It’s just eight days into a New Year and already I’m thinking about the ‘good ol’ days!”. Remember when the dairy industry was at the top of the agricultural sustainable list, milk was the “perfect food” and milk moustaches were seen on celebrities and sports stars? Hmmm. Where has all the glory gone? In 2013, the dairy industry is fighting to stay alive, the North American diet, including milk, is under attack as obesity from babes to the elderly is out of control and, when all is said and done, milk is a slipping way down on the favorite beverage list!
The land of milk and money is gone. In the cold light of the soul searching brought on by a new year, it seems that this shocking state of affairs has happened suddenly and for no apparent reason. In actual fact, the signs have been there for more than thirty years and we as an industry let it happen.
MILK OF AMNESIA – We forgot the basics
It took three steps for the milk market to evaporate!
- We forgot about the consumer.
The first commandment of business, “The customer is always right!” in the dairy industry has become “The cow always comes first!”
- We forgot about the product.
Somewhere production, with the myriad of logistics in between, pulled out in front of the inherent value of our end product – milk.
- We forgot delivery.
Despite the first two failures, we still expected that the product we produced could be delivered in boring, hard-to-open cardboard cartons, heavy jugs or even plastic bags and compete against the “cool” the “sexy” and the “handy” beverages provided by competitors – who wanted — and stole — our market share!
MISSING THE TARGET: Where’s The Consumer? Where’s the market?
Consumer demand is the key to market sustainability. There’s no use producing a product if there is nobody to buy it. The truth is demand for milk has been in a free fall for the last three decades. North American milk consumption has dropped a startling 36% since the 1970s. The continuing economic downturn has refocused consumers on value. They not only are choosing private label products and discount store venues, they are seeking low calorie, reduced sugar and functional value in the beverages they consume. Milk – even though billions of pounds are being produced is losing out to fortified, organic, sports drinks and a myriad of better-for-you products. We are paying the piper for focusing on just one highly commoditized product, ignoring market trends, and trying valiantly to sell what we make rather than what people want. If we don’t give consumers what they want, someone else will.
LOOK BEYOND THE PAIL: Think outside the box stall.
For decades industry strategy has been to make dairy operations more efficient. It has succeeded: From 1970 to 2006, the number of cows declined 25%, output per cow more than doubled. But while the dairy industry focused on squeezing more milk out of fewer cows, they largely ignored the fact that demand was getting squeezed as well. That’s the nature of business. Where’s the competitive spirit that drives all the other parts of the dairy industry? Even the perfect sire or model cow, needs to be marketed. Our over-riding concern to “protect” ourselves from each other, the economy and even mother-nature, has made us put on blinders to the dangers of not being relevant to the marketplace. Breeder beware! We could protect our industry right to zero!!
4 STEP ACTION PLAN: It’s Time for a MILK SHAKE Up!
Three steps got us into this mess. Let’s start with four to get us out.
- Pay Attention:
With per-capita North American milk consumption down 36% between 1970 and 2011, it isn’t whether or not there is a problem. The fact is the dairy industry is in trouble.
- Make it Functional:
You’ve got to get the drink – in our case milk – into consumers’ hands. This is no time for doing things the way they’ve always been done. Look at Nestle. They wanted their milk drink containing probiotic for children to have a shelf life of one year. Realising that it is impossible to keep the probiotic alive at room temperature for more than a few days. The solution was a shelf-stable nutritional drink with the probiotic in the straw, instead of in the drink. Inside the patented straw of boost Kid Essentials is the probiotic lactobacillus reuteri ‘protectus’, released by the liquid when the consumer drinks through the straw! Now that’s functional! On-the-go consumption is increasing. Milk packaging needs to conform to this trend. Consumers are increasingly looking for a range of package sizes to suit different beverage types and thirst levels, as well as functional and aesthetically-pleasing packaging. Not my area, you say as a dairy farmer? Whose is it? Who cares?
- Make it Healthy:
Whether it’s the health benefits you get from drinking milk or the environmental benefits of how it is packaged – the consumer cares about both! Parents are increasingly concerned about the nutrition and sugar content of the products consumed by their children. This can work for us (with soft drink competition) or against us (sugar added milk products). Again packaging enters the discussion. Studies in 2011 showed there is a substantial proportion of European consumers that would be prepared to pay extra for glass containers, especially for milk, yoghurts, juices and wine. “it may well be that consumers are willing to pay more as good packaging protects the health benefits and taste of the product for longer”. The health and wellness trend is not going away. We have a healthy product but it won`t sell itself if we continue our milk-sells-itself mind set!
- New Products. New Location.
We`ve got to ask ourselves what does the market want and then find innovative ways to provide it. Perhaps even before we answer those questions we have to zero in on “where” the market will be. In a global marketplace, we need to consider the enormous potential of focusing on the end user – perhaps in another country!
LIVE OR DIE MILK BATTLE: Consumption is the Key
We can no longer rest on our milk stools. We have to compete for the marketplace with all the old beverages … and countless innovative new ones. That may seem to be a daunting task but it can no longer be ignored. Again. The world is waiting. Look at the graphic below. While our own markets are mature in the milk marketplace, there are HUGE opportunities for dairy in the global scene.
Consider this: One glass of milk per day per child in China could surpass the milk consumption of the entire North American market. It’s a new frontier to be won!
THE BULLVINE BOTTOM LINE
We can’t continue to let narrow focus override finding the consumer and serving them the milk products they want. Laying blame won’t stem the downward trend of the dairy industry. Remember when land-line phones had a monopoly on communication? Think about large phone companies (another almost monopolistic industry, especially in Canada). Where would they be today, if they had continued to whine about the intruders into the marketplace? The faster we learn from their example, the sooner we’ll prove that the North American dairy industry isn’t ready to kick the milk bucket yet!