How Innovation Center helps your business

Your Dairy Checkoff At Work

By Tom Gallagher

As a dairy producer, you operate in a much broader and complex world than did your parents or grandparents. To be successful in your business today, dairy producers, through their investment in the dairy checkoff, must work with and through the dairy industry to grow sales by identifying common goals and building on producer investments.

This approach, working through the Innovation Center, benefits dairy producers because it provides the opportunity to influence the supply chain and the marketplace – by sharing knowledge and insights that affects how the industry processes, packages and promotes dairy products.

The Innovation Center is not a physical entity. Rather, it is an industrywide forum that allows a cross-section of the dairy industry – from farm to fridge – to work together to foster innovation and give consumers more of what they want, when and where they want it.

Already, the Innovation Center has engaged more than 180 companies and organizations, and more than 500 people, to address barriers and opportunities pre-competitively to protect and grow dairy sales.

Here are some examples to date of how the Innovation Center is helping the industry work together:

• Consumer Confidence: The Consumer Confidence Committee has completed quantitative research of consistent messages that reinforce consumer trust and confidence in dairy’s health and wellness, environmental stewardship, animal care, community, innovation and food safety. Results are being packaged for co-ops and processors to use in marketing and communications to promote more dairy sales. In 2011, we will start a proactive campaign to activate an army of ambassadors through the dairy marketing chain to promote dairy’s image with the public.

• Food Safety: This industry-led Food Safety Task Force, comprised of 24 senior executives and content experts from 11 processors and co-ops, assessed in-plant risks and vulnerabilities. It also built a plan to establish uniform pathogen control standards, auditing practices and industry and supplier education and training. Such efforts will reduce financial/business risk, maintain consumer confidence and create easily adoptable practices across all U.S. dairy and ingredient processors.

• Food Retailer Engagement: The Research and Insights Committee is working with eight grocery store chains on new strategies for improving dairy innovation and merchandising to drive increased sales. The retailers will do store testing of strategies that deal with “meal solutions” for shoppers.

• Comprehensive Business Case: The Research and Insights Committee has used comprehensive product, nutrition and consumer research to guide the industry to new growth opportunities related to: the Hispanic market, lactose intolerance, snacking, “dairy aisle reinvention” in grocery stores, and reduced sodium in cheese. This work has already helped industry leaders expand product lines and make company acquisitions that can lead to additional sales for the industry. New growth opportunities in 2011 include breakfast and sweeteners.

• Cheese and Sodium: The Health and Wellness Committee is working with more than 50 industry players on key “pre-competitive” barriers to reducing sodium in dairy products without sacrificing consumer satisfaction and product quality. The “action plan” for 2011 includes thought leader education on the role of sodium in cheese-making, a vendor solution for rapid-testing of sodium levels, and an industry-wide approach to assuring quality and safety in processing cheese with less sodium.

• Flavored Milk: In association with MilkPEP and IDFA, the Health and Wellness Committee has brought together dairy industry marketers, DMI and state and regional dairy promotion representatives, school foodservice directors and nutrition professionals to identify the challenges that drive schools to consider flavored milk bans, and action plans that can be used locally.

• Promoting the Positive: Based on thorough consumer research, new marketing strategies, messages and communications tools are being made available to dairy marketers. To date, more than a dozen dairy brands – including Kemp’s, Dean Foods, Kraft, Hood, Anderson Erickson, LALA, and Shamrock – are promoting dairy’s positive health benefits, such as multiple nutrients and protein, in their marketing efforts.

• Sustainability: The Innovation Center conducted the first national life cycle assessment (LCA) for fluid milk, advancing a science-based approach recognized as “best practice” around the world. This work has given the dairy industry the data it needs to help tell its story and set the record straight regarding dairy’s impact on greenhouse gas emissions. The study establishes a baseline for the U.S. dairy industry to use in demonstrating continued progress in reducing its carbon footprint. The Innovation Center is raising $1.6 million in outside funds to implement 10 greenhouse gas reduction projects throughout the value chain. Other studies are underway, including an LCA for cheese.

• Globalization: The landmark Bain study has served as a critical strategic guide for the U.S. industry to address the impacts of globalization on U.S. domestic and international trade and move U.S. dairy farther along the path of being a consistent global supplier. The study was aimed at addressing fundamental barriers to U.S. global competitiveness, as well as taking advantage of an anticipated shortfall of global supply. Efforts in this area include dairy pricing reform, volatility risk management, customer product specifications, net-export benefit trade treaties, and more competitive quality traceability systems.

• Communications: The Innovation Center has created a password-protected web site at usdairy.com to allow secure sharing of pre-competitive science, insights and information.

Through the combined efforts of cooperatives, processors, manufacturers and other businesses, the industry has contributed more than $7 million in donated time to the Innovation Center to help advance dairy producer priorities in the marketplace. That’s just one indicator of the increasing unity that is forming to keep the dairy industry strong and secure, assuring a continued home for the milk you work so hard to produce. I encourage you to let me know your thoughts as we continue to work together to grow the market.

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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