Gallagher skeptical about ‘comfort and nutrition’, wants data from partners, not opinions. O’Brien says ‘future of dairy’ may go fast-forward

Data shared by DMI in the May 4, 2020 industry call shows all retail dairy sales categories are up significantly year over year. DMI CEO Tom Gallagher noted that the level of increased sales of fluid milk compared with a year ago are “still relatively consistent” as of the end of April.

By Sherry Bunting, Farmshine, May 15, 2020

CHICAGO, Ill. — Amid the supply chain disruptions brought on by COVID-19 restrictions, Dairy Management Inc. (DMI) and the National Dairy Board are having weekly conference calls. They say 100 to 150 farmers have been participating.

And they are scratching their heads a bit over what to make of the now ‘unleashed’ consumers.

‘Unleashed consumers’ is the phrase I have coined for describing consumers now in control over their food, beverage and dairy choices, now that they are not so completely influenced by away-from-home and institutional feeding that adhere more closely to the dietary guidelines.

This has emerged most notably in the huge increases in whole milk sales that have boosted the fluid milk category well over year ago levels to the first year-over-year increase last month in decades. It has also shown up in the demand for butter, full fat cheeses and other cream products that sell out quickly at retail and prompt spot shortages.

On the May 11 DMI call, Russell Weiner, Domino’s COO and president of the Americas, was a guest and he highlighted his company’s partnership with dairy checkoff since 2008. That is a separate and quite interesting story. One thing he referenced is that pizza sales have been strong through the pandemic, and that consumers historically spend 5% of their disposable income in the quick-serve-restaurant (QSR) sector through recessions and other crises. This appears to be holding true amid the pandemic.

DMI CEO Tom Gallagher and National Dairy Board president Barb O’Brien also gave updates about what DMI is doing about consumer buying patterns and future trends. It was evident in the discussion that DMI has a future of food concept for dairy based on prevailing insights from its partners and does not want to deviate from this framework unless data from partners points to a true shift in consumer purchasing and unless they have a “why” behind the shift.

Gallagher stressed that DMI, and the states and regions, are collecting every piece of information from every partner they can to “see what it will mean post-COVID or during COVID. There are a lot of opinions out there,” he said, “but it’s too early for us to put our stake in the ground as to this is what it will be.”

He talked about DMI’s data partner Inmar Analytics, which did the recent 2019 “Future of Food Retailing” report. “At no charge to us, they are looking at the buying patterns after the initial ‘panic buying,’” said Gallagher. “We know what people bought, but why did they buy it? Was it because they were interested in comfort food or nutrition? Or were they hoarding? Or were they baking more? I am a data guy. I want to see the data as to why they buy what they bought.”

In a skeptical tone, Gallagher went on about these so-called “opinions” on the buying patterns revealed by COVID-19 impacts.

“Some say, ‘Oh, it’s a return to nutrition.’ And some say, ‘Oh it’s a return to comfort food.’ But what really drove their behavior? And what strategies should really influence our thinking about the future? We don’t know. In the meantime, we will collect information,” Gallagher said. “We all have opinions, but we want to be informed with data, not opinions, to design how we move forward.”

Gallagher mentioned a study coming out this week on what food companies are thinking will be the patterns after COVID. When pressed later about how to hang on to the new-found bump in purchases of certain dairy products at retail (such as whole milk and butter), given that some of these purchases may be relatively new for some consumers, Gallagher was steadfast on not changing the future plan because of current “opinions.”

He stated — again — that Inmar Analytics will be able to tell DMI “exactly what shoppers put in their baskets and compare it to what they put in prior to COVID. They will be able to tell us what changed and through technology, why did that change occur, that’s the data I want,” he said.

One ‘why’ for ‘what changed’ (in this reporter’s opinion) may be too subtle for the Inmar Analytics surveys to detect — that is the nuances of just how much consumers have been controlled by the Dietary Guidelines pre-COVID, without even realizing it. There is rarely any talk from DMI about what those flawed guidelines — set by the government with very little opposition by the dairy industry — actually do to buying patterns when people are consuming 54% of their calories away from home and much of that in schools, workplaces, quick-serve-restaurants and other institutional settings where food choices are more “formulated.”

The COVID-19 pandemic has abruptly unleashed consumers nationwide from the fat-restrictive Dietary Guidelines. Now, consumers are able to use more of their own discretion and choice apart from institutional food settings, guidelines and formulas. Some experts ‘reading the tea leaves’, such as Nielson Global Insights, observe that after a significant event like a pandemic of this magnitude, consumers can be expected to stay with some of the choices that made them feel healthy and safe during the pandemic, once the world gets back to a new-normal. That could be significant for dairy — but it may not line up with the ‘future of dairy’ pathway set by DMI and its partners.

O’Brien explained that dairy checkoff teams are actively involved in both long-term and immediate efforts.

“We are looking at the future of dairy. COVID-19 may fast-forward some of that future to happen more quickly,” she said. “In the immediate term, our retail teams are working with MilkPEP, to keep stores stocked and address the concerns people have about value, and we’re doing things with e-commerce to offer recipes that extend the use of the dairy products they bought.”

DMI’s ‘future of dairy’, as we know, is built on partnerships, innovation, and promotion of dairy farmers and sustainability and animal welfare practices, not education and promotion about milk and dairy products. It is well known that the innovations over the past decade have been focused on consumers eating dairy, not drinking it; and in the fluid space, these innovations emphasized through DMI partnerships have focused on ultrafiltered, shelf stable, lower-fat dairy beverages and blends and away from the whole milk gallon jug.

But we also can see that in their time of freedom to choose for their families amid the pandemic, consumers are reaching for the whole milk gallon jug. In fact, prices are rising on whole milk by $1 to $2 per gallon, while other fat content milks have remained the same, and still sales of whole milk are strong.

A producer from Wisconsin on the call asked Gallagher to make sure to track convenience store purchases when gathering the data, not just grocery retail, noting that many consumers buy their milk at convenience stores. Gallagher responded that they may have to check with another data partner for that piece.

O’Brien also stressed that while they gather data about consumer patterns, DMI will continue to chart the path it has set. That is to “gain the trust of consumers and celebrate dairy’s role in sustainably nourishing families and communities,” she said, adding that a media segment is being prepared for Fox and Friends next Monday morning, May 18 that will feature Katie Pyle of Cow Comfort Inn Dairy in Maryland.

“That piece will help bring to life our dairy farmers’ commitment to sustainably producing nutritious food,” said O’Brien. An estimated 2.5 million viewers will see the spot, and it will be supplemented with “live-streaming” on two other network stations where farmers will be interviewed to “tell their story.”

“That piece is supported by a 30-second video drawing footage from many farms and will run this week to the end of the month in streaming venues,” said O’Brien. She also explained that DMI has been working extensively with MilkPEP (fluid milk processors promotion) and that MilkPEP’s ‘Love what’s real’ ads are on television right now during the COVID period (when everyone is at home). The ads review the essential role of dairy farmers, and others involved in the dairy supply chain, she said.

“We co-brand these ads using the Undeniably Dairy logo, and design ways to help them reach consumers with these interests,” said O’Brien. “That’s our runway into June Dairy Month.”

While Gallagher said he expected to have some data insights from Inmar Analytics as early as next week, he added that it will begin a process to use technology to interact with consumers to learn more of the why’s behind their choices so that DMI — and its partners — can “appeal” to those drivers.

Stay tuned.

-30-