4 Keys for Milk Sales Growth
Saturday, June 13th, 2009Since the fourth quarter of 2008, global demand in the dairy product production industry has declined due to the global economic crisis. Rising unemployment, declining wages, and supply increases (mainly from milk production in New Zealand) have resulted in less demand for world dairy products including milk and world dairy price declines.
Demand for dairy products in developing countries has significantly declined since dairy products are considered more of luxuries than necessities. In developed countries, consumers are projected to shift to cheaper dairy products including private labels and decrease consumption of discretionary dairy products.
For the past ten years, consumption of consumer fluid milk has decreased due to factors such as better convenience, advertising, and better packaging from substitute beverages, an increase in soy milk consumption, and a decrease in the children population.
So what can dairy product manufacturers do to profitably increase milk revenue over the long term? Industry consolidation, product development, marketing, and health campaigns are potential measures they could utilize.
1. Industry consolidation can yield access to milk supplies at good prices, inspire continuous investment in product technology and branding, and provide lower per unit costs and production efficiency - measures that are significant to preserve and/or acquire national retailer supply contracts.
2. Continued product development can result in increased milk sales. Flavored milk products with new flavors and energy boosters have been increasing.
3. Catering to the health consciousness of consumers via push and pull marketing strategies for healthier milk products such as value-added milk (milk with added vitamins, nutrients, or low carbs), organic milk, and reduced fat milk can also increase milk revenue.
These strategies could also help counter consumer shifts from branded organic milk to either private label organic milk or conventional milk.
4. Educating consumers such as young people (main dairy product customers) and baby boomers via more health campaigns about the significance of milk and calcium could result in an increase of daily milk consumption.
By utilizing the measures above, dairy product manufacturers can also help cushion or augment the effects of oil, energy, and raw milk price fluctuations on margin. What other measures could these manufacturers employ to help generate revenue and profit growth?