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.

Increases in soy milk consumption, declines in the population of children, and better advertising, packaging, and convenience from substitute beverages are factors that have contributed to a decrease in consumer fluid milk consumption over the past decade.

So what can dairy product manufacturers do to profitably increase milk revenue over the long term? Industry consolidation, product development, marketing, and health campaigns are potential measures they could utilize.

1. Consolidation within the dairy product production industry can encourage continuous investment in branding and production technology, access to quality milk supplies at generous prices, and enhance production efficiencies – factors that are important to maintain and/or acquire national retailer supply contracts.

2. Continuous product development can lead to milk sales growth. Flavored milk products with energy boosters and new flavors have been increasing.

3. Push and pull marketing strategies for healthier milk products such as reduced fat milk, organic milk, and value-added milk (or products with added vitamins, nutrients, or low carbs) can also increase milk sales by appealing to the health consciousness of consumers.

These marketing measures could also reduce consumer shifts 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?