Presently there are 3 trends that are responsible for shaping the dairy industry and they will have upcoming implications soon enough. To prepare for such a scenario, the dairy industry leaders should follow an amalgamation of industry and company-level actions.
Coronavirus disrupted almost all parts of our daily lives and the dairy industry is no exception. Since the technology adoption there came a change in the consumers’ place and way of shopping, working, eating, and living life in general. For instance, a survey of 2020 by Mckinsey found that online shopping for dairy consumers increased after the pandemic situation. A total of 163% more people have started buying milk products online.
The past year took a toll on the dairy industry in quite a few ways but the industry proved its capability and resilience to meet the needs of its customers. However, a revisit is needed for the dairy executives regarding their approach to evolving trends which are critical for digital and analytics, customer behaviour, and supply-chain management.
This article will cover the trends and the steps companies can take to stabilize their next 3 to 5 years in this industry. All the information here is based on the info given by the 2020 McKinsey dairy executive (more than 50 industry leaders were under this survey) and the US dairy customers’ 2020 propriety survey.
Dairy Industry and Its Present State
When planning their strategic approach over the near term, dairy leaders need to be aware of the 3 critical market-shaping trends.
Changes in Terms Of Consumer Behaviour and Improvement in Consumer Rights
The pandemic’s huge impact on consumer behavior is definitely something to consider to improve the status of the dairy industry. More than 33% of consumers reported that during their quarantine they experimented with new brands often. 20% of the consumers claimed how trying new things is now trendy and a top priority for them.
Dairy industry leaders also need to focus on value because of the US customer’s financial concerns. 32% of the consumers reported that they bought dairy products mostly during the pandemic and the reason is price promotion.
As time passes, consumers have become more aware and prone towards health and wellness leading 42% of them to purchase dairy alternatives during the pandemic. From 2019, the number has increased by 14%. Also, consumers now focus more on sustainability so their purchase of products increased quite a lot as dairy consumers focus more on packaging and carbon emissions.
Learn More:- Fresh cow milk in chennai
Dairy Production and Consumption
Annually the dairy products expenditure per person is on average 87 kg and by 2067 it will increase to 119 kg worldwide. This information is based on Alexandratos and Bruisnsma’s 2012 extrapolations. Butter is excluded from this estimate because, in the FAO’s food classification system, butter is categorized as animal fat.
When someone migrates from a rural area to an urban one, it’s likely their dairy consumption will increase which is why countries of Asia and Africa that have experienced significant growth and development in urban areas can expect a substantial rise in demand for dairy products. In developed countries, the dairy intake per person is 225 kg per year per person and this doesn’t differ in urban or rural places.
Increasing population growth combined with increased dairy product consumption translates into a necessity of 600 kg more milk in the future (the year 2067) than what is produced now. FAO stated that approximately 82.4% of the world’s raw milk is produced by dairy cows. Buffalo milk covers 13.6%, followed by goat milk which is 2.3%, milk from sheep at 1.3%, and lastly camel milk at 0.4%.
If we want to achieve the goal of getting 600 kg of milk annually in the year 2067 then an average dairy cow will have to produce twice as much milk which doubles its annual yield to 4531 kg from 2405 kg. This is very unlikely to occur since the countries with the most cows often produce the least amount of milk per year.
Many companies are modernizing their processing sectors and dairy farming in order to meet the future demand but in the future, if a company wants to successfully profit from selling milk products, their methods need to be sustainable.
How To Prepare the Dairy Industry For the Future
The trends described above can be handled by dairy companies through a mixture of approaches and it can prepare them for the next 3 to 5 years. The actions taken by the dairy company leaders will be executed on different levels such as company and industry levels while having short and medium-term horizons.
Dairy executives may take cooperative actions at the industry level to:-
- Redevelop the sustainability performance (defined by the industry) to align with corporate and social incentives.
- Reconstruct a different industry go-to-market which adopts a direct-to-customer platform.
- Make this a career choice option for skilled people who can help strengthen the industry.
- Invest in customer education as well as research that benefits the dairy industry.
At the company level, dairy leaders or executives can:-
- Improve sustainability, wellness and health attributes by investing in research and technology.
- Enable innovation that is consumer-focused by developing insight capabilities.
- Find different avenues of growth by making several significant international bets.
- Capitalize on opportunities and solve various problems by incorporating digital tools.
- Realign their portfolios by utilizing programmatic mergers, divestitures and acquisitions.
- Upgrade operational resilience and agility.
- Engage and employ talent by strengthening corporate culture.
The Bottom Line
The past year has been a challenge for most people no doubt but the dairy industry proved its resilience. Leaders in the dairy industry now have to carefully analyze the data and analytics of their business and apply strategic, focused actions to upgrade their response to customer demands. With the help of collaboration among social, public and private sectors they can carry out many strategic approaches which will be too much to handle singlehandedly. This way the dairy industry can better prepare itself for the near-term goals as well as the future.
