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Guest Columns

Perspective:
Industry Issues

Don’t become irrelevant!

Connie Tipton

Connie Tipton is president and CEO of the International Dairy Foods Association. She contributes this column exclusively for Cheese Market News®.

If you’re a Baby Boomer like me (born 1945-1965), and you’re not paying very close attention to consumer behavior, you may be missing the significant changes occurring in the marketplace for just about everything, including food.

Gen Xers (born 1965-80), Millennials (born 1980-95) and whatever we call the generation following them are part of the equation of change, but do you know the biggest game-changer? Virtually everyone is armed with his or her own powerful, hand-held computer with direct links to the marketplace and the world. They can select precisely what they want, get it when they want it and have it delivered where they want it. The consumer is in charge and can only be ignored at risk of great peril or demise.

These are consumers who pay attention not only to what’s in the product, but how it’s grown, where it’s from, whether it’s a large or a small farm, whether the animals are well cared for, if the farmer uses environmentally sustainable practices, how far it was transported, if the processing facility is energy efficient, how long it takes to get the product from farm to market — you get the idea; they want to know it all. It’s really a different world, and that calls for a different way of thinking in making and marketing your products.

The Internet makes so much more possible, including a new “sharing economy” in which customers can interact directly with service providers in a real marketplace. Probably one of the best known examples of this is Uber, the ride-sharing service that reportedly now operates in more than 200 different cities in 45 countries and has enjoyed a multi-billion dollar valuation since June 2014. It simply brings together driver and rider through an app on your phone, with direct communication and easy payment on your credit card, no cash required.

A speaker at our January Dairy Forum, Daniel O’Connor of RetailNet Group, talked about the dramatic implications for food retailing stemming from this consumer power through technology. It’s virtually transforming how we think about buying our food, he said, because we can order right from our phone and simply drive-by on the way home to pick up our groceries, or have them delivered. Imagine all that might be possible with so much power now in the hands of the consumer.

This ever-more consumer-driven marketplace makes it clear that we must remove the friction in our markets, the impediments that keep us from being as efficient and effective as possible in serving new consumer demands. Regulations that help us deliver consistently safe and nutritious products provide consumer confidence that is critically important. Regulations that add costs without benefits, however, need to go.

One that comes to mind is the proposed redo of the Nutrition Facts panel on all food products. Our current government’s view is that it needs updating to help people understand better what to avoid in foods, i.e. fat, sugar and sodium. But where is the analysis or research that shows the changes would justify the enormous expense for every company in every food product line to have to print entirely new labels? Unfortunately, this proposal is on the course to become law before the current administration leaves Washington at the end of 2016. In the political world, that critical cost-benefit analysis is often missing as those in power attempt to push their agenda on the rest of us.

Even without new regulations, we already have well more than our share in the dairy foods industry, including many that have nothing to do with the safety and quality of our products. The milk pricing policy that has been on the books since 1937 — 78 years ago — is a prime example. In 1937 our marketplace was vastly different than today; farmers were small with few bargaining cooperatives, and local milk supplies were critical as refrigerated transportation didn’t exist.

How can your business possibly be nimble enough in our new world order of consumer power if you have to comply with needless price regulations that make it more difficult to plan your budget and operate your business? Our federal milk marketing order system must be streamlined to allow milk to move to its highest value use and to provide everyone in the marketplace — farmers, processors and manufacturers — the ability to better manage volatility with robust risk management tools. We must come together to make this program work better for our industry.

I invite you to work with our organization to help transform needless regulations and guard against new ones that aren’t backed by sufficient science or research. Together we can make important changes that will help your efforts to respond to changing consumer interests and take advantage of the technology that is clearly changing how our markets work.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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