As dairy producers try to revive their balance sheets after consecutive years of struggling milk prices, better milk prices are helping improve outlooks today.
But the industry is still fighting to bring more people to the dairy aisle. A major shakeup in dairy last month is still sending ripples through the industry. Dean Foods filing for bankruptcy, blaming a drop in fluid milk demand. The company says a growing popularity of pop, juices and alternative beverages like almond juice, are all to blame.
But Phil Plourd, President of Blimling and Associations, Inc,. says the actual culprit of muted milk demand overall is cereal.
“Milk best friend got in trouble,” Plourd says. “We eat much less cereal today and if you were to plot a graph of cereal sales and milk sales, it's the same picture. Cereal sales are down 20% since 2009, by volume, milk sales are down 18% is not much more complicated than that in terms of a big bulk of the loss of sales.”
While Dairy Farmers of America may be looking to buy portions of Dean Foods’ business, the dairy co-op made another controversial move this year by creating a 50/50 milk, nut juice blend product.
“When we started out, it was more of a purpose driven sort of marketing campaign,” says Doug Drasslaer, Director of Innovations at DFA. “These are great in smoothies, these are great in your coffee. But the flavor was so good, that now it's more of like, this is something that you could have as your protein-based, your plant-based protein and your dairy-based protein, plus the added calcium.”
Dresslaer says the bold move has brought more people back to the dairy aisle.
“I think it's increasing demand,” Dresslaer says. “It's giving people an option to try different things that that may have steered away from dairy for a while.”
Milk winning back over shoppers is something Plourd says can happen, but in a different form than just a traditional gallon.
“Well, I think coffee is milk’s new best friend, they hang out together a lot,” Plourd says. “Coffee still has a lot of upside. If you look at it, for example, in China, Starbucks is opening a new outlet in China, every 15 minutes I've read, well, there's a lot of milk that goes along with that stuff. Right? So I think that coffee is a good friend for traditional milk.”
He says as the industry works to innovate new products, it boils down to one key factor: Convenience.
“I've been studying consumers in one way or another for a number of years,” Plourd says. “One of my rules is to never bet against the laziness of the American consumer. We see it time and time and time again, that if it's convenient, it's got a chance. If it's asking the consumer to do a lot of work, it's really, really hard to get traction.”
Trying to gain traction, while attracting more consumers back to dairy could drive trends in the months and years ahead.