Dairy Leaders Discuss Supply Chain Challenges And Opportunities
In a session on Tuesday, July 9th during the Wisconsin Dairy Products Association’s (WDPA) 2024 Dairy Symposium, experts discussed navigating supply chain challenges and the opportunities to capitalize on evolving consumer preferences for dairy products.
Leading off the session, Mathew Rutz, vice president of contract manufacturing for Tetra Pak in the United States and Canada, shared an overview of today’s food landscape and evolving consumer preferences for protein-forward foods.
Addressing Food Sustainability
Rutz notes that the food system as built today is unsustainable, and by 2050 the world will need to feed 10 billion people without using more land and while simultaneously working to reduce emissions.
Key Global Macro Forces In The Dairy Supply Chain
Rutz shared a few key global macro forces in food and beverages today, including consumers’ interest in health and wellness; their uncertainty when it comes to cost of living; and their concerns about sustainability. He notes 38% of global consumers say inflation is the most worrying topic for them, while 40% are concerned about the price of healthy food options.
Consumer Interest In Protein
“Consumers associate multiple benefits to proteins — it’s not only about sports,” Rutz says, noting that protein ranks first in terms of consumer interest, followed by fiber and omega-3.
“Dairy is positioned to deliver on these preferences,” he adds.
Key Health Platforms
Key health platforms for consumers include immune health, bone health, weight management and cognitive health.
“Protein offers a great opportunity across these platforms, hitting all kinds of different consumers and target occasions. It coverts volume into value,” Rutz says.
He adds protein is taking the spotlight on front-of-pack communication, and real dairy still can demand a premium price compared to plant-based alternatives.
Suntado LLC’s New Plant
Next, Rutz and Tory Nichols, business development, Suntado LLC, shared details of the new Suntado LLC plant in Burley, Idaho. The new state-of-the-art shelf-stable milk and alternative beverage manufacturing facility has the capacity to process approximately 400,000 to 1 million pounds of local milk per day into a combination of organic, conventional and A2 milk products.
Specialized Processing In The Dairy Supply Chain
The Suntado facility specializes in processing Class I and Class II milk and also serves as a co-packer for an array of products including private label and other recognized brands. The product lineup is diverse, ranging from sports, children and adult nutrition to innovative coffee products and alternative beverages. A notable feature of these products is their packaging, ensuring both extended-shelf-life (ESL) and aseptic conditions. Suntado has worked closely with Tetra Pak on much of its packaging offerings.
Solutions For Dairy Supply Chain Challenges
As the industry continues to face supply chain challenges, material shortages and other disruptions, ESL and aseptic dairy products are a potential solution for manufacturers to realize increased flexibility for transportation, storage and distribution.
For example, ESL and aseptic beverages offer:
• Increased distribution due to long shelf life, which can fill voids in school districts without a local milk supply;
• Paperboard for aseptic packaging sourced from different suppliers than that used for gable top packaging; and
• Global footprint provides a high degree of redundancy in meeting changes in packaging demands.
Rutz notes some retailers already are embracing these types of packaging as aseptic packages in the chilled space allow them to have more variability, velocity and accessibility.
Growing Market For Aseptic Cartons
“The family size aseptic carton is growing year-over-year for those brands with a strategy of aseptic in the chilled space,” he says.
Nichols adds it offers an opportunity for consumers also to consider the concept of being able to store milk in the pantry instead of the refrigerator.
Innovating In Value-Added Dairy Products
“It’s very important to look at ‘value-added’ — that’s the space we need to be innovative in and where growth will come from,” he says. “I think most dairy producers tend to think of the chilled space and focus on that, but we can’t just focus there anymore — we have to attract the dry grocery buyers, pharmacy buyers and others. We need to get true, shelf-stable, high-protein dairy products in to these other areas of the store. That will be key for our growth and success.”
Growth In Value-Added Milk
Rutz notes that while the white milk category is decreasing in volume, two segments are growing: value-added milk (particularly half-gallon and 48-ounce sizes), and 32-ounce cartons of shelf-stable products.
Production And Storage Efficiencies In The Dairy Supply Chain
In addition to ESL benefits, many shelf-stable packages also contribute to efficiencies in production schedules as well as storage as the products stack better, he says.
Shelf Life And COVID Lessons
Nichols notes that shelf life for retailers was a big issue during COVID, and it taught suppliers that having days of supply somewhere, ready to go is very valuable to them.
“When you can warehouse 25-30 days of product for a customer, it’s very reassuring, especially for larger customers and in the event of a crisis like COVID,” he says.
Extended Shelf Life Benefits
Rutz says that ESL packaging typically provides a 30- to 90-day shelf life, while truly shelf-stable beverages can be stored for six-plus months.
Opportunities In The Dairy Supply Chain
Meanwhile, he notes the case can be made for verticalization of the producer and processor into one entity.
“The opportunities for verticalization of the dairy supply chain are more present now,” Rutz says. “Among cheese and powder considerations, beverage verticalization is considered a viable strategy.”
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Source: Cheese Market News
