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Checkoff Watch: A difficult year, but checkoff offers reasons for optimism

Contributed by Tom Gallagher Published on 24 November 2018

It goes without saying how much your national and local checkoff staffs care about dairy farmers. We understand how difficult this year has been for you, and there is nothing harder than watching families we know exit the industry.

This will likely be remembered as one of the most trying years in our industry’s history. Maybe it’s because of the economic hardships, but I’ve never seen the checkoff staffs nationally and across the country work harder and be more united to build demand and trust in dairy.

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I’d like to share some results of this work, done via our unified marketing plan, with and through the entire dairy community. Hopefully, the results of this strategy offer you a ray of hope for the coming year and have you feeling good about the work your checkoff does on your behalf.

  • Sales are strong: Sales are understandably on every farmer’s mind, and the first seven months of 2018 showed total dairy sales increased by 2.3 percent, which was stronger than last year’s rate.

    Much of this growth was driven by record-setting exports led by the U.S. Dairy Export Council (USDEC), an organization you created more than 20 years ago through your checkoff to keep you competitive in the global marketplace.

USDEC President and CEO Tom Vilsack has created a mission to ship 20 percent of U.S. production into international markets. Through the first seven months of 2018, almost 17 percent of your milk was moving out of the U.S., the largest percentage in history. U.S. exporters have moved record volumes of dairy ingredients (nonfat dry milk/skim milk powder, whey products and lactose) this year, while domestic and export cheese sales also have been excellent. Butter exports have been stronger too.

  • Bright spots within fluid: Fluid milk sales are down at a similar rate to the full year 2017. However, it’s important to note milk is still purchased by 95 percent of American households over the course of a year. While we’d like to see fluid sales climb, there are noteworthy bright spots within the category.

Fairlife Lactose-free flavored whole milk

Lactose-free, flavored and whole milk are $1-billion-or-greater categories, and each achieved growth this year. We’ve seen a case study of what is possible for fluid through fairlife, which showed success requires investment in product innovation, consumer research and marketing.

The checkoff’s partnership with fairlife ended this year as it has become a national brand with more than $420 million in sales.

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For the past three years, fairlife has grown faster than the plant-based milk alternative category, according to IRI and Nielsen data. The success of fairlife, combined with the growth in certain categories, points to the need for others within the industry to similarly commit to understanding consumers and innovating to meet their changing needs. That, combined with modern marketing via digital engagement and at retail, is the pathway to success.

  • Checkoff partnerships deliver results: Partnerships with global food and restaurant leaders continue to grow overall consumption. One of the greatest aspects of our partnerships is the ability to place food scientists at the headquarters of these companies and work with our partners’ menu teams to develop new ways for their customers to enjoy dairy.

    This has led to about 80 percent of McDonald’s menu featuring dairy, including the new Triple Stack breakfast sandwich that has two slices of cheese.

Our pizza partners offered special promotions this fall that featured cheese in a big way, including Pizza Hut increasing the amount of cheese on pan pizzas by 25 percent. We’ve taken this partnership model and applied it to the work we’re doing with KFC in Latin America and the Caribbean to develop menu options that pair chicken and U.S.-produced cheese. It’s also in play at Pizza Huts in the Asia-Pacific region, where U.S. cheese use is up 29 percent.

  • Sharing dairy’s story: The Innovation Center for U.S. Dairy – founded by farmers through the checkoff in 2008 – launched the Undeniably Dairy campaign last year with the goal of uniting the industry to proudly reintroduce dairy to consumers.

Our work is making progress. In 2018, more than 300 dairy companies and organizations have engaged with the campaign. Undeniably Dairy has helped us reach more people with the story of dairy’s unmatched nutrition and your commitment to responsible production, community and economic impact.

We’re seeing it reignite consumers’ love for and trust in dairy, from the farm to the table. And when consumers engage with Undeniably Dairy content, we see a decrease in their overall purchase intent for dairy alternatives.

So as 2018 ends, I want to assure you checkoff staff across the country fully understand the gravity of the situation you faced this year. Our motivation for 2019 remains high. Our plan is working. Our commitment to you is to continue to place a priority on those areas that are building demand and trust in dairy – modern marketing, global and domestic partnerships, exports and advancing U.S. dairy’s social responsibility with and through the community.

Please watch for more updates on these priorities and progress in the new year. In the meantime, I wish you and your family a peaceful holiday season and health and prosperity in 2019.  end mark

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Tom Gallagher
  • Tom Gallagher

  • CEO
  • Dairy Management Inc.

Your Dairy Checkoff in Action – The following update is provided by Dairy Management Inc. (DMI), which manages the national dairy checkoff program on behalf of America’s dairy farmers and dairy importers. DMI is the domestic and international planning and management organization responsible for increasing sales of and demand for dairy products and ingredients.

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