottles and then also bundle them in a multipack. Additionally, license another popular food brand (like candies or cookies) or a movie (Star Wars) and leverage the marketing.
4. Be transparent. I have a feeling the GMO discussion will become uglier than it is. Consumers want to know what is in their food. If you use ingredients made from genetically modified organisms, state that publicly, if not on the package itself, then on your website. The dairy industry doesn’t need rules from the grocery store lobby or an act of Congress to guide them on this issue. Consumers just want to know, so just tell them. The same holds true for sustainably and ethically sourced ingredients and packaging. Also, know how your milk suppliers care for their animals, because at some point you will be asked. Be ready with answers to questions about confinement and tail docking.
Happy New Year and best wishes for the 365 days ahead.