Checkoff partnerships paying big dividends for dairy
By CAROL RYAN DUMAS
Dairy promotion programs funded by producer contributions to the National Dairy Checkoff Program have had a significant impact on dairy sales since the program's debut in 1984.
But an evolution in how checkoff dollars are spent has brought even bigger dividends in recent years, industry officials say.
U.S. per capita dairy consumption went from about 540 pounds in 1983 to about 610 pounds in 2011. And dairy exports have gone from 3.7 percent of U.S. milk production in 1996 to about 14 percent year to date in 2013, according to data from USDA.
Dairy Management Inc., which manages a major portion of checkoff funding, credits that growth to innovative partnerships and a change in its business strategy.
A change from the earlier years of direct marketing to consumers to strategic partnerships with quick-service restaurants and well-known food brands is paying off, said Kevin Ponticelli, DMI senior executive vice president and chairman of the Dairy Research Institute.
Those partnerships with McDonald's, Dominoes, Pizza Hut, Taco Bell, Nestle, and Quaker are uniquely focused on growing demand for dairy products and ingredients, Ponticelli said during the Idaho Milk Processors Association annual convention in Sun Valley last week.
"That strategy is working," he added.
Those strategic partners are driving usage of dairy products with the help of DMI staff to accelerate menu innovation, with a catalytic effect on those partners' competitors who soon follow with their own menu innovations, he said.
Case in point is McDonald's, which has grown dairy sales by an estimated 1.7 billion pounds over the last three years through fat-free milk in Happy Meals, seasonal McFlurries, iced mochas, smoothies, and expanded cheese choices on sandwiches, he said.
Burger King and other companies quickly added similar items to their menus to catch up with McDonald's increased sales, and the same thing is happening in the pizza sector, he said.
Working with strategic partners in a mission to build dairy demand magnifies the checkoff impact by attracting other people's money, and it extends producer influence to point of consumption, he said.
The benefit-to-cost ratio of the strategic partnerships during 2009-2011 was 7.1 to 1, a notable increase compared with 3.9 to 1 during 1995-2008, before the partnerships were in place, according a 2011 USDA report to Congress.
Those partnerships are building demand and returning dividends to the industry and the producers who fund the checkoff program, Ponticelli said.
The checkoff program is also building demand and growing sales through U.S. Dairy Export Council. USDEC is focused on trade missions and trade agreements to gain market access, resolving tariff disadvantages on foreign imports of U.S. dairy products and assisting U.S. suppliers in capturing global opportunities, he said.
Those efforts have had spectacular success and the future for U.S. dairy exports is quite bright, he said.
The checkoff-funded Dairy Research Institute is also driving innovation and demand for dairy products and ingredients through technical research in nutrition, products and sustainability. The Institute's research is fueling recognition of the health benefits of dairy and re-evaluation of dietary guidelines, he said.
DMI is also building demand through the National Dairy Council, which promotes dairy's nutritional credentials, and Fuel Up to Play 60, which promotes consumption of dairy through school programs.
DMI's 2013 budget is $188 million, funded by a portion of dairy producers' checkoff contribution of 15 cents per hundredweight of milk.