In other words: plan ahead.
The 100 largest dairy processors in North America clearly are planning ahead. They are building new plants and adding to existing ones, even though at least 30% of the companies reported lower sales in 2015 than in 2014. They are not going to let a one-year blip derail their plans for the future.
In fact, the actions of many firms on the Dairy 100 show that they are bullish on the long-term prospects of the dairy industry. For example, No. 71 Continental Dairy Facilities told us it will be building a new plant in Littlefield, Texas, to balance the southwest region milk supply. It invested $50 million for a butter line in a Michigan facility and is spending $8.6 million to build receiving bays.
No. 4 Schreiber Foods installed additional high-speed shred and slice lines in its natural cheese plant in Carthage, Mo., added a new bottle line in Logan, Utah, and completed an expansion of a distribution center in Wisconsin. It built four facilities in Europe and Mexico. No. 16 Parmalat North America has started construction on a plant in Winnipeg, Canada, installed a new mozzarella line at another plant in Canada and a shredded cheese line in Nampa, Idaho. No. 19 Glanbia Nutritional completed a $92 million investment in a whey production facility in Idaho.
If you are looking ahead, then you should be looking at where and how Americans spend their money. The answer: dollars on dining out exceed those spent in grocery stores. That fact holds a lot of ramifications for dairy processors. Restaurant customers might require bag-in-box milk, single-serve bottles and flavored coffee creams. Cheese packaging and formatting requirements probably will be different than those for retail customers. Restaurants and scoop shops want three- or five-gallon ice cream tubs rather than half-gallon or smaller scrounds.
Those are just some of my best guesses. You’ll know exactly what restaurants need when you talk with them and ask what their needs are. Even better, ask if your dairy can develop products specifically for them. Dairy executives I talk with tell me they exhibit at regional and national restaurant shows for these reasons. The restaurant might note your brand (if it’s strong enough) on its menus.
McDonald’s needs the dairy industry in a big way. It partners with Dairy Management Inc. to identify opportunities for new foods and beverages using dairy as the main ingredient or one of many. (more here.) The restaurant chain has rigorous standards to ensure consistency and quality. McDonald’s has about 16 dairies supplying soft-serve ice cream mix to its 14,000 U.S. restaurants. Think about how much milk that represents. Then think about all the other restaurant chains and standalone eateries. Restaurants and institutions (including schools, prisons, government cafeterias and park concessions) are a multibillion-dollar opportunity for dairy processors.
Working with a restaurant chain can be a long-term proposition. Adding apples to Happy Meals took three years because McDonald’s had to build up the supply chain first. Even swapping margarine for butter on the breakfast menu was not as simple as it might seem. The restaurant company had to change the Nutrition Facts labels for all its menu items made with butter. It also had to assure that the restaurants had the necessary food preparation tools.
Dairies that serve the grocery store channel should investigate the restaurant industry (as well as other potential markets). That’s where the traditional dairy customer is headed. You don’t want to be left behind.
The $8,000 dessert
Another place to look for new ideas is at universities. A team of students from North Carolina State University developed “panikotta,” a dessert that mimics panna cotta but is made with Greek yogurt.
The students took first place in the annual Dairy Products Competition sponsored by the National Dairy Council and they won $8,000 for their idea. Second place in the competition (and $5,000) was won by Iowa State University for a frozen yogurt sandwich concept. Penn State took third place (and $3,000) for its baked cheese snacks. I served on the judging panel and tasted all of these (and three other) entries. They are winners.
I also tasted plenty of new ideas at the IFT annual meeting and food expo in Chicago in July where ingredient suppliers showed concepts using their products. Suppliers do offer off-the-shelf recipes but more often than not they work with customers and tailor specific formulations that work with a dairy’s processing equipment and that meet consumer needs. After a day of tasting various beverages, dips and baked snacks, I concluded a winning new dairy product would be flavored sour cream. Imagine a line of chipotle, roasted tomato and cilantro flavors to squeeze over tacos. Suitable for the home or the professional chef, of course.