For Dairy Management, Inc. (DMI), “got milk?” is no mere rhetorical question. Developing products that enable a growing number of consumers to answer “yes!” more often—and in more places—stands central to the group’s mission.

Decades of sagging per capita milk consumption prompted the 1995 formation of DMI as a joint effort of the United Dairy Industry Association and the National Dairy Board. This Rosemont, Ill., USA-based not-for-profit, funded by America’s 60,000 dairy farms, has addressed the challenge of increasing dairy sales through a creative blend of research, education and collaboration. Its unique partnerships and innovative approaches have delivered significant results. “In 2006, for the first time in 22 years, per capita [milk] consumption increased,” says CEO Thomas Gallagher. The 2.1 percent rise reported by the United States Department of Agriculture represented an increase of 575 million pounds over 2005.

Even the overall steady sales level of 2007 offered a measure of success: A slight dip in retail milk sales (think half-gallon containers sold in traditional grocery stores) was balanced by a surge in single-serve beverage sales, primarily in schools and quick-service restaurants—key areas targeted for enormous growth potential. “We have to make changes in what we offer to stay contemporary,” Gallagher says. “For years, the only choice was a cardboard container—white milk only—and it was hard to open and not cold enough.”

Updated packaging in a resealable plastic container, served thoroughly chilled, delivers greater kid appeal. This type of container is currently offered in 10,000 schools—reaching 5.7 million students a day, 180 days a year—and 60,000 restaurants across the nation. Discussions with other major chains could add another 27,000 outlets this year. “And there are 86,000 schools to go,” Gallagher says.

A critical challenge of protecting milk’s place in the market is being met through collaboration with the International Dairy Foods Association (IDFA) to develop flavored milks, ranging between 140 and 170 calories per serving, for schools. Different formulas using a variety of sweeteners—either traditional or non-nutritive or a blend of both—were sampled by 2,000 children. “The goal was to create taste profiles that kids really like, not what we think they should like,” Gallagher continues.

DMI has partnered with leading contract management firms to tap into another single-serve market with enormous growth potential: The 15 million students attending more than 4,200 colleges and universities across America.
Since Gallagher notes that “milk meets all the markers of health and nutrition,” the beverage is well-positioned to compete in a market flooded with functional drinks, and whey protein has emerged as an important addition to nutritional drinks. Value-added milk formulas, such as those with omega-3 fatty acid and varieties that focus on meeting the nutritional needs of diabetics and seniors, encourage consumers to “come back to milk.”

But proper marketing, with the right mix of product, package and placement, is crucial. “It needs to be done smartly, with the right consumer data,” Gallagher says. “Otherwise the consumer will ask, ‘What have you done to my milk?’” Placing milk in vending machines and shelf-stable systems also provides a wider variety of options that were unavailable only a few years ago.

DMI can customize services for companies currently in, or looking to enter the dairy business. Examples include cholesterol-lowering Promise Activ SuperShots and the reformulated SlimFast Optima line.

With core values of integrity, excellence, leadership, collaboration and innovation, DMI can build alliances among producers, processors and retailers. “When you find the point where their interests intersect, the entire chain works together, reducing costs and increasing sales,” Gallagher says.

The recent formation of the Dairy Business Innovation Center, co-managed by DMI and groups in the US and abroad, facilitates industry-wide collaboration by supplying data on sales, nutrition and research. Also, DMI has teamed up with the IDFA, the National Milk Producers Federation and the US Dairy Council to establish a comprehensive communications plan that provides a unified, consistent message to the public in case of a dairy crisis.

The next challenge is tapping into the global market. “There are 15 billion pounds of unmet demand, much of that in China and India, and no other player except the US is big enough to fill those needs,” Gallagher says.

With the support of DMI, producers, processors, distributors and retailers have an opportunity to customize products and make American milk the world’s beverage of choice.

From Beverage World April 15, 2008