SIOUX FALLS, S.D. -- Today's dairy checkoff spending is "consumer-driven," and more heavily involved in driving industry partnerships than it was before 2006.
Stan Erwine, vice president of producer relations for Dairy Management Inc., speaking at the SIOUX FALLS, S.D. -- Today's dairy checkoff spending is "consumer-driven," and more heavily involved in driving industry partnerships than it was before 2006. Stan Erwine, vice president of producer relations for Dairy Management Inc., speaking at the I-29 Dairy Conference in Sioux Falls, S.D., says DMI is funded by checkoff fees, which promote the sale of American dairy products. Included in Erwine's resume is 15 years as a past publisher of Dairy Herd Management magazine.
"You folks are going to increase the production of dairy products," Erwine said. "We accept that challenge. We're going to find homes for it," Erwine told producers.
Before 2006, DMI primarily was an advertising company, looking at the largest categories that could drive retail sales. Since then, it has focused on being a "partnership company" that offers information, communications and consulting to partner with companies such as McDonald's Corp. and Domino's Pizza Inc.
"Anybody tried a McCafé specialty coffee? Anybody guess the percentage of milk in McCafés? Eighty percent," Erwine says.
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Ninety-two percent of quick-service restaurant growth last year occurred because of McDonald's. The industry has scientists and manufacturing advisers who work with McDonald's to see that "dairy's interests are served" with these new products.
In partnership with McDonald's, 1 billion extra pounds of dairy products were consumed just through new products. McDonald's represents 14,000 franchises, serving 27 million customers a day.
Domino's increased cheese amounts, leading to a 3.2 percent increase in pizza cheese use, nationwide. That equals an extra 2 billion pounds of milk and an extra $800 million in noncheckoff funds for promotion, from all promotion partners. The company added the amount of cheese on their product. Pizza cheese accounts for 25 percent of all cheese consumed by Americans.
"These brands are doing what they do best, spending five and six times what we would be on advertising," Erwine says. "So the next time you see a Domino's or McDonald's commercial, look in it for your product. They're promoting."
The goal is to accelerate innovation through industry-wide participation.
Nutritional benefits
Checkoff dollars are also being used to increase the nutritional benefits of dairy products to increase sales.
Coalition partnerships are anchored by the National Dairy Council, which for 100 years has provided nutrition science that documents and sustains dairy's position in a healthy diet, Erwine says. This works to make sure three dairy servings daily are included in government dietary guidelines, revised every five years.
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"There are those who would like to have seen chocolate milk moved into the sweetened beverage (category), but by having good science we were able to keep chocolate milk where it needs to be, as a nutrient-rich product for kids in the schools," Erwine says.
Among dairy's initiatives is an Innovation Center for U.S. Dairy, a twice-annual gathering of 32 chairmen and chief executive officers of companies that represent 80 percent of the nation's milk market. Of those, 16 are farmer-owned.
One of the industry's six priority areas are health and wellness to "protect and promote dairy's healthy halo" in the minds of consumers.
The battle over the healthfulness of chocolate milk is a "war that we're going to win, but there are going to be skirmishes," he says. "What can you do? Be involved in your school districts," Erwine told the farm audience. "Know when there's a change or an activist parent, so you can contact your state and region so we can get involved," he says.
Erwine says the industry has developed a "tool kit" for intervening, and has identified schools that are "at risk, those supporting, and those on the brink," with chocolate milk.
The U.S. Center for Disease Control recently has issued statements on sodium intake, which he called the "next frontier" for action by dairy. "The Innovation Center is already working on that just as it has on chocolate milk, and oh by the way, chocolate milk today has 35 percent less sugar than it did five years ago, so we're being responsible," he says.
The U.S. Dairy Export Council invests $12 million on behalf of farmers, but 120 companies invest in it as well. Farmers invest another $13 million in the U.S. Dairy Research Institute, to grow the "collaborative research effort" -- already at $60 million and on its way to a $100 million goal by 2013. Partners include NASA and the Department of Defense.
Editor's Note: Agweek will carry other reports from the I-29 Dairy Conference in coming weeks, including a Bain and Co. analysis of the U.S. dairy industry's position in a global marketplace.
