By Tom Gallagher
Today’s dairy producers are facing unprecedented challenges with low on-farm milk prices, high input costs at the farm level and extremely tight credit markets. And while your dairy checkoff cannot address all of the factors with these economic challenges, we continue to work hard to do what we CAN do – grow dairy product and ingredient sales over the short and long term.
Making budget adjustments
To that end, the producer directors who oversee your national dairy checkoff program have adjusted 25% of the total 2009 program budget (more than $30 million) to capitalize on opportunities to grow immediate- and short-term sales. Our strategic business plan, which was developed more than five years ago, allows us to do this by working with and through the dairy, food and beverage industries.
Activities to generate sales include:
• Growing pizza cheese use at foodservice. To help build cheese sales, dairy producers partnered with Domino’s Pizza® to introduce Domino’s American Legends,™ which are six new specialty pizzas that use up to 40% more cheese than traditional Domino’s pizzas. Producers have invested $12 million over two years, while the chain will invest up to five times that amount.
In July, the chain kicked off the second phase of their marketing plan to build sales with aggressive television and online marketing. Domino’s also ramped up promotion and online offers for their cheese-friendly items –at no additional cost to dairy producers. This partnership sells more cheese. Other pizza chains are taking notice and offering more cheese-focused promotions. If every pizza were made with one additional ounce of cheese, it would require an additional 2.5 billion pounds of milk annually.
• Protecting pizza sales at school. The dairy checkoff also is committed to protecting and promoting pizza’s place in schools as a healthy, satisfying and popular item among students. Pizza is the No. 1 entrée in schools – 25% of all school meals include pizza. DMI and state and regional dairy checkoff organizations are working with industry partners on a program to build the “perfect pizza” that not only tastes good, but also meets increasingly restrictive school nutrition standards.
• Increasing dairy sales at McDonald’s.® Due in part to a multi-year partnership between dairy producers and McDonald’s to increase dairy sales, the world’s largest restaurant chain recently launched a national marketing campaign to promote its Angus Burgers, which use two slices of cheese per sandwich. Estimates indicate the Angus Burgers may use up to nearly 6 million pounds of cheese this year (600 million pounds of milk). This includes one sandwich using Swiss cheese – a first for the chain. Beyond cheese, McDonald’s continues to promote its single-serve milk through a special tie-in with “Ice Age: Dawn of the Dinosaurs,” a popular children’s movie that was in theaters this summer. Milk was featured prominently in TV and print advertising and in-store signs. These two efforts are in addition to the chain’s new McCafe® specialty coffee drinks (which consist of up to 80% milk) that are now available in nearly 14,000 restaurants across the country.
• Creating new opportunities in the lactose-free category. To help grow milk sales by reaching out to the nearly one in four Americans who have left or are at risk to leave the fluid milk category, dairy producers are partnering with a leading milk processor to help grow the lactose-free milk category. Collaborative marketing and education efforts will help demonstrate to these consumers that lactose-free dairy meets their needs for taste, variety, nutrition, and convenience – thereby introducing or reintroducing consumers to dairy. The partnership kicks off with a branded retail coupon offer this fall that, based on past efforts, may increase sales between 30% and 60%.
• Uncovering new reasons to drink milk. Emerging science, originally funded by dairy producers, suggests that chocolate milk is an excellent post-exercise beverage due to its protein and other essential nutrients. DMI partnered with Shamrock Farms® to test the sales opportunity for their chocolate milk product, “Rockin’ Refuel,” which as additional protein and naturally occurring electrolytes.
Tests indicate the product is popular with men ages 18 to 25 and moms looking for new and health options for their families. Now, DMI is working across the industry to identify sales opportunities for post-exercise dairy beverages through other flavors and packaging options, as well as new places to buy the product, including schools and vending machines.
• Developing new opportunities for dairy as an ingredient. General Mills,® owner of the Yoplait® brand, and DMI have worked together to develop yogurt chips that are blended with eight ounces of milk to make a nutritious smoothie. In 2008, the company tested the product in club stores and, at the conclusion of the test, stated that it was one of the most successful product tests ever. As a result, General Mills, in collaboration with DMI and state and regional dairy promotion organizations, is rolling out the products in grocery stores across the country this summer and fall. Dairy checkoff staff will help build sales through in-store sampling events.
These examples fit the strategy of meeting unmet consumer demand – giving our consumers and customers the products they want – when, where and how they want them. This is how we can build sales and help the industry grow … both for today and over the long term.
■ Tom Gallagher is chief executive officer of Dairy Management Inc.™ (DMI), the domestic and international planning and management organization that works to increase sales of and demand for U.S.-produced dairy products and ingredients on behalf of America’s dairy producers. For more information on dairy checkoff programs, visit www.dairycheckoff.com.