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.

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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.

Over the past decade, consumer fluid milk consumption has declined due to factors which include better packaging, convenience, and advertising from substitute beverages, a declining population of children, and soy milk consumption increases.

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. 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. Continued product development can result in increased milk sales. Flavored milk products with new flavors and energy boosters 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 strategies could also help counter consumer shifts from branded organic milk to either private label organic milk or conventional milk.

4. More health campaigns utilized to educate consumers such as young people (main consumers of dairy products) and baby boomers about the importance of calcium and milk could help increase daily milk consumption.

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