Dairy Promotion Leader Reports How Dairy Checkoff

Has Driven Sales in Response to 2009’s Economic Challenges  

DMI CEO Cites Recent Successes, Reasons for Optimism  
posted 11/14/09

GRAPEVINE, Texas – The dairy checkoff has taken dramatic steps to increase dairy sales in the short term, while building for the long term, in response to dairy farming’s 2009  economic crisis, according to Tom Gallagher, chief executive officer of Dairy Management Inc.™ (DMI), which manages the national dairy checkoff. Gallagher spoke at the 2009 National Dairy Promotion and Research Board (NDB)/United Dairy Industry Association (UDIA)/National Milk Producers Federation (NMPF) Joint Annual Meeting in Grapevine, Texas.  

The checkoff responded to the economic challenges by redirecting $35 million of the budgets of DMI and the U.S. Dairy Export Council (USDEC) to efforts that would affect immediate sales, Gallagher reported. DMI eliminated $9 million of fixed administrative, consulting and other costs and moved that money to programming. It entered into key strategic partnerships to drive short-term sales, while advancing the dairy checkoff’s long-term goals, he said.  

Strategic partnerships  

To help reignite the pizza category, the dairy checkoff and Domino’s Pizza have a multi-layered partnership focused on more cheese, on more pizzas. To impact the specialty beverage market, the dairy checkoff has a three-year partnership with McDonald’s to support dairy-friendly menu development. And, to capitalize on the enormous potential in the lactose-free milk market, the checkoff is partnering with HP Hood, the marketers of Lactaid®.   

“It’s startling that over 50 percent of people over the age of 18 don’t drink milk. And half of them don’t drink it because they think they are lactose intolerant, even though many are not. If we can get the facts and the right product out there, we can increase fluid milk sales,” Gallagher said.  

In addition, Gallagher also cited the formation of a critically important partnership that affects all of dairy’s future consumers. DMI and the National Dairy Council (NDC) formed a partnership with the National Football League (NFL) to offer a unique program where kids are directly involved in making better food and fitness choices at school.  

“We have taken the power of NDC and coupled it with the NFL, resulting in ‘Fuel Up to Play 60’, a full package of nutrition and physical fitness options, with dairy front and center,” Gallagher said.  Now, DMI and the NFL are working toward a partnership with the U.S. Department of Agriculture (USDA) because they, too, see the positive impact this program can have on kids.  

Within three weeks of the program’s launch, 50,000 schools have signed on to participate, and 150,000 school children have registered online to track their progress, he said.  

“This program has also caught the attention of the health professional community, business partners, because of its unique aspects and the positive impact it can have on our nation’s youth,” Gallagher said.  

Reasons for Optimism  

“These partnerships, plus three other significant factors, lead me to be optimistic about dairy sales in 2010 and beyond,” Gallagher said. The three factors are:  

1. The industry has a shared vision and a roadmap through the globalization study conducted for the Innovation Center for U.S. Dairy to analyze international dairy opportunities. “That study indicates that there is a growing marketing for U.S. dairy exports if the industry capitalizes on it,” Gallagher said.  

2. The global economic meltdown has not changed the fact that there will be more people in more places with more money who want dairy products.  

3. The U.S. dairy market is a growth market. Gallagher pointed to the recent history of U.S. per capita consumption of dairy products. Between 1951 and 1972, consumption declined by 175 pounds. From 1972 to 1983, consumption flattened out. From 1983, the year the national dairy checkoff was enacted, to the present, sales have increased more than 80 pounds per capita.  

“If you give people what they want, when they want it, and where and how they want it, the U.S. is an incredible market for growth,” he said. “Look at what happened with school milk. Look what can happen with pizza, if it’s fresh, and tastes good. Look what can happen with McDonald’s with specialty beverages. This is a growth market. And it’s is going to get better with innovation.”  

The dairy checkoff responded quickly in 2009 to increase sales while still advancing the long-term goals. Through partnerships, the dairy checkoff is well positioned to grow global dairy demand and sales in 2010 and beyond, Gallagher said.  

To find out more about producer-funded checkoff programs, visit www.dairycheckoff.com.  

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Dairy Management Inc.™ (DMI) is the nonprofit domestic and international planning and management organization responsible for increasing sales of and demand for U.S.-produced dairy products and ingredients on behalf of America’s dairy producers. DMI manages the American Dairy Association®, National Dairy Council® and U.S. Dairy Export Council®.