Partnerships add 1 billion lbs. dairy sales

Your Dairy Checkoff At Work

By Tom Gallagher

Starting in 2005, dairy producer promotion leaders from across the country moved the national dairy checkoff program in a new direction: grow sales by working with and through the industry to provide consumers with the products THEY want – when and where they want them. Over the past five years, national and local checkoff staffs have worked hard to establish and grow marketing partnerships that have resulted in real sales growth over both the short and long term.

Here is a list of what those marketing partners must be committed to do:

• Grow sustainable sales throughout an entire category, rather than benefit only a specific brand or company.

• Build upon producer investments by dedicating their own resources (e.g., millions of marketing dollars) to programs that are aligned with our goals to grow sales.

• Break through the clutter in an increasingly competitive marketplace to persuade consumers to keep dairy top of mind when buying and consuming.

Moving 1 billion extra lbs. of milk

Over the past 12 months, our key marketing partners have sold more than more than 1 billion additional pounds of milk, helping to meet unmet consumer demand.

• Cheese used for pizzas required an additional 640 million pounds of milk through the introduction of the cheese-friendly Domino’s Pizza® American Legends™ and other major pizza chains.

• Milk-based coffee beverages that were introduced through the popular McCafe® line with McDonald’s have required an additional 40 million pounds of milk.

• Cheeseburgers at foodservice have required an additional 322 million pounds of milk due, in large part, to the introduction of the Angus Third Pounder “mega-burger” offered at McDonald’s.

• Lactose-free milk sales have seen annualized growth of 47 million pounds, driven by the checkoff’s partnership with Lactaid®.

In addition to the sales increases, these partners also bring major resources to the table to grow those sales. For every $1 that dairy producers contribute, our partners contribute more than $6. These contributions include: investments in equipment at restaurants to accommodate new specialty beverages; marketing and public relations campaigns to raise consumer awareness; and dedicated dairy-specific menu development and innovation efforts.

McDonald’s

The nation’s largest restaurant chain continues to become a “dairy destination” for millions of Americans, as part of a multi-year partnership with the dairy checkoff. Here are some of the new menu offerings:

• Frappés, made of up to 50% milk, are now in 80% of McDonald’s 14,000 restaurants, and will be available nationwide later this year. The products, offered in mocha and caramel flavors, will require an additional 100 million pounds of milk annually.

• Real Fruit Smoothies, which use low-fat yogurt and are available in strawberry banana and wild berry flavors, will launch nationally next month. They will require an additional 23 million pounds of milk annually.

• McCafé specialty coffees, which use up to 80% milk, have been available nationwide for more than a year now. They require an additional 300 million pounds of milk annually.

• Improved shakes, including a new formulation that includes real whipped cream and new plastic cup packaging. These new products will require an additional 320 million pounds of milk annually.

• Angus burgers, originally introduced as a limited-time only menu item in 2009, performed so well that these burgers – which use two slices of cheese per sandwich – will now become a permanent menu item. This will require an additional 60 million pounds of milk annually. For those customers wanting a snack-sized option, later this year the chain will introduce Angus Snack Wraps, which use one slice of cheese.

Pizza cheese

To help the pizza category and grow cheese sales, dairy producers have partnered with leading pizza chains to make cheese their core ingredient in new and enhanced menu items. Market research indicates that pizza servings increased 2% across all restaurant chains (through April 2010), compared to a year ago. Major pizza chains, led by Domino’s Pizza® (and its partnerships with dairy producers through the checkoff), have improved their pizza quality – including increases in the amount of cheese used on their pizzas – and have reduced prices to drive traffic. This means more cheese sold on pizzas.

Specific to Domino’s, in addition to the six specialty pizzas introduced by the chain in early 2009,  a new Domino’s American Legends pizza is scheduled to launch in October with 80% more cheese than a large one-topping pizza. Domino’s also has scheduled in October a continuation of last year’s pizza discount item for carryout pizzas to drive additional sales.

The dairy checkoff is also working with Pizza Hut to grow cheese sales. Throughout the summer, the chain continues its “Any Pizza $10!” promotion. This has helped drive pizza sales throughout the summer. During the promotion’s first 16 weeks, sales increased more than 20%.

Lactose-free dairy

To bring new consumers to the milk category, and help build fluid sales among those who no longer drink milk due to real or perceived lactose intolerance, dairy producers have partnered with the HP Hood and its Lactaid® brand, which has more than 80 percent of all lactose-free dairy sales.

To help meet unmet consumer demand, Lactaid recently introduced 12-ounce, single-serve lactose-free milk offerings, along with a 32-ounce offering of lactose-free half-and-half.

This is a tremendous opportunity to grow additional milk sales by more than 2 billion pounds per year, because more than 14 million adults currently identify themselves as lactose intolerant, and avoid dairy as a result.

The dairy checkoff’s role includes product innovation, along with consumer and health professional awareness and education efforts.

In summary, these strategic partnerships are critical to our future dairy sales. Your dairy promotion program is working to lead the industry in a new direction of sustained, category-wide sales that can benefit all producers.

FYI

■  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.

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