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The Viability of Increasing the Consumption of Vermont Dairy

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The Viability of Increasing the Consumption of Vermont Dairy good food is good business VERMONT DAIRY MARKETING ASSESSMENT FINAL REPORT Februar! 24, 2020 good food is good business PREPARED FOR The Vermont Agency of Commerce & Community Development and Agency of Agriculture, Food, & Markets BY 27 East 21st Street, 3rd Floor T: 212.260.1070 kkandp.com New York, NY 10010 F: 917.591.5104 CONTENTS INTRODUCTION & PROJECT BACKGROUND .......................................................................................................................................................................... 2 ABOUT THIS REPORT ......................................................................................................................................................................................................................... 3 RESEARCH THEMES & FINDINGS .................................................................................................................................................................................................... 4 NATIONAL & REGIONAL DAIRY MARKET DYNAMICS ................................................................................................................................................ 4 NATIONAL CONSUMER & CULTURAL TRENDS ............................................................................................................................................................. 6 Potential Opportunities ................................................................................................................................................................................................................. 8 Challenges .............................................................................................................................................................................................................................................. 9 VERMONT & NEW ENGLAND DAIRY SECTOR CONDITIONS ................................................................................................................................. 9 Farm Loss & Consolidation ......................................................................................................................................................................................................... 9 Milk Production & Prices ............................................................................................................................................................................................................. 10 Regional Supply & Demand Balance ................................................................................................................................................................................... 12 STAKEHOLDER PERSPECTIVES ............................................................................................................................................................................................... 13 The Vermont Dairy “Brand” ....................................................................................................................................................................................................... 13 Challenges for Farmers ............................................................................................................................................................................................................... 14 Lack of Cheese Expertise Pipeline ........................................................................................................................................................................................ 14 Lack of Sector Investment ........................................................................................................................................................................................................ 15 BRAND ANALYSIS & CASE STUDIES ................................................................................................................................................................................... 16 Vermont Brand Positioning Analysis .................................................................................................................................................................................. 16 Analysis of Past Vermont Dairy Branding Efforts and Place-Based Efforts in Other States ...................................................... 17 PAST RECOMMENDATIONS & CONCURRENT EFFORTS ....................................................................................................................................... 19 CONCLUSIONS ...................................................................................................................................................................................................................................... 21 RECOMMENDATIONS ........................................................................................................................................................................................................................... 23 BUILD VERMONT’S DAIRY EXPERTISE .............................................................................................................................................................................. 23 ENCOURAGE DAIRY DIFFERENTIATION ........................................................................................................................................................................... 24 COMMUNICATE VERMONT’S DAIRY IDENTITIES ....................................................................................................................................................... 24 INVEST IN INFRASTRUCTURE & WORKFORCE ........................................................................................................................................................... 25 APPENDICES ............................................................................................................................................................................................................................................... 26 POLICY & FUNDING SUPPLEMENT ....................................................................................................................................................................................... 27 INTERVIEWEE LIST ........................................................................................................................................................................................................................... 33 BRAND CASE STUDIES ................................................................................................................................................................................................................. 34 BIBILIOGRAPHY & DATA SOURCES ..................................................................................................................................................................................... 66 27 East 21st Street, 3rd Floor T: 212.260.1070 kkandp.com New York, NY 10010 F: 917.591.5104 P. 1 INTRODUCTION & PROJECT BACKGROUND Vermont has a strong and well-supported identity as a dairy state. Its characteristic agricultural landscape—green rolling hills populated with livestock and picturesque dairy barns—drives much of the state’s tourism activity and public perception. According to a 2019 survey conducted by Vermont Public Radio and Vermont PBS, 93 percent of Vermonters believe that the state’s dairy industry is very important or somewhat important to the state’s sense of itself. This perception is not a superficial or inaccurate one. Vermont is responsible for more than 60 percent of the milk produced in New England, and the state’s dairy sector brings in over $2.2 billion in economic activity every year, accounting for about 70 percent of the state’s total agricultural sales. In addition to fluid milk, the state is well-known for value-added dairy products, especially artisanal cheeses. Between 2013 and 2018, Vermont cheesemakers placed in the American Cheese Society Best in Show awards nine times—equal to the next three states (Wisconsin, California, and Pennsylvania) combined1. But like other milk producers across the U.S., dairy farmers in Vermont are facing unprecedented pressures. Five consecutive years of low milk prices have especially challenged milk producers in New England, where topography generally prevents farmers from reaching the same economies of scale that their counterparts in the West and Midwest are able to achieve. Farm loss and consolidation have resulted in Vermont losing almost a third of its dairy farms between 2007 and 2017. With the state’s dairy farmers at risk, and with a palpable awareness of dairy sector’s economic, historic, and cultural importance to the state, Vermont leaders and stakeholders have put a significant amount of energy and attention over the past several years into finding ways to keep the dairy industry viable. Past studies have focused on farm conditions, production dynamics, consumer trends, marketing strategies, policy environments, and other topics as well. Whether addressing the national, regional, or state level, all of these reports highlight corresponding conditions in the dairy sector and in dairy consumption trends: declining fluid milk consumption, an oversupply of fluid milk, excess inventories of dairy products, too many choices competing for consumer attention, growing competition from plant-based milks, and
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