“The Milk With Extra Goodness”
Updated: Jul 7, 2018
There has been quite a bit of rhetoric recently on trade issues. I would like to give my two cents worth at least for a starting point for further discussions.
The data suggests that systematically over the last number of years, the USA sacrificed its own trade interests for other geopolitical interests—politically and militarily. Bring nations into the fold through trade, lift their economies and promote democracy.
While one could make the case that this makes sense, over time these imbalances in the agreements have become systemic and have fueled significant trade imbalances. With the USA representing +24% of global GDP, some imbalance is expected. In addition, as time passes, original concessions have become entitlements and almost impenetrable barriers to US industries and investments. Messing with entitlements is a dangerous thing as we see. One wonders how many generations the strategy of “nudging” nations along to address asymmetrical tariff and non tariff barriers will take and opportunity costs for the USA.
While this is an indirect “trade issue” let’s take a look at an example of one issue reflecting this disadvantage: the commitment around NATO for a 2% GNP annual spend on military. Germany has underfunded NATO consistently by 0.75%. This reflects an approximate $26 billion US dollars annually in underfunded opportunity costs to the USA and equivalent to Germany’s annual budget surplus. While the rhetoric is “we want to hit the 2% number” the reality is that is unlikely for the next decade at best—additional cost to the USA taxpayer: about $260 billion in additional USA funding to ensure NATO readiness. How do we address the imbalance—keep talking for the next 20 years?
On the dairy issue, clearly the current approach of drawing a red line in the sand will have a potential negative impact on one of the bright stars of USA ag exports; USA dairy. USA dairy exports have grown significantly and now represent some 15% of total USA annual cow milk production. As the trade initiatives unfold, there is no question that allies and non-allies alike will target those products which would incur the most damage politically and economically to the USA.
The bigger question for me is the following: How do we address the free fall in USA per capital consumption which has taken place over the past decades? We under consume milk by 50%—that is, put another way, there is addition demand potential out in the USA market for some 47 billion pounds of milk.
The idea that consumer doesn’t want to consume milk is misleading in that Alternative milk analogs have grown to a +$1.5 billion market in less than 10 years and are growing at a +10 CAGR. Each additional pound consumed is a pound of surplus milk we have to find a home for. How have we allowed the value of milk within the mind of the consumer to have eroded to such an extent that it’s becoming more extinct in our homes, schools and food service channels ?
Do we in the dairy industry have to up our marketing and communications game? I would like to suggest that yes, we have room for improvement. Branding tied to tailored, relevant messaging which connects with the consumer and drives trial and adoption are critical.
Milk is a safe, great tasting nutritious product consumed by all demographics—it’s a beverage; it’s meal replacement; it’s a pairing; it’s added nutrition; and it’s authentic. While we understand demographics, have we done the homework around psychographics? Have we dissected attitudes, values, lifestyle patterns and the like to best identify how to better generate and capture demand? Do we understand how to create markets versus only defend them?
Authentic milk has lost traction in proverbial “battle for the share of the throat”. In the meantime, huge markets have been created around sports and energy drinks; engineered alternative analog milk beverages; and super premium fruit/vegetable blends to name a few.
It’s time to bring milk and Golden Guernsey Premium Milk back to rightful place as the daily best choice for taste and nutrition. It is “The Milk With Extra Goodness”.