Dairy balancing efficiency and innovation  

Processors and manufacturers engaged in the dairy industry face this pressure more acutely than most.   The increasing commoditisation of major lines across the dairy cabinet – packaged milk, block and sliced cheese, and dairy spreads – where significant inroads have been made by private label and EDLP strategies, have compelled extensive innovation in the dairy sector for margin growth to be sustained by brand managers.  At the same time, the pressure for the industry to consolidate brand ownership and capacity remains strong.

The dairy sector has enormous opportunity in the array of positive influences on product consumption – influences which include product taste, nutritional advantage, indulgence and convenience.  These advantages exist against a background of a more complex competitive set in critical segments of the market – the lunchbox, on-the-go snacking, entertainment, and impulse beverages.  The need to manage and filter intelligence on these market domains and activities of new and emerging competition will remain a key priority for marketers. 

The demand for accuracy in picking and evaluating “winners” in new product innovation will only get stronger.

Dairy product value-chains have evolved as a tense trade-off between efficient commodity processing and careful management of marketing and product innovation.  As the relative importance of consumer market segments and the complex nature of competition changes, getting that balance right becomes more challenging.

The challenges facing processed food manufacturers in the current and future market environment requires a careful balance between ensure economies of scale in processing lines whilst meeting the increasing challenge of identifying and managing innovation in product and marketing.