1. 6 DairyFoodsNovember2002
Tom Gallagher CEO
Dairy Management Inc.™
Industry Editorial
6
T
he U.S. dairy industry can congratu-
late itself on some innovative con-
cepts during the past few years. Sin-
gle-serve plastic containers, improved-
mouthfeel skim milk, all-in-one pie and
ice cream packs, cheese package slider
zippers, squeezable sour cream and kid-
appealing carbonated dairy drinks all have
debuted during the got milk?® era.
But parts of the industry are hesitant to
change and this caution often stems less
from a lack of desire to alter their course
and more from a misconception about what
is truly achievable. It’s a mindset that in-
hibits innovation from the get-go and often
won’t let go. It can stifle market and indi-
vidual company growth and hamper indus-
try-wide advances.
The dairy producers who fund Dairy
Management Inc.™ (DMI) are committed
to erasing these fallacies and spurring the
dairy industry on to unprecedented creative
heights. DMI’s upcoming Innovation Fo-
rum (Jan. 28-29, 2003, in Scottsdale,Ariz.)
embodies this philosophy. At the event,
leading experts spanning the marketing,
nutrition and research realms will speak to
food manufacturers about pursuing the in-
novation path with the reassurance that not
only must it be done, but tools exist so that
it can be done.
To reflect the spirit of the forum, we’ve
gathered five of the most popular, and de-
bilitating myths with the purpose of
putting put them to rest, once and for all.
1. Myth: The products category is ma-
ture; no room exists for real growth through
innovation. Rather, growth will mainly
come to individual companies through
mergers and acquisitions. Reality: Many
believed the rice category was “mature” un-
til Uncle Ben’s debuted the single-serve
Reality Check
Debunking innovative-inhibiting myths
Rice Bowl concept. Big players such as P&G
and Kraft once operated under the assumption
that the coffee category could go no higher.
However, given a jump-start by Starbucks,
high-end coffee beans moved from specialty
coffee shop to mainstream America. Turn-
about also is fair play—take Coca-Cola. The
successful Dean’s Chug prompted the soft-
drink giant to initiate Project Mother, an R&D
program gathering input from nutritionists,
pediatricians, parents and children to create
dairy beverages aimed at pint-sized palates.
2. Myth: The dairy-processing industry
is a commodity business. Reality: There’s
no such thing as a commodity business,
only a commodity mindset. Look at those
who viewed water as a commodity busi-
ness. They missed a giant growth opportu-
nity. Care to guess what is the fastest-
growing segment in the U.S. beverage cat-
egory? It is water in single-serve bottles.
3. Myth: Fluid milk profit margins are so
small, it’s not worth the investment to inno-
vate. Reality: Turn that thinking around and
consider that because earnings are so slim,
this is precisely why the industry must inno-
vate and create value-added products con-
sumers are willing to pay more for. Consider
the aseptic concept in upping the ante. Free
from refrigeration restrictions, aseptic milk
conceivably could face off against soft
drinks for consumer attention by occupying
the same supermarket aisles. Other exam-
ples include creating products carrying a
perceived added value for consumers, such
as lactose-reduced or lactose-free milk. This
would solve a consumer problem and simul-
taneously expand sales, margins and profits.
Of course, risk exists in developing new
products. Companies concerned about risk
roll up their sleeves and do their homework
to help avoid potential pitfalls, including
market research and forecasting, custom re-
search, and concept testing. They also seri-
ously study the reasons some products fail
while others succeed.
4. Myth: No innovators exist in our
company. Reality: Innovation isn’t neces-
sarily inborn. We need to work at it.
American inventor Thomas Edison per-
haps summed it up best when he said,
“genius is 1% inspiration and 99% per-
spiration.” It’s vital for a company to
have a culture and process capable of cul-
tivating innovation. Management’s re-
sponsibility is to encourage an innovative
mindset and create an organizational
process to nurture this approach.
5. Myth: Our organization simply is
too small to innovate. Reality: Tell that
to five of the 10 companies listed in
Prepared Foods’ annual Top 10 New
Food Products list in 2000. Sure, heavy
hitters such as Heinz, Unilever and Par-
malat got on the roster, but half of those
making the grade are small to mid-sized
food processors, including Stonyfield
Farm, which gained kudos for its
YoSqueeze innovation. Larger compa-
nies often are too unwieldy and turtle-
paced to achieve an innovative edge.
Though the resources exist in a large
company, many times they’re not man-
aged effectively to allow it to wield its
might in an innovative way. Just consid-
er the number of smaller companies be-
ing taken over by the big guys.
So, when you start to think there’s no
room for innovation, think again. Con-
sider the widespread myths that some-
how became so-called conventional
wisdom and resist their enterprise-
inhibiting effect.
Innovate, innovate, innovate. It’s the
dairy industry’s lifeblood. Ⅲ
For more information on DMI's Product
Innovation/Research program, please contact
Amy Skovsende, dir., technology marketing,
at 847/627-3248 or amys@rosedmi.com.
Dairy Foods is always interested in
providing a forum for the views of in-
dustry. This is the one in a series of
guest editorials that will occasionally
appear in this space.
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