Episode 15 – Why Do Large Food Companies Need Checkoff To Drive Dairy Sales?

Tune in with our dairy farmer hosts, Michigan’s Ashley Messing-Kennedy (@messykennedy) and Minnesota’s Rita Vander Kooi, as they talk with Paul Ziemnisky, executive vice president for domestic partnerships at Dairy Management Inc., and Amy Wagner, executive vice president for international partnerships at Dairy Management Inc., about how both retail and restaurant partnerships, both nationally and internationally, are working to drive incremental dairy sales for all dairy farmers. 

To learn more about the national dairy checkoff and your local dairy checkoffs, please visit www.usdairy.com.

Dairy Farmer Hosts:

Farmer Host – Ashley Messing-Kennedy – Michigan Dairy Farmer

Farmer Host – Rita Vander Kooi – Minnesota Dairy Farmer

Industry Experts:

Guest – Paul Ziemnisky – EVP, Global Innovation Partnerships at DMI

Guest – Amy Wagner – EVP, Global Innovation Partnerships at DMI

Transcript (please ignore typos – machine-generated)

Paul Ziemnisky  0:00 

what’s our role for the industry and it’s to unlock areas where maybe the big suppliers aren’t looking. So we look at the whole category level because our job is to grow categories. You have a lot of players in industry right that they still share from each other. Our job is to move volume and drive sales for the farmer. So a great example we started looking at the chicken category chicken sandwiches are growing rapidly. About 86% of burgers have cheese less than 20% of chicken sandwiches have cheese and so one of the things we’ve been doing is talking to the chicken players if we can get it from 20 to 30 as a couple 100 million no pounds that stays in the system for behavior that people are doing today.

Ashley Messing-Kennedy  0:43 

Hello, everyone and welcome to another episode of your Dairy Checkoff podcast. I am Ashley messing Kennedy, a dairy farmer from Michigan and I’m joined by Rita Vander coy, who is a dairy farmer from Minnesota. We will be the host for today’s discussion on how our national and international partnerships with food service companies is impacting the dairy industry. Today. We’ll be talking with Amy Wagner DMI is Executive Vice President for international innovation partnerships. And Paul Kaminski, Executive Vice President for domestic innovation partners about why DMI and the local checkoff decided to form partnerships with national and international food service companies and how it is working. First off, Amy, please tell us what you do.

Amy Wagner  1:37 

Sure, thanks. Well, thanks for inviting us to this podcast. As I mentioned, I oversee our exports area at DMI. So I work directly with our colleagues at US DAC to kind of grow dairy exports on behalf of dairy farmers, and specifically the area that my team works in our partnerships. And those partnerships fall into really two categories. One type of partnership or those we have with large US based foodservice organization. So you’re probably familiar with the work that we do domestically working with companies like Domino’s and McDonald’s and Taco Bell, about back in early 2017. We took that very successful US model and began working with those organizations in oversea markets. So for example, we had a long standing partnership with pizza hut in the Asia Pacific region. So that’s kind of one category of partners. The other category partners as we work directly with us dairy coops, who are having as a stated objective to grow their value added dairy exports. And with those coops we work to provide expertise to them as well as to co found growth initiatives that will drive their value added export capability. So currently on our roster when working with with Dairygold, with a MPI, with you know, derrimut of Arizona and with DFA.

Rita Vander Kooi  2:59 

Paul, what is your role?

Paul Ziemnisky  3:01 

Hi, Paula miski. Again, similar to Amy, I lead the domestic work plus some other strategic areas. So domestically, we have specific channel partnerships. So when you think about food service, we have McDonald’s, Taco Bell Domino’s, we have partnerships at ecommerce with Amazon, we’ve got partnerships and consumer packaged goods arena with General Mills. And then I also lead our fluid milk revitalization effort with that got specific partnerships, from direct coops to brands to retailers like Kroger, and the job of that is to modernize the category and consumer experience in a category of a fluid milk specifically, I’ve been also leading the health and wellness science area, and we’ve got a new collaboration and as we look at that space to call renew dairy and at the science space and Mayo Clinic and working with mayo to drive the science around dairy to outreach and educate consumers about the great scientific benefits of dairy in the health and wellness space. And then some call it future transformational space of dairy bricklink Gaina, the modern technology and science and those technology tools to prove dairies unique value with the consumer. So you

Rita Vander Kooi  4:11 

talked about collaborations and partnerships, how are you choosing or how do you pick those partners, we have

Paul Ziemnisky  4:18 

a set of criteria. And that criteria may vary, will that partner drive incremental and sustainable sales for the category and we want to make sure that they’re not taking from another but putting more milk in the system and keeping that milk in the system. And so sometimes we won’t partner with people, because they just want to steal share from another player. For instance, we get often calls from some of the McDonald’s competitors. But when you start to look at their proposals, they’re just trying to move that consumer McDonald’s has 26 people going through their doors a day. They’re trying to just move that consumer over to their store. And it’s just not driving incremental sales. So that’s a critical thing for us. Number two is willingness to invest significant Only behind dairy products on the foodservice side, it’s normally a minimum of 10 to one criteria, what we put in, they’ll put in and terms, just domestic partners we were talking about earlier and food service, they spend about 1.5 billion annually and advertised dairy. That’s a great example of that. Number three is also shared values and objectives of the farmers, some companies will talk out of both sides of their mouth. And we want to make sure our partners are supportive of farmers interest and understand what the farmer does their meaning and value to society and willingness to show that, you know, a great example is Domino’s were on farmers day last year, we took over their tracker, and they’ve got 30 million app users, when you order a pizza, you follow that tracker. And they talked about how great dairy farmers are, it’s a great partner who’s willing to talk about where their food comes from and celebrate the source of their food. The fourth one is senior management commitment at a partner, you want to make sure their their C suite is engaged with the partnership, and not the junior levels. You know, because the C suite where the decisions are made and involvement, and we asked the partners to come to our board meeting or to our sales committee meetings once a year and talk about the state of their business. And so that strategic alignment and commitment to the partnerships critical from a leadership perspective.

Ashley Messing-Kennedy  6:16 

So how are we going into this, you know, realm of health? How are we as farmers and as an organization, helping to make sure that our research and our partnerships keep it evergreen?

Paul Ziemnisky  6:31 

Well, I think having it’s a seat at the table with major category leaders is important. If you think about it, Domino’s is number one, pizza chain, McDonald’s, the number one burger chain, Taco Bell, and number one Mexican chain. And you know, General Mills that retails in the top three players and yogurt space Kroger from the top three players in the grocery space. So having that voice with them and sharing where dairy is. And the value of dairy. A great example is General Mills, they started working with us the first thing out of their mouth was they the consumers not getting enough nutrition today, when you look at high school kids 85% of the girls are not getting enough of the critical nutrients and 13 essential nutrients out there. And so they realize the value of dairy to society, there’s an element of we want to make sure we bring the voice and the value of dairy to those folks, if you look at with the work we’ve done at McDonald’s, they haven’t brought in a alternative beverage, despite being the largest chain in the country and the competitors willing to pay 10s of millions of dollars to try to get that product in there. And I think how we able to do that is we engage the consumer but the consumers first and show that like milk for McDonald’s is full of milk and 92% of the households. And when you start to back off the individual competitive categories, they start to fragment I’ll call it using data as an advantage. We live in the real world. So we use key facts. And then we engage the consumer with these partners to show consumers engagement with real dairy and the value with those consumers in the category of our job on behalf of farmers to is to to bring the real facts to them and let them make the logical decisions. And so far, you know what those key players, they’ve been very supportive of dairy because what they understand that the real facts and that’s why we try to be an advocate for the farmer. And for the category.

Rita Vander Kooi  8:17 

We’ve heard a lot about, like, as you said, the key players are there any new partners or up and coming partners that either of you could share that like

Amy Wagner  8:28 

to bear talk a little bit on a little bit about the co op partners, because that doesn’t get talked about as much as perhaps the food service or the retail partners do. And they are what’s important for you to know is that our strategic intent is different there. So when we were with a food service partner or retail partner, our goal is really to influence to influence and grow the presence of dairy on their menus or in their stores. So more cheese on pizza or dairy based beverage, because these companies remember are not fundamentally dairy companies. So we want to make sure that we have a seat at the table to influence them and we bring our resources our dairy scientists are marketers are communicators to help them build their dairy sales. On the coop side, like I said that the strategic intent is a little bit different there because these are fundamentally daring companies right there. What we’re trying to do is help them build capabilities and help them launch new products. I don’t know if they’re newer partners, but they may just be partners who aren’t as aware of so on the export side, as I said, we started this worked around 2018. And we started by asking those coops to bring their proposals jobs, about how they were going to grow exports. And as Paul also alluded to, there were criteria. Now the criteria was a little bit different on the export side, right. So the first criteria was, are they going to is this initiative that we’re going to help to co fund and I say co fund because we don’t bring all the funding the coops have to bring their own funding as well. But is this initiative going to help them build a core capability It’s critical to building your export expertise. There is a consultancy called Bane about over a decade ago, the checkoff asked them to bring a proposal on a really an assessment of the dairy industry in the US and what’s going to take for the US to really be a consistent global supplier. And they laid out a bunch of competencies that both the industry and individual companies needed to build things like sales, sales and marketing capabilities, production capabilities, etc. So one of the criterias we use to decide if we’re going to work with a co op is, is this initiative going to build a sales capability for them? Are they investing in that? So that’s a key criteria, are they going to co invest? And then the other important point about our partnership? So a question I often get asked by farmers when we’re talking about partnerships is why don’t you partner with fill in the blank, another company, and a lot of our partnerships strategy is really to be catalytic. So we try to partner with those that we believe others are going to follow. Because we only have a fixed amount of money. We partner with McDonald’s, for example, because we know they’re large and catalytic. We know if McDonald’s which is from margarine to order that you know Jack in the Box is going to follow and burger he’s going to follow and others are going to follow. So those are a lot of the reasons that we select the partners that we do,

Paul Ziemnisky  11:22 

I would say in the last two years, we’ve added three new partners, we talked to General Mills with that purpose, or really modernize the yogurt category. It’s on trend with digestive health, and all the culture and functional benefits. It’s been a category that there’s still room to grow and a lot of different spaces. So we’ve got this idea as challenged our mindset. And as we are looking at some of the partners to attack other spaces, I think there’ll be some interesting things you’ll see out of that partnership, and in the next 12 to 24 months. Another one I said was Mayo Clinic. And that’s more of a collaboration of really, as we look to the health and wellness space with dairy and creating our point of difference, you’re gonna see us do a lot more unique and new types of partners in the science and technology side of that space. In the next couple of months, you’ll see more news coming into that science space with mayo is a great example of the number one branded healthcare institution in the US and probably the world. So imagine having them be a voice and a voice for the power of dairy and the scientific benefits. Number two, using their outreach, you know, they reach both the physician side, you know, they’re one of the most trusted sources of information for physicians, but also for consumers. So there’s two ways to reach major influencers and major consumers directly through mayo. Imagine some of the myth busting we can do around certain new rumors around dairy with a true facts, we just got approved at our board meeting. So it’s not completely signed on the dotted line yet, but as I talked about having dairy attack other categories, you know, it’d be much the aggressor in the future. One is in this sport beverage space, which is good sport. It’s made with the real dairy, it’s a byproduct of the dairy production upcycle product sport beverages, an $8 billion category, energy and sport drink category, wake up, some of those folks have dairy coming after them like so, you know, we’re going to be partnering to help them scale up that brands got new distribution, it’s doing well and market in some of these test markets to to help become a national player to go head to head with Gatorade and body armor as examples of that. So those are some of the key ones. I’ve got some other ones that are still in the confidential discussion phase. But I think the farmers will like that when we can announce that in the next six to 12 months.

Amy Wagner  13:38 

I would say on the international side, it’s been a lot about geographic expansion. So you think about 96% of the world’s population lives outside the United States. So there are a lot of places that we could go with. We began a partnership with Domino’s Pizza back in 2019, in Japan, so just working within Japan, but that partnership was so successful, doubling the amount of us shoes that they were using between 2019 and 2021 that we decided to expand to other geography, we now have a partnership with Domino’s in Saudi Arabia and the United Arab Emirates, a key region, the Middle East and North Africa is a key growth region for us dairy. And then most recently, we’ve begun a partnership with Domino’s in Taiwan. It’s been very interesting to work across the world on these really well known brands and understand how there’s something that are universal that people actually love pizza all over the world and advance a great future growth platform for farmers.

Ashley Messing-Kennedy  14:41 

So life is very much so about being a winner or a loser. And so are we in these partners sometimes picking hopefully we’re picking winners more than losers but you know, where are we that at in that space?

Paul Ziemnisky  14:58 

There’s times when you know it It’s kind of sunset, a partner where you made progress, you got to the point where the investment results versus the end market results, you just don’t feel it’s a match moving forward. So a great example of I’ll give you two we used to partner with Quaker and one of the early successes was getting in the change from water to make him with milk on the back phase two, there isn’t gonna be focus on innovation and new products. I mean, you guys have heard around overnight oats to get some work in that space. It’s actually a popular use at home. We got to the point we did some concept work and Quaker just didn’t want to put enough money in to scale it make a big enough impact. So we said it’s time to sunset, we didn’t think there was a return. So we walked away from that one. And Pizza Hut. You know, we were a partner with Pizza Hut since 2013. We seize that partnership last year. And one of the reasons was, you know, the goal was stepping back to 2008. And we started partnering formally in 2009 with Domino’s was the restaurant pizza category was struggling. They were taking cheese off which you know, more than 25% of the cheese and foodservice arena goes out on pizza. So when the one of your major categories is taking cheese off, it has a big impact to the category. We started partnering with Domino’s we said what can we what else can we do in that category? And they’re like fixed the number one player at the time was Pizza Hut. So when we started working on Pizza Hut, and they were having major sales declines, and we went in we our approach was Domino’s, which is a little different Domino’s, they first invest in quality Domino’s invested in as we looked at to the future, they wanted to win globally, Domino’s was investing in technology, investing in new delivery methods and carry out solutions, Pizza Hut, they had more fundamental challenges, we help build their product pipeline, help them stabilize their business. But as we started having the last conversation with them about their future growth areas, they weren’t as clear where growth was. And so we felt that at Pizza Hut, we built an innovation pipeline. And a great example was successful Detroit pizza that they launched last year, our team built the concept, we built a pipeline of concepts, you’ll see them launch this year next year. But we were like, you know, those dollars can be better used elsewhere, whether it’s domestically globally other places in the MIS plan. And then we also felt that the state of the pizza category is much different than it was 12 years ago. If you look at the state of the foodservice pizza category, now you’ve got this quick serve fast casual arena that’s extremely healthy with the MOD Pizza, Blaze pizza, a bunch of emerging places, and that category is growing nicely. So we didn’t need two pizza partners, we even pulled back on Domino’s, and put more on Domino’s internationally because there’s a big opportunity for moving us dairy internationally, as Amy talked about. And so again, it wasn’t winners and losers. It’s about understanding when when he needs to sunset versus other opportunities to drive growth. So concurrently, we took those some of those dollars and we’ve invested across the plan. And then we also are always looking at are there new growth spaces that we shouldn’t be playing and that can position dairy for long term success. And so an example of that is we also said what’s our role for the industry. And it’s to unlock areas where maybe the big suppliers aren’t looking. So we look at the whole category level, because our job is to grow categories, you have a lot of players in the industry, right that they still share from each other. But we have we our job is to move volume and drive sales for the farmer. So a great example, we started looking at the chicken category, chicken sandwiches are growing rapidly prior to COVID. They’re growing 10% a year, they still grew 7% during COVID. And now they’re back over 10 About 86% of burgers, head cheese, less than 20% of chicken sandwiches have cheese. And so one of the things we’ve been doing is talking to the chicken players, helping them understand the value of cheese on chicken and promoting chicken. And we’re talking to others about potentially partnering that in that space. And we do the volume to make sure that there’s a sizable opportunity if we can get it from 20 to 30 as a couple 100 million no pounds that stays in the system for behavior that people are doing today. Our job is to look at new places, whether it’s international domestically that we can create these catalytic long term sustainable sales. And that was just a new area that we’re starting to look at on behalf of the farmer.

Rita Vander Kooi  19:12 

Or are there certain like metrics that you always measure best, and like maybe you could tie that in with just a specific story that you’re really proud of just something that was very successful that you had worked on and that you can tell us about that, particularly in

Amy Wagner  19:29 

our food service. We have contractual agreements with these partners. So it’s not things of course, you want to have a good relationship, but everything is down in writing to so these are fairly formal relationships. And we always have a volume metric that we are targeting so a percent of growth 1% 2% and 10% depending on what is appropriate for the partners and we evaluate that on an annual basis. Usually our agreements sometimes can be a one year two or three year agreement, but we evaluate very volume in particular And we actually the way we do it is the way dairy farmers do it. So we do it in milk equivalent pounds. So if the partner happens to sell cheese and milk and yogurt and different things, we translate all that back to milk equivalent pounds. And then we calculate the percentage growth on it. We’re also looking at did the partner say what they do what they said they were going to do. So whether that was a launch a particular marketing campaign that we might have been co funding, or did they launch a particular product that we might have been co funding or having developed. So we’re looking at both what we would call kind of diagnostics, the underneath the volume, as well as the volume. So those are some of the metrics on the outside. Um, in terms of something I’m really proud about, you know, I alluded to Domino’s, Japan, great partner, they came to us back, we’d had a long standing us relationship. And the gentleman who’d been our long standing partner on the domestic side, moved over to oversee all the international business, and he’s helped. But I think we have a real opportunity here to grow a few of our markets, and Japan was one of them. It’s a pretty large market, over 100 million people live in Japan. And it’s the world’s third largest economy, I believe, since it’s a large and growing and it’s one actually very favorable to us dairy exports. So over literally about a three year period of time that we’re buying something like 6 million pounds of us cheese, and I double that to nearly 13 or 14 million pounds of us cheese. So largely by being good partners and thinking through products and marketing that would help them grow. And also, frankly, by opening new stores, that’s one of the things we see internationally. That’s so such a huge opportunity is that the pizza category is so what we would consider very underdeveloped. In other words, the frequency that people eat pizza, if you think about like the, you know, the average American, many pizza on a monthly basis, a heavier user more frequently than that. Domino’s was telling us in Japan that people were eating pizza, like once a year there. So the marketing efforts, their vision was to I know it makes you laugh, doesn’t it? And you know why? Because it’s super expensive to buy pizza there. So we were helping them work on products that would be great child vehicles, as well as helping them get their value equation into line. So really helping them strategically work on building that market and getting consumers to eat pizza more often.

Ashley Messing-Kennedy  22:20 

Are we working with companies currently that aren’t partners? Definitely,

Paul Ziemnisky  22:27 

we don’t say yes to everybody. But we don’t say no, you know, that old saying where a lot of people come for insights and information and category knowledge, one of the things we’re proud of is we really try to look at the condition of the category, what’s happening in those categories, like an Amazon, we don’t have a contract on paper. But we went to Amazon because unlike a traditional food beverage grocery retailer, the people who run the food business and Amazon didn’t grow up in food, you know, they came from the tech side. And so Amazon, we had a chance in 2019, and meet with them, and just talk about the value of dairy. And we went in and show them the facts I hate when a dairy is in the basket, consumers spent $36 more. And when you think about if you’re an Amazon and people are ordering groceries through E commerce, you know, think about how that helps them. If it’s $36 More, that helps with their delivery costs covering things like that. And so we’ve developed a relationship with Amazon where we actually advise and guide what they carry in their grocery business. And it’s not the Amazon Prime you guys think that delivers to your homes. But in major metro markets, there’s a thing called Amazon Fresh. The Amazon Fresh Is this called the second outcome cropping of Amazon’s investment grocery in 2017, Amazon bought Whole Foods about 2017 Amazon also started this Amazon Fresh concept. And now this Amazon Fresh now I believe there’s more close to 20 across direct sites for consumers, but there it’s so you can actually go to the grocery store and like LA or Chicago or New York, but they also have delivery models that this Amazon Fresh is. So anyway, we advise them what they the right products to carry and cheese and milk. And that’s critical because a lot of other retailers Those categories are advised at least the milk from our call it people who are very plant for so we make sure we’re educating them with the right facts as I talked about earlier, you know, and for Amazon this year, we went in and we actually built a marketing calendar for them to reach out to the consumer that drive their baskets. And so, you know, January they promoted smoothies, you know, the summer they’re promoting different types of sandwiches and things like that using dairy. So it’s a relationship where we show them how to drive their sales, and then we’d show them other category insights. But we know we don’t have a we haven’t had an investment dollar into that. And our team has actually taken Amazon out in the next couple of weeks to two farms in New York. because they want to get closer to understand where their food comes from so, and enables us to deliver proactive sustainability message to their dairy team of how real sustainability work. So it’s expanding, broadening that relationship beyond the category insights to more sustainability insights as well. So we do a lot of that across the retail world. We do it a lot food service world. And then the other piece is for like companies that are starting up and they’re interested in dairy like slate milk, you know, it’s it’s a new milk launch. There’s other players out there, thunder, coffee, male, you know, who are started doing startups with dairy, you know, we want to help them be successful. So we’ll do a lot of counsel and strategic insights around the category and help introduce them to different players, because we’re so you know, we like to say that DMI likes to be that to help people work with and through and convene in the industry. So we do a lot of matchmaking as well. So some

Rita Vander Kooi  25:54 

of this matchmaking, like so you’re talking about, there’s some that are relationships, there’s some that are partnerships. But there’s such a huge benefit that we’re providing to them. So why aren’t more companies like adopting some of these innovations that we’re showing, or what’s kind of the holdup behind some of that,

Paul Ziemnisky  26:13 

we want to make sure, to Amy’s point that they’re going to be the catalytic investors. When you look across categories, are they willing to put their major skin in the game, like I said earlier, tend to one investment often what we do, and a great example is fairlife. Up front, we put money to help ignite the launch of fairlife that farmers don’t realize we’re putting over $100 million a year in marketing into that category. Now. Imagine what the state of flood milk would be like if you didn’t have fairlife out there. Imagine what fluid milk would be like if we didn’t help start lactose free with hood and lactate farmers may not realize that was DMI health that get off the ground, we did a lot of the dietician of health professional outreach that encouraged the retailers to carry that product. Now if you look at the state of value added milk, the catalytic responses from what fairlife has done were high protein, low sugar and lactose free and those partnerships, value added milk has grown more than plant based over the last five years and a checkoff ignited now. So that’s what we try to do is look at areas where we can bring value and have that others respond and what it’s meant for the category of milk, you’ve had a billion dollars of new capital put in over the last five years and a segment of the store you guys know it’s been 40 years without major investment. So one of the things we try to look at is who’s willing to put skin in the game and who’s willing to commercialize things and put in the back end. So often, a lot of our investments will be I’ll call it the front end investment, like a taco bell, where we believe there’s an opportunity for Taco Bell to have dairy be much more forward cheeses here on that menu and that they reviewing cheese as a garnish like lettuce and tomato, right? So at Taco Bell, they don’t think dairy, they think tacos. So we went in there and we said, hey, look, we think there’s an opportunity for you to grow your sales. And now for them, it’s about their check, right? The average dollar spent per consumer and more consumers coming through. We met with and said what’s their goals and we obviously our goals are to drive more incremental dairy sales with a leader who’s willing to put a lot of money behind it. And so with Taco Bell, what we did is you know, they were selling the Doritos taco if you remember for like a buck, maybe a buck 29. That’s like a quarter ounce of cheese on that. If you look now that over the last three years, we’ve launched the case of Luba 5x, the cheese, cheesy core burrito, and then last year is a grilled cheese burrito. That’s 10x the cheese that Doritos taco. So in five plus years, cheese is a hero on their menu. And so what we do, though, is we do a lot of concept work. And we have food scientist on site who will develop the formulations because again, they’re not cheese experts, right? They’re not they’re Paco makers. And so we do a lot to help validate with the consumer. And that investment is minimal. versus you know, Taco Bell put $100 million of advertising behind the case of Luba or the the grilled cheese burrito, think about it. That’s a third the size of the checkoff and just one marketing event. So that’s why we look at partners who are willing to put major dollars to commercialize or address a challenge and a category two, you’re

Rita Vander Kooi  29:14 

talking so about how like things are just so different, internationally and different perspectives. Specifically, can you tell me any, like how does Gen Z differ overseas? Like, what are their different driving factors?

Amy Wagner  29:28 

There’s not like an overseas consumer because I think that’s the complexity about it. Overseas is hundreds of countries. Right. I think one thing that’s interesting is that one of the opportunities for us dairy farmers are in places where there are younger populations, you know, places like Saudi Arabia, it’s a younger country. And so there’s a lot of growth opportunity there. So interesting to look across the world. I’m not sure there’s one. There’s kind of one Gen Z is you see a lot of the same stuff you see here which is They love their technology who very active on social media that’s common again, in certain in certain cultures away. And I think one of the interesting things too, is just what people eats. So while they might like pizza, if you went to Dubai, actually, a pizza that they eat, they’re fairly similar to what you might see in the United States, with the big exception of they, a lot of the population does not eat pork. So if they’re eating pepperoni, it’s a beef based pepperoni, they might say there, but if you went to an Asian country, Taiwan, Japan, China, you might see a lot more seafood, octopus, squid, things like that, the pizza because again, that is what they are more familiar with. And that’s part of their culture. So part of the success from working internationally is to take the familiar like a burger like a pizza, but then marry it with their local culture in their tastes. So that’s been very interesting to learn, learn about different tastes.

Ashley Messing-Kennedy  30:56 

So this conversation has been really exciting learning about all these partnerships. But how do I, on my local level, get my co op to be a part of these partnerships,

Paul Ziemnisky  31:08 

we’ve always will listen, anybody on the proposal from our side, we’ve always suggested that they come and present because we, Amy and I, a staff, we don’t make the decision. The decisions are made by the farmers. And you know, the farmers have the they look at those criteria that we set, you know, are the coop willing to invest, you know, the five to one to 10 to one, do they have a clear incremental growth plan to drive the Category A lot of people come in, and they say they’ve got a growth plan, but it when it’s growth at the expense of others. And we don’t do that, we want to make sure they have a clear strategy that’s going to benefit all because we work for all farmers. So we want to make sure is a strategy that will lift all boats,

Amy Wagner  31:50 

if your co op is one who is trying to build their export capabilities. And if I hadn’t mentioned this before, you know, exports are a huge part of us dairy sales, about the equivalent of one out of six tankers is going abroad now, so it’s a big, big part of the industry, something like 17 or 18%. And so if you’re if your co op is participating in that, and they have a growth proposal, they have an idea to drive value added exports, I would say, you know, have them reach out if not to DMI then to their state and regional organization to, you know, connect us in and as Paul said, we do hear proposals frequently. And as Paul also mentioned, the work that my team does on international partnerships is actually overseen by a dozen dairy farmers from all over the country. So they’re DMI board members, and they actually, they hear the proposals, they vote on whether those proposals go to the DMI board for full approval once I become partners, that team is hearing updates regularly from the partners to make sure that you know we’re getting the results that we’re looking for. So I would say again, if there’s an opportunity, if you have one, that’s something we want to hear about,

Rita Vander Kooi  33:02 

is there anything that’s just something that we’ve brushed over that really should be elaborated on or something that you wanted to add to the discussion about what we’ve been discussing with our partnerships.

Paul Ziemnisky  33:16 

Every partnership we have we have targeted criteria in the contracts, we have growth targets and fast met targets, clear goals that are outlined, we then have the partners come in and share the progress against it. And then we also of course, correct but I think there’s definitely scrutiny against what we do. When you look at food service. One of the things we’re proud of, and we do measure everything. As Amy said, since we started the food service partnerships, we’re averaging over 2.2 billion pounds annually, versus where we were that’s a 3% average growth rate. So you think about the milk production rate over the last, that same timeframe is average 1.5%. So when those partners were double the growth rate of milk, so we’re definitely moving milk at you know, twice the rate of production. So that’s things that we do, I’ll call it good rigorous analysis is that and that was before in if a catalytic effect. As Amy said, we measure people following you know, most recently, one of the things we’re proud of is Taco Bell, starting to launch dairy based beverages and ask any of the farmers who would have ever thought that Mountain Dew would have dairy in it, but that’s what we did. We did a Mountain Dew Baja Blast at Taco Bell. So they pumped dairy creamer into the Baja Blast freeze. Now they’re doing freezes and whips there. And the great thing is the technology that was developed by the product scientists that comes out of the dairy research centers funded by the farmers is that’s a technology that can be used anywhere now and at that technology has been used at Taco Bell to replace the non dairy creamer because they don’t have space and refrigeration for it. So they’ve historically use non dairy. Well, it’s a shelf stable creamer with real dairy that’s replacing the United States. So that’s the stuff we try to do is find new ways and new catalytic uses now that technology imagine and throughout out of all food service so we take pride in trying to unlock new incremental way for the farmer that they can relate to back home. The last thing I’ll end with, like right now we’re in heavy discussions on trying to prove to McDonald’s, you know, ways to fix and improve their ice cream system to half a billion dollars and new equipment, we know they’ll have to replace it in the next five or 10 years, but we’re doing some pilots with them to improve the maintenance and stuff like that on our machines that again, so every farmer that goes gets ice cream, and they get reliable ice cream. And then we also at the same time at McDonald’s, we’ve got we’re launching a chocolatey, pretzel McFlurry. So that’s, again, that’s the farmers on site scientist and team who developed that and trained 14,000 restaurants to execute that. I always like to say that the farmers get to see their work in their backyard. And that’s some of the stuff that’s going on right now.

Amy Wagner  35:45 

I would just say on the export side of it, it starts with having farmers really understand the importance of us dairy exports to the industry, if not exported, where would that product be? Where would 17% of their other production be? And so, and as we think about the future, again, 96% of the world’s population lives outside the United States. So And then third, just how underdeveloped some of these categories are, you know, I talked a lot about pizza. But our next target is really to work in, in the burger segment. And we actually have our co op partner, who now will we began working with just shipping to three burger units, individual stores in China and is now in over 800 units selling their premium process lies on top of burgers in China. So just tremendous growth opportunity. tremendous upside. But you know, exports are complicated. They require a lot of specific understanding and specific capability building. And so really, that’s the spirit of our partnerships. We’re trying to represent dairy farmers and have that seat at the table, whether it’s building capabilities with co ops, or creating demand with our food service partners to ensure that long term dairy exports continue to provide healthy growth in markets for dairy farmers.

Rita Vander Kooi  37:06 

I just want to thank you, Amy and Paul for this. I really appreciate knowing what’s going on with our partnerships, both domestically and internationally and all the things that you’re doing for me, while I’m back home, taking care of things, my farm and I’m unable to do things like that. So for me, I just want to say thank you. I really appreciated knowing more of the story and also your great examples.

Paul Ziemnisky  37:30 

Well, thank you guys. We love working for the farmers and we know that no one works harder and does a better job and the dairy farmers it makes it fun place to work and proud place to work. Wow. Thanks,

Rita Vander Kooi  37:41 

Amy and Paul, that’s been a great discussion. In closing This is Rita Vander Coyne. Ashley messing Kennedy hosting your Dairy Checkoff podcast. Thanks for joining us today. If you want to hear more about various issues affecting the dairy community, subscribe to this podcast on your favorite podcast platforms including Stitcher, Spotify and iTunes or you can check out our website Dairy Checkoff. podcast.com for future episodes. Until next time, have a great day.

Transcribed by https://otter.ai

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