Archive for September 2020

To Niche or Not to Niche? Big Questions Face Dairy Markets

WHAT MAKES DAIRYING SUCCESSFUL OR NOT IN 2020?

Currently milk producers see milk checks as cash flow and they fear giving up cash flow. And so begins the cycle.  Too much fluid milk. Fluid milk with nowhere to go. Fluid milk ends up being dumped. This repeating cycle has been with us for at least fifty years due to the fact that milk is seen as a commodity.  As a commodity, there is no differentiation between fluid milk products. Every unit is the same as every other unit.  In the competitive market place, a differentiated product is able to stand out from competitors and win the interest of consumers. We can argue the well known health benefits until the cows come home, but we will still be faced with shrinking markets.  Producers need consumers. We can’t afford to stubbornly hold our positions or the day may come when one side or the other withdraws from the fight. Dairy producers need to design their cash flow so that they are not dependant on volume alone for cash flow.

DO HEALTH MIS-PERCEPTIONS CONTINUE TO AFFECT DAIRY MARKETS?                                                                   

When I meet with non-dairy friends, they see all farms through fond memories of fairy tales, nursery rhymes and their relationship with their own pets. Regarding animal care, this last perspective leads some consumers to fall too easily for negative attacks regarding animal treatment on dairy farms.  We need to look at ourselves from their perspective. They don’t produce products from their pets.  They don’t have herds of pets. The idea of herds of the same animal living together or diseases that spread from animal to animal is not usual to their companion animal experience. With enough negative publicity or lack of positive information, consumers may choose another option when sourcing their beverages.

WHAT MAKES YOUR MILK DIFFERENT?

It is up to the dairy industry to explain how milk is different from other beverages. However, we don’t want to be a product that professes difference that the consumer doesn’t accept. Different does not necessarily mean a product is provably better but we must win perceptions. The purpose of advertising and promotion that occurs in our society is to achieve the end result of earning the consumer’s dollar. It is a competition and we must start by recognizing where the competition actually is. We should compete against other non-dairy beverages.  We can learn from those who do the most convincing job?   A good starting question is to ask why many non-dairy beverages try to be perceived as “milk”.  We need to emphasize different taste.  Unique health benefits.  Speak up about the different benefits for different ages of consumers from birth to assisted living. If we continue to be stubbornly undifferentiated, eventually that sameness will drive prices lower and vital consumer support will also decline.

CAN YOU FIND YOUR DAIRY NICHE and GROW YOUR DAIRY INCOME?

We are all consumers and accept responsibility for the buying decisions we make.  Milk producers can earn new consumers by caring enough to recognize and align our milk products with their real concerns. Creating a brand for milk benefits that show it to be safer, healthier and with a wide variety of tastes that appeal to the whole family. If your current niche differentiation is that you are organic, the time has come to admit that it is not enough.  Organic milk is still fluid milk and simply puts milk in a different commodity market. The opportunity must be taken to differentiate your milk by focusing on specific aspects that are sought by specific markets. Generations before us have promoted healthy milk.  Today the appeal needs targeted outreach to the hearts of all consumers.  Pregnant women.  Babies. School children.  Sports diets. It must start with the recognition that members of households have different requirements and personal preferences from the points of view of health needs, taste, sustainable packaging and ease of availability.  The dairy industry can’t assume that consumers are also not a commodity that has only one profile to appeal to.  As well, we can’t assume that all consumers are well-informed on the differences between the facts and fallacies regarding the production of milk and its impact on health. Where does your milk fill a specific need?

WHAT RESOURCES ARE NEEDED TO MAKE A NICHE MILK PRODUCT?

Finding and building a niche market cannot be done for free.  It takes dollars to advertise.  It takes time and money to find the working partnerships.  It takes investment to make profitable changes to the milk delivery line as it moves milk from farm to table.  For this reason, a lack of resources can be the most difficult part of making the transition from commodity to niche product. Wherever your dairy is operating, there are other producers, manufacturers, marketers and retailers. The forward building dairy business will look for the partnerships that not only build their own dairy but the community they serve as well.  Without customers there is no dairy industry. Although I have previously said nothing is free, all dairy businesses have the opportunity to share free virtual content that highlights the health, safety and entertainment value of dairy farming.  Reinforcing a positive dairy milk image is step one. And “Yes!” – I said entertainment value.  With zoos and parks facing the challenges of health and safety, virtual farm experiences from simple to complex, depending on your resources, can fill a niche. Additionally, consumers in restricted times are receptive to experiences to accompany their purchases. Some creative dairy folks are filming virtual calf shows.  There are opportunities to provide experiences from calving to milking lines. At an in-house creative level, dairy kitchen recipes can expand consumer experience and put dairy products on more tables.

WHERE IS DAIRY GOING?

Many business analysts us graphics to show the rising trajectory of successful business decisions. We are convinced by rising income, rising production, reduced costs and reduced debt. That’s on paper. In real life, time doesn’t stop to allow us time to see the future more clearly ahead of time and then change the lines to reflect our positive success. We cannot perfectly control the future.  We cannot perfectly control the consumer market. Perfect answers are not needed.  Forward progress is needed.  Having said that, vulnerability and risk come with every change.  From the size of the investment that is needed, to the development of the equipment, people and advertising, progressive dairy producers must face many issues when daring to be different. These factors include weather changes, pests, currency fluctuations, economics and political support or lack of it.  That is the dairy side.  On the consumer side, there is reduced disposable income, marginalized demographics and those who are vulnerable for other reasons during these unusual times.

THREE KEYS: 1. Responsibility. 2. Innovation 3. Relationship   

The dairy milk producer does not exist in a vacuum.  From the cow in the dairy line to milk on the table, each step depends on effective input from numerous other businesses. As the world, as we know it, is disrupted, innovation will be important as a way to find ways to keep the dairy business line operating successfully from end to end.  It is risky to feel that the producer at one end does not need to be connected to consumer concerns at the other end.  Going forward the dairy producer will survive because of a successful direct to consumer relationship. It takes acceptance of this responsibility to start the ball rolling.  Then comes willingness to change and innovate.  All three steps are needed for a dairy operation to begin the process of producing not just fluid milk but also niche products.  Simultaneously, the dairy industry has to have compassion for the reality that many businesses are completely interrupted or closed due to the global pandemic. These closures may not immediately affect your dairy business, however, eventually the domino effect will, at the very least, affect the purchasing habits of consumers. It makes sense to start early to consider what new infrastructure would enhance your longevity in the dairy industry.

EXPERIMENTATION and NEW TECHNIQUES

 Long before the decision to invest in new niche market infrastructures, a dairy producer considering change needs to allot time for experimenting with milk specializing, learning new techniques that might be necessary and continually analyzing all changes and the resulting effects on improving milk quality. It can take years, and require significant trial and error, to be able to consistently produce milk for an identified niche market. Niche milk quality, rather than supply and demand, should determine prices – but “should” is the key word here.  In theory, consumer will pay premiums for better-quality milk however, price premiums are not guaranteed.  As much as everyone prefers the comfort of a sure thing, today’s business environment means that this surety is unlikely to be achievable.  Through constant evaluation and adaptation, every dairy operation needs to evaluate processes and track data. Tracing of actual results is key to achieving potential markets and improving consumer market penetration.

PARTNERSHIPS, COLLABORATION AND COMMUNITY

Reinforcing the reality that no business, dairy or otherwise, can operate totally in a vacuum, specializing in niche markets will mean reaching out to new partnerships and collaborations. Finding a community of viable partnerships is not easy. Many businesses have had tough years based, at least in part, on the new realities of the Covid Pandemic.  On the bright side, there are great reports of innovation and new beginnings.  From new packaging to green manufacturing, we are excited to see the opportunities for new business partnerships to reach consumers in new ways.

Closer to our own milk industry, it is important to recognize that many non-milk beverages are well along the path of marketing to consumers in new ways.  Specialty micro-breweries. specialty sodas and a booming growth in specialty coffees are fiercely competitive in the beverage market.  We can learn from their successes and failures.  Individually, dairy producers need to consider and implement ways to raise the profile of dairy products. This can be undertaken through support of community events, 4H competitions and vulnerable groups, all of which may vary from community to community.  The important point is to earn, learn and give back to the community where you are. The dairy future will have a strong foundation only if if builds on consumer confidence, relationships and interaction.

The BULLVINE BOTTOM LINE

 In the past volume of production was the priority. If dairy keeps chasing volume, it means also accepting the risk that an outside force could make some dairy operations irrelevant.  We readily acknowledge the uncontrollable impact of forces such as a global pandemic, weather disasters, economic upheaval and politics.  A more controllable possibility is for dairy to adapt and transition toward selling to specialty markets. This means building long-term relationships with buyers and resulting outcomes in milk consumption. There will be opportunities to innovate new products and give dairy a higher profile position. Strong dairy niche markets will provide more stable income and reduced risk. The most important outcome is that the dairy industry will continue to provide safe and healthy food for the entire community.  

 

 

 

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Shows are needed…

When Barclay Phoenix put his shoulder to the wheel to initiate a show in Canada, the people who knew him well recognised the look in his eye.

He was determined to make it happen, and they didn’t doubt that he would.

Most breeders in the USA have been able to continue to show this year because of different COVID protocols. The rest of the world has watched from the sidelines with more than a twinge of envy.

And, Barclay felt strongly that Canada needed to get some urgent airtime if it was going to sustain its energy and profile within global cattle marketing.

Two days before the show the minister of Agriculture and the local politicians attended the show to make a big announcement for funding for agriculture societies.

His solution was to get on the phone to health officials, prominent breeders and The Bullvine. It was a mission many have talked about, and none had progressed past the brainstorming and the hurdles at that point.

However, this time within 2.5 weeks of navigating strict health regulations, and other challenges, Barclay and his wife, Shelley, pulled off an important precedent for the Canadian industry.

The Summer Invitational 2020 goes down as the first profile show to be held in Canada this year, and the highest-profile show on the world stage so far this year. It happened at the Lindsay Exhibition Grounds in Ontario under judge Brent Walker. It was an invitational because government restrictions limited it to 100 people, in addition, to show staff on-ground. There were 150 entries. (See full show report here)

While the public couldn’t visit to watch, the extreme focus on the calibre of exhibitors, pre-show interviews, and online streaming were the game-changers.

There were 5000 Youtube Livestream views on The Bullvine on show day and 10,000 views in the first two days. In all, 55,000 people have seen coverage on The Bullvine alone. To put the publicity into perspective, it comes in just after World Dairy Expo and the Royal as the third most-watched show, and is 5 times as many viewers than live streams during this COVID time on other media outlets. And, it puts it well ahead of most others shows, which have sub-50,000 viewers. 

(Due to internet challenges during the show a clean recorded version of the show is now available)

“To say this show achieved more coverage than most of the big US shows during these COVID times – as a first-time show with an incredibly short lead-in time – is almost insane,” The Bullvine’s Andrew Hunt said.

Dianna Malcolm talks to Barclay, Shelley, Andrew and one of the king-hitter exhibitors, Ferme Jacobs, about why the show worked, and what is in the pipeline going forward…

DM: “Barclay and Shelley, thanks for your time today. Lots of people have talked about starting shows this season, but no-one outside of the regional shows in the US has got it done yet. What made you want to pull this off?”

BARCLAY: “Well, this is our business up here as far as merchandising cattle and we haven’t had an opportunity to do it this year, particularly in Canada. And, it was a little frustrating in that you can see shows going on in the US, and I just decided around June 1 that I’d like to try and create a show. After listening to the radio and hearing that the regulations had changed, I first called the local health officials, before they even knew the changes.  I then called Jacobs (Ferme Jacobs), Pierre Boulet, Simone Lalande (Ferme Blondin), Kingsway, and some others and given them the heads up that we’re were going to have a show, and that I was 85% sure it would happen. Two weeks before the cattle got there, we didn’t even have more than 50 people allowed on the grounds. Then I called to get the health guy out to the showgrounds, and a week before the cows moved in, we were cleared to have 100 people involved, and 60 staff.”

ANDREW: “Knowing that Barclay had taken the time to get everything in place gave me a lot of confidence that he was going to make it happen, and I decided I wanted to get involved rather than be left behind.”

DM: “What were the key ingredients to the Summer Invitational’s success?”

BARCLAY: “To tell you the truth, when you get most of the best breeders in the world to come to a show…that helps. A few people answered, ‘we’ll be there.’ Then some couldn’t come, and I was a little worried for a minute, but when Ysabel (Jacobs) said that Jacobs was coming, everyone else then just followed suit.

“It wasn’t held in downtown Toronto or downtown Victoria, but it was one hour from Toronto airport in the city of Lindsay, in the Kawartha Lakes region (population of just over 75,000). Everyone could walk to the hotel, and we could drive to McDonald’s and Tim Horton’s in five minutes. Those necessities are important to make everything go well.

“But, if it wasn’t for The Bullvine this wouldn’t have had the ripple effect across the world that it did within the short time-frames we were operating within to build hype.

“I said that by the time Friday came around I wanted the world to know that we’re having a show. And, I think by the time the cattle moved in there – with Shelley doing the interviews – that plan came together.”

ANDREW: “I think that those video interviews made a big difference. And, you know, I’ve had so many people suggesting ideas about what should be done without the shows this year. But they have all been just ideas. It takes a helluva lot more to turn ideas into a show. The way this came together so quickly was through the determination, knowledge and effort from Barclay and Shelley.”

BARCLAY: “I didn’t even have anyone to line up the cattle an hour before judging started.”

ANDREW: “But the exhibitors were veterans, and they were amazing at working with the officials to make it happen.”

DM: “You also said there was a different feeling on the showgrounds?”

ANDREW: “Barclay and Shelley started a chat stream on Facebook, and all the exhibitors and sponsors were in that chat room. They got everyone talking.”

BARCLAY: “It was kind of neat because we’d put a comment or a request in there, and people responded. And, you could feel the excitement building from the exhibitors.

“I really enjoyed that chat group. The exhibitors were our show committee really. For instance, one day someone asked about wearing coloured shirts for judging. In Canada, we are known for wearing white shirts, and the response from everybody was that ‘It’s a Canadian show, and it’s our first show and we’d like to wear white shirts’, so, that was that. The exhibitors decided. And, on show day, we assembled cows outside to come into the ring, because we didn’t have to wear masks out there, but it got hot and sunny in that space, and I put the message into the chat room that people could go around to the shady side, and before you knew it everyone had moved over there. It was that easy. I think the chat room made everyone feel involved.”

ANDREW: “Plus, one of the neat things was that Barclay is never afraid to ask someone, do things differently, or to push things to a higher level.”

DM: “What is your feeling as you review the show with the value of hindsight?”

BARCLAY: “I think we achieved what we set out to do. If this show didn’t happen, and we were sitting here yesterday watching that show in Wisconsin, I think there would have been a lot of frustrated Canadians thinking, ‘Oh my God, we need a show’.

“It’s kind of set the stage a little bit and maybe we can springboard off this to get another one up and going. It’s too bad the US and Canada can’t get together, but that’s just the way it is this year. There was so much advertising coming out of this show, and that’s what we set out to achieve. Obviously, without social media we wouldn’t have got it done.”

ANDREW: “Barclay said we have to let the world know and he wanted to do the video interviews. And Shelley took that on, so full props to her.”

SHELLEY: “I’d rather be in the background, but things were happening so fast and there were so many things to do, that Barclay asked me to do it. And, he’s not an easy guy to say ‘no’ to. It was fun and interesting hearing from the breeders.”

BARCLAY: “We made a good team. And, everybody seemed to be in a good mood, and they were all smiling from what I could see.”

DM: “To get the feedback you had, must be heartening because by your own admission this show wasn’t without pressure. And, you couldn’t invite everyone simply because of the ceiling on numbers.  Do you think there is a bit of regret from some of the exhibitors who were invited, but who didn’t/couldn’t join you?”

BARCLAY: “Absolutely. Because we knew that these exhibitors needed to get something out of this. And, in my opinion, they got huge advertising.

“And, I had a prominent fella in the business I hadn’t heard from in four- or five-months text me afterwards. The text said, ‘Congrats on pulling off what likely seemed impossible at certain moments, but we both know that it just adds fuel to your fire. Well done.’ That was nice to receive.”

SHELLEY: “People really helped each other out at the show too, if they needed something. We don’t always see that kind of collaboration between teams at a show. And, we couldn’t walk 20 feet without being thanked by people.”

ANDREW: “Barclay’s family also did a great job coming out to help. Half of the show staff had the last name ‘Phoenix’.

BARCLAY: “When I phoned my dad on the way home – and I was tired – I said to him that he should be pretty proud of his kids and grandkids, nephews and nieces…and he said [Barclay takes on the gravelly tones of his father], ‘Well, I’m glad you got through it, because you almost gave me another stroke. Don’t do this again’.”

DM: “Why are shows so important to this industry?”

BARCLAY: “Everybody can take all the pictures they want at home, but I think that a cow or a heifer in the ring with a ribbon or having somebody liking her means a lot more. And, those phone calls you get afterwards regarding sales and marketing is what it’s all about.

“The Junior Champion got sold just before the Junior Champion class. There was a couple of other heifers sold before the show. There have been enquiries and sales on young cows since the show. And, that’s what it’s all about, eh? We had a fantastic judge. Everybody has got their different opinions, but everyone knew they’d get a fair shake with Brent (Walker).”

Grand Champion: Erbacres: Snapple Shakira-ET (Snapple), 1st 5-year-old, C & F Jacobs, Ferme Antelimarck 2001 Inc., Ferme Jacobs Inc., Kilian Theraulaz, Ty-D Holsteins, QC

DM: “Ysabel [Jacobs], we all know that with seven successive Premier Breeder banners at WDE, makes you the first call any prospective show committee will make. What made you decide to get on-board with eight head? Because the biggest players also have the most to lose if something like this doesn’t fly. Yet you didn’t hesitate to pony up. And, you came away with Grand Champion (Erbacres Snapple Shakira-ET, 1st 5-year-old), and Intermediate Champion (Jacobs High Octane Babe, 1st Senior 3-year-old).” 

YSABEL: “We knew that you just need one person to start the wave. And, no-one wants to make it easy to win, so once we were coming, they were coming too. The cows were not 100% ready, for sure. We had one month of preparation. Usually, we would do three. But everyone was in the same boat. It was a perfect practice for the next one.”

DM: “What were your reservations, if any?”

“We more hesitated at first because the cows were not ready, ready. But, in Canada every camping ground is open, every water park is open, so when you think about it, a showground is not worse than that.

“We need to learn how to live with the COVID virus. If anyone knows about viruses, it’s a farmer. We deal with them all the time. By respecting the protocol, we can make it happen. We just have to sometimes change location or do it smaller.

“When they announced the show and that there was a protocol already in place, we decided to do it.”


DM: “And, not just for yourselves, as I understand it?”

“For us this year, we have never sold as many embryos as right now. But it’s easy because of our last results. We are still on that high, and I’m sure it’s because people aren’t spending that much on travel etc, so they perhaps buy embryos.

“So, not having a show hasn’t affected us as much as others. But for some of the kids, who are developing young cows, I worry for them. Because they need those heifers and cows to get out to a show to be known. There are always new cows coming through and they need to be seen. I think we should just keep on doing the shows. Not international, but in each of our countries we need to make it happen – perhaps on a smaller scale until they find a solution for us.

“This show was awesome. Barclay and his team did a great job. From day one we felt very welcome. Everything went great, the facility was perfect, and while there were no spectators and less people, for me that was OK. With the number of views, The Bullvine had, we can’t ask for better than that.

“And, it’s important that it’s not just the competition, it’s also about the information you get around the show. We all talk about a lot of things when we all get together. We get updated on what’s going on. Without a show we don’t have the chance to talk with each other as much.

“And, when you have that passion, you need to keep that fire burning, and for us good cows are always going to bring people together. Also, our kids live for the shows. It is important to them, so that keeps us involved.”

DM: “I understand you sold a junior two (from your barn) and a senior two (from your show string) after the show to Elm Vue Holsteins?”

YSABEL: “Yes, and I’m sure the show helped to sell them.”

DM: “Barclay, swinging back to you, it seems that the industry perhaps now realises in moments of calamity like Covid-19, how vitally important to have the impact people, who are prepared to think outside the box, and make things happen for everyone. And, that includes the people prepared to get on-board, like your exhibitors?”

BARCLAY: “I like creating things like this when things do happen because I like a challenge. In 2003 when the border closed [between the US and Canada], there were a lot of the big-name cattle guys struggling, and basically going broke. At that time, we started Tag sales. We all banded together, and we had a heck of a Royal that year, and the US wanted to have our cattle. I think this is another reminder that we need different ideas to get through different challenges.

“And, when the elite exhibitors like Jacobs, Blondin, Pierre, and Kingsway, once they decided to come, that was the icing on the cake we needed to make this fly. For the next show, I need the boys from British Colombia to come.”

DM: “The next show? Do I hear the beginnings of another show?”

BARCLAY: “Yes, we are talking about it. It could be at the same spot, and it could be somewhat the same structure. Because of the weather – even though I’d love to have it at the same time as The Royal – it’s going to be too cold. I think at this point we’d be looking at the first or second week in October sometime. The reason for October is so the people from the West will be able to come down because I think they’re still talking about having their show at Red Deer.”

ANDREW: “I’ve been polling the exhibitors about whether they would attend the next show if there was one, and not a single one wouldn’t come back. I think everyone was there for the right reasons, and the Canadian industry badly needed this show.”

DM: “Is there anything else you’d like to add?”

BARCLAY: “I just want to take the opportunity to thank everyone for coming out. The aftermath, in general, has been incredible, to be honest. Overwhelming, actually.”

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