Market Watch Diary: Reasons for Dairy Demand Growth

Critics frequently charge me with cheerleading—writing while under the influence of too much optimism about the dairy foods business.

I readily plead guilty. And now, in the court of public opinion I’d like to name numerous accomplices—other folks who are optimistic about the future of the dairy business.

• First, a name we all know: Chobani, as in Greek yogurt. The company was in such a rush to capitalize on opportunities in the marketplace that it built a brand new plant from the ground up in 12 months. Located in Idaho, the plant is meant to augment the supply already being produced at the company’s recently enlarged New York plant.

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• Theo Müller, a massive German dairy company, and PepsiCo, the soft drink and snack food giant, teamed up to open a large yogurt plant in Batavia, N.Y., this summer. The joint venture, Müller Quaker Dairy, LLC, is already building its market in USA through imports. When the plant is completed later this year, all of the milk and products will be sourced from the U.S.
• Before leaving the yogurt business, let me add: Alpina, a dairy company headquartered in Columbia, South America, built a plant Bativa, N.Y., last year.
• Phoenix-based Shamrock Farms just announced plans to build a $50-million-plant in Augusta County, Va. Shamrock, with a herd of 10,000 cows in Arizona, already has national distribution of a host of dairy products at retail and foodservice.
• Dairy Farmers of America is busy building a dry dairy ingredients plant at a cost of $85 million in Fallon, Nev., (see "Built for Export," p. 10). Ready by year’s end, the co-op will turn 2 million pounds of milk into 225,000 lb. of high quality whole milk powder per day.
• Franklin Foods, with a plant in Enosburg Falls, Vt., has started construction on a second plant, located in Casa Grande, Ariz. The 90,000-sq.-ft. facility will crank out cream cheese, including a new Greek cream cheese, early next year.
• Tillamook Cheese of Tillamook, Ore., built a second plant in Boardman, Ore., several years ago. Just recently the cooperative announced plans to add 63,000 sq. ft. in Boardman so that location can begin manufacturing WPC 80, a high-value whey product, and lactose.
• One of the three largest manufacturers of infant formula in the world is exploring the possibility of building a plant in Washington state, according to sources at Darigold, the Seattle-based cooperative.
• Last year, Leprino Foods started making nonfat dry milk at a plant in Greeley, Colo.—even while the building was still under construction. When all of the mortar finally sets later this year, the facility will be converting 7 million pounds of milk per day into cheese.
• One more optimist: Coca-Cola. I wrote about them last month. The company bought a stake in Fair Oaks Farms Brands, LLC, another bunch of optimists who created Core Power, the milk-based fitness beverage.

That’s right. I’m guilty of hanging out with optimists—i.e. capitalists investing in what they see as the bright future of the dairy business.

Jerry Dryer is the editor of Dairy & Food Market Analyst, www.dairymarketanalyst.com. You can contact him at jdryer@dairymarketanalyst.com.