The dairy product production industry’s global demand has declined since the fourth quarter of 2008 due to the world recession. A decline in world income (due to rising unemployment and falling wages) and supply increases (predominantly from milk production in New Zealand) have resulted in lower demand for world dairy products such as milk and declines in world dairy prices.

Consumers in developed countries are expected to trade down to cheaper dairy products such as private labels and to reduce consumption of discretionary dairy products such as ice cream. In developing countries, dairy products are considered more of luxuries instead of necessities and as a result demand for these products has declined tremendously.

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.

What measures could dairy product manufacturers employ to profitably increase milk revenue in the long term? They could use product development, marketing, health campaigns, and industry consolidation.

1. Industry consolidation can provide access to quality milk supplies at fair prices, encourage continued investment in branding and production technology, and provide production efficiency and lower per unit costs – factors that are vital to maintain and/or gain national retailer supply contracts.

2. Constant product development can result in milk sales growth. Sales of flavored milk products with new flavors and energy boosters have been rising.

3. Pull and push marketing strategies for healthier milk products such as organic milk, reduced fat milk, and value-added milk (milk with added nutrients, vitamins, or low carbs) can also result in milk sales growth by catering to the health consciousness of consumers.

These marketing strategies could also help resist consumer trade downs from branded organic milk to either conventional milk or private label organic milk.

4. More health campaigns stressing the importance of milk and calcium to baby boomers and young people (main consumers of dairy products) could lead to a rise in daily milk consumption.

By employing the factors above, dairy product manufacturers can also augment or cushion the effects of energy, oil, and raw milk price fluctuations on margin. What other factors could these manufacturers utilize to generate revenue and profit growth?