Study reveals evolving perspectives, strategies of dairy executives
Market insights and an openness to work with non-dairy companies will be critical elements of strategy moving forward.
The mood of U.S. dairy executives has deteriorated, as flat growth, trade tensions and changing consumer tastes continue to dampen prospects for the coming years. With regions beyond the United States experiencing growing demand, rising numbers of U.S. dairy companies have begun to pursue exports in the past several years. Other market factors, including the move by some consumers to non-dairy alternatives, will also present challenges. New research from McKinsey & Co., New York, sheds light on the mind-sets of U.S. dairy executives and their recent evolution as they attempt to jump-start growth.
In 2015, several developments in the global dairy industry suggested cause for optimism. The European Union removed its milk production quotas, and observers anticipated that a growing middle class in Asia would consume more dairy products. In the ensuring years, milk supply grew faster than demand, and prices and profitability have remained depressed ever since. As a result, in 2018, 63% of survey respondents thought the downturn was not cyclical, but structural, caused by a global surplus of milk and a fast-changing consumer environment