NATIONAL DAIRY PROMOTION

AND RESEARCH PROGRAM

NATIONAL FLUID MILK

PROCESSOR PROMOTION PROGRAM

J U LY 1 , 2 0 0 8 J U LY 1 , 2 0 0 8

REPORT TO CONGRESS REPORT TO CONGRESS

USDA AMS Dairy Programs Report to Congress • Vol 24 • 2008 USDA AMS Dairy Programs Report to Congress • V ol 24 • 2008 

NATIONAL DAIRY PROMOTION

AND RESEARCH PROGRAM

NATIONAL FLUID MILK

PROCESSOR PROMOTION PROGRAM
Report to Congress 

National Dairy Promotion 

and Research Program 

and the 

National Fluid Milk 

Processor Promotion Program 

2007 Program Activities
ii

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iii

Contact Information 

To obtain additional copies of this Report to Congress on the National Dairy Promotion and 

Research Program and the National Fluid Milk Processor Promotion Program and the 

complete independent analysis of the programs, please contact: 

Promotion and Research Branch 

Dairy Programs, Agricultural Marketing Service, USDA 

Stop 0233, Room 2958-South 

1400 Independence Avenue, SW 

Washington, DC 20250-0233 

(202) 720-6909 

To obtain copies of the complete independent analysis report or for questions on Chapter 3, 

please contact: 

Harry M. Kaiser, Ph.D. 

Cornell Commodity Promotion Research Program 

Department of Agricultural, Resource and Managerial Economics 

Cornell University 

349 Warren Hall 

Ithaca, NY 14853 

(607) 255-1620 

http://www.cornell.edu

To obtain copies or for questions on the Fluid Milk Market and Promotion Assessment by 

Beverage Marketing Corporation of New York, please contact: 

Gary Hemphill 

Beverage Marketing Corporation of New York 

850 Third Avenue, 14th Floor 

New York, NY 10022 

(212) 688-7640 

http://www.beveragemarketing.com

For additional information about the National Dairy Promotion and Research Board and 

Dairy Management Inc., please contact: 

National Dairy Promotion and Research Board 

Dairy Management Inc. 

10255 West Higgins Road, Suite 900 

Rosemont, IL 60018-5616 

(847) 803-2000 

http://www.dairyinfo.com

http://www.ams.usda.gov/Dairy
iv

For additional information about the National Fluid Milk Processor Promotion Board, please 

contact:

National Fluid Milk Processor Promotion Board 

1250 H Street, NW, Suite 950 

Washington, DC 20005 

(202) 737-0153 

http://www.whymilk.com

The Department of Agriculture (USDA) prohibits discrimination in all of its programs and 

activities on the basis of race, color, national origin, age, disability, and where applicable, 

sex, marital status, familial status, parental status, religion, sexual orientation, genetic 

information, political beliefs, reprisal, or because all or part of an individual’s income is 

derived from any public assistance program. (Not all prohibited bases apply to all programs.) 

Persons with disabilities who require alternative means for communication of program 

information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at 

(202) 720-2600 (voice and TDD). 

To file a complaint of discrimination, write USDA, Director, Office of Civil Rights,

1400 Independence Avenue, S.W., Washington, D.C. 20250-9410, or call (800) 795-3272 

(voice) or (202) 720-6382 (TDD). USDA is an equal opportunity provider and employer. 

Report printed on recycled paper using vegetable-based ink. 
v

Contents

Contact Information ................................................................................................................iii

Executive Summary .................................................................................................................1

Chapter 1: The Dairy and Fluid Milk Promotion Programs ...................................................5 

National Dairy Promotion and Research Board .......................................................................5 

National Dairy Council®/ School Marketing ...........................................................................7 

National Dairy Council®/ Nutrient Rich Foods Coalition .......................................................8 

 Research .................................................................................................................................9

Export and Dry Ingredients ......................................................................................................9

3-A-DayTMof Dairy for Stronger Bones ..................................................................................13 

Foodservice/Partnerships .......................................................................................................14

Communications and Technology .........................................................................................14 

Qualified State or Regional Dairy Product Promotion, Research,

 or Nutrition Education Programs .........................................................................................15 

National Fluid Milk Processor Promotion Board ..................................................................16 

Medical and Scientific Activities ...........................................................................................17

National Fluid Milk Programs ...............................................................................................17 

Sponsorships ..........................................................................................................................18

Advertising .............................................................................................................................18

Promotions .............................................................................................................................19

Public Relations .....................................................................................................................20

Strategic Thinking ..................................................................................................................21

School Marketing ...................................................................................................................21

Chapter 2: USDA Activities .................................................................................................23

National Dairy Promotion and Research Board Oversight 

Nominations and Appointments ............................................................................................23 

Organic Exemption ................................................................................................................24

Amendment to the Dairy Act .................................................................................................24 

Foreign Agricultural Service ..................................................................................................25

Contracts ................................................................................................................................25

Contractor Audits ...................................................................................................................25

Collections .............................................................................................................................25

Compliance ............................................................................................................................26

Qualified Programs ................................................................................................................25

National Fluid Milk Processor Promotion Board Oversight 

Nominations and Appointments ............................................................................................27 

Program Development ...........................................................................................................27

Contractor Audits ...................................................................................................................27

Compliance ............................................................................................................................28
vi

Contents, continued 

Chapter 3: Impact of Generic Fluid Milk and Dairy Advertising and Promotion

 on Dairy Markets: An Independent Analysis ......................................................................29 

Highlights ...............................................................................................................................30

Analysis of Generic Fluid Milk Marketing ............................................................................31 

Fluid Milk Model Estimation .................................................................................................38

Fluid Milk Model Simulation ................................................................................................41 

Analysis of All-Dairy Product Generic Marketing ................................................................41 

Benefit-Cost Analysis of the Dairy Program .........................................................................47 

Chapter 4 ................................................................................................................................51

Part I – Fluid Milk Market and Promotion Assessment: 

 Beverage Marketing Corporation ........................................................................................51 

Introduction ............................................................................................................................51

Key Highlights and Trends for 2007 .....................................................................................51 

Fluid Milk Category Performance .........................................................................................51 

Fluid Milk Competitive Position and Performance ...............................................................52 

Analysis of Key Beverage Category Growth Drivers ............................................................56 

Category and Consumer Positioning .....................................................................................56 

Branding and Media Spending...............................................................................................57 

Retail Channel Distribution ...................................................................................................59

Consumer Pricing ...................................................................................................................60

New Product Activity ............................................................................................................61

Beverage Marketing’s Assessment of 2007 Milk Marketing Programs ................................62 

Part II – National Fluid Milk Processor Promotion Program: 

 Highlights by the National Fluid Milk Processor Promotion Board ....................................66 

Sustaining Milk Sales Despite Historically High Pricing ......................................................66 

Addressing At-Risk Flavored Milk in School Channel .........................................................69 

In Summary ............................................................................................................................73

Part III – National Dairy Promotion and Research Program: 

 Highlights by Dairy Management Inc. .................................................................................74 

Introduction: DMI’s Changing Role .....................................................................................74 

Fully Executed Model: Quick Serve Restaurants .................................................................74 

New Product Development: A New Test for the Model .......................................................77 

Incremental Sales Definition, Explanation and Results .........................................................78 

Conclusion .............................................................................................................................80

The Evaluation Model............................................................................................................80

Sum Cost of Program/Sum Impact on Producer Revenue .....................................................80 

Definitions..............................................................................................................................81

Appendix A: Membership.....................................................................................................83 
vii

Contents, continued 

Appendix B: Finances .............................................................................................................89

Appendix C: Independent Auditors’ Reports .........................................................................97 

Appendix D: Contracts Reviewed by USDA........................................................................139 

Appendix E: Research Activities, National Dairy Promotion and Research Board .............147 

Appendix F: Qualified State or Regional Dairy Product Promotion, Research, 

 or Nutrition Education Programs ........................................................................................153 

Appendix G: Thumbnail Images of Advertising, Promotion, and Public Relations ............157 

Appendix H: Maps ................................................................................................................174
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1

Executive Summary 

The enabling legislation of the dairy producer and fluid milk processor promotion programs 

requires the Department of Agriculture (USDA) to submit an annual report to the House 

Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry.

The producer and processor programs are conducted under the Dairy Production and 

Stabilization Act of 1983 (7 U.S.C. 4501 et seq.) (Dairy Act); the Dairy Promotion and 

Research Order (7 CFR § 1150) (Dairy Order); the Fluid Milk Promotion Act of 1990 

(7 U.S.C. 6401 et seq.) (Fluid Milk Act); and the Fluid Milk Promotion Order (7CFR § 1160) 

(Fluid Milk Order), respectively. This report includes summaries of the activities for the 

producer and processor programs, including an accounting of funds collected and spent; USDA 

activities; an independent analysis of the effectiveness of the advertising campaigns of the two 

programs; an industry-commissioned review of fluid milk markets and program operations; and 

highlights from each of the boards’ perspectives. Unless otherwise noted, this report addresses 

program activities for the fiscal period January 1 through December 31, 2007, of the Dairy 

Promotion and Research Program and the Fluid Milk Processor Promotion Program. 

Producer Dairy Promotion and Research Program 

Mandatory assessments collected under the Dairy Act totaled $282.6 million in 2007. The 

National Dairy Promotion and Research Board (Dairy Board) portion of the revenue from 

the 15-cent per hundredweight producer assessment was $93.6 million for 2007, and Qualified 

Programs revenue from the producer assessment was $189.0 million. Expenditures by the Dairy 

Board and many of the Qualified Programs are integrated through a joint process of planning and 

program implementation so that the programs on the national, regional, State, and local level 

work together. The Dairy Board continued to develop and implement programs to expand the 

human consumption of dairy products by focusing on partnerships and innovation, product 

positioning with consumers, and new places for dairy product consumption. One such endeavor 

was accomplished through continuing to integrate single- serve plastic bottled milk into the 

menus of quick-serve restaurants such as Burger King®, Wendy’s®, and Subway®. The Dairy 

Board also continued to promote its 3-A-DayTM for Stronger Bones, a nutrition-based marketing 

and education program developed to help solve the Nation’s calcium crisis and increase 

consumption of milk, cheese, and yogurt; as well as its “New Look of School Milk” campaign 

which includes efforts to improve the school milk experience for the Nation’s children through 

improvements in packaging, flavors, and availability. Details of the 2007 activities of the dairy 

producer program are presented in Chapter 1. 

National Fluid Milk Processor Promotion Program 

The National Fluid Milk Processor Promotion Board (Fluid Milk Board) continued to administer 

a generic fluid milk promotion and consumer education program funded by America’s fluid milk 

processors. The program is designed to educate Americans about the benefits of milk, increase 

milk consumption, and maintain and expand markets and uses for fluid milk products in the 48 

States and the District of Columbia. During 2007, the Fluid Milk Board evolved its messaging to 

use the role of calcium-rich fluid milk products in successful weight maintenance as a central 
2

theme and focal point for its activities. In its promotion programs such as “Another Reason, 

Another Season,” and “Give Your Family Something Smarter,” the Fluid Milk Board 

encouraged moms to choose milk to help maintain a healthy weight. For teens, the 2007 

integrated Body By MilkSM campaign, combining advertising, promotion, and public relations 

components, stressed the importance of maintaining a healthy weight through a healthy diet, and 

keeping fit and strong by drinking three glasses a day of lowfat or fat-free of milk instead of 

sugar-sweetened beverages. Assessments generated $107.7 million in 2007. The Fluid Milk 

Order requires the Fluid Milk Board to return 80 percent of the funds received from California 

processors to the California Milk Processor Board. The amount returned to California from the 

2007 assessments was $10.3 million. The California fluid milk processor promotion program 

uses the funds to conduct its promotion activities, which include the got milk?® advertising 

campaign. The fluid milk marketing programs are research based and message focused. 

Activities of the National Fluid Milk Processor Promotion Program for 2007 are presented in the 

Fluid Milk Board section in Chapter 1 of this report. 

USDA Oversight 

USDA has oversight responsibility for the dairy and fluid milk promotion programs. The 

oversight objectives ensure that the Boards and Qualified Programs properly account for all 

program funds and that they administer the programs in accordance with the respective Acts and 

Orders. All advertising, promotional, research, and educational materials are developed under 

established guidelines. All Board budgets, contracts, and advertising materials are reviewed and 

approved by USDA. USDA employees attend all Board and Committee meetings, monitor all 

Board activities, and have responsibility for obtaining an independent evaluation of the 

programs. Additional USDA responsibilities relate to nominating and appointing Board 

members, amending the Orders, conducting referenda, assisting with noncompliance cases, and 

conducting periodic program audits. The Boards reimburse the Secretary, as required by the 

Acts, for all of USDA’s costs of program oversight and for the independent analysis. In 2007 the 

Secretary of Agriculture appointed 12 members to the Dairy Board and 10 members to the Fluid 

Milk Board. Approximately 863 dairy producers were granted organic exemptions in 2007, 

representing approximately 1 billion pounds of production. Compliance for both Boards 

continues in a timely manner and at a high rate. Chapter 2 details USDA’s oversight activities. 

Independent Analysis and Fluid Milk Market and Program Assessment 

Chapter 3 presents the results of the independent econometric analysis, conducted by Cornell 

University (Cornell), of the effectiveness of the dairy and fluid milk promotion programs. It is 

estimated that the generic fluid milk marketing efforts activities sponsored by fluid milk 

processors and dairy farmers have helped mitigate the decline of fluid milk consumption. The 

generic fluid milk marketing activities increased fluid milk consumption by 30 billion 

cumulative pounds from 1998 to 2007, or 3 billion pounds per year on average. Had there not 

been generic fluid milk marketing conducted by the two National Programs, fluid milk 

consumption would have been 5.4 percent lower. Cornell concluded that these marketing efforts 

have had a positive and statistically significant impact on per capita fluid milk consumption. 

Details of Cornell’s independent evaluation are presented in Chapter 3. 
3

Chapter 4, part I presents the industry-commissioned fluid milk market and program operations 

assessment conducted by Beverage Marketing Corporation (BMC). The review offers an 

evaluation of the effectiveness of the fluid milk advertising and promotion programs from a 

marketing perspective. In 2007, the fluid milk volume decreased by 0.1 percent from 6.26 to 

6.25 million gallons. Consumer awareness of the generic milk advertising program remained 

high, but lack of branded advertising kept milk at a competitive disadvantage. BMC believes 

that the marketing campaigns developed under the Dairy Act and the Fluid Milk Act have played 

a key role in maintaining the category’s growth, and volume declines would have been more 

significant without the major programs and initiatives implemented in 2007. 

Additionally, the National Fluid Milk Board and Dairy Management Inc., (DMI) provide 

individual highlights of 2007 program successes from the Boards’ perspective in Parts II and III.

In Part II, the Fluid Milk Board presents highlights regarding sustained milk sales despite 

historically high pricing, at-risk flavored milk in the school channel, and a summary assessment 

of the program’s effectiveness. The Fluid Milk Board concludes that the 2007 campaigns were 

successful in advancing the effectiveness of the program by driving incremental volume and 

helping to mitigate the long-term loss of market share. The short-term comparison of retail sales 

to Board expenditures ($6.60 for every dollar spent) remains highly favorable – basically flat 

compared to 2006 ($6.61 for every dollar spent). The Fluid Milk Board continues to promote the 

fluid milk industry through the National Fluid Milk Processor Promotion Program (MilkPEP), 

supporting the Federal nutrition goals such as those outlined in the enabling legislation, the U.S. 

Dietary Guidelines for Americans, and USDA’s Food Guide Pyramid. MilkPEP is a national 

marketing voice for milk in a marketing environment subject to a high degree of Federal and 

State regulation, helping to maintain the strength and stability of the fluid milk industry, to the 

benefit of the Nation’s health. 

In Part III, DMI provides highlights regarding the dairy producer promotion program’s successes 

through DMI’s changing role, the executed model for quick serve restaurants, and new product 

development efforts based on an in-depth segmentation study. DMI concluded that positioning 

the right product to the right consumer at the right place and time is the key to growth for the 

milk category. DMI will continue to maximize dairy farmer investments through innovation, by 

increasing dairy demand, and by identifying and analyzing what works best to move dairy sales. 
4

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5

Chapter 1 

The Dairy and Fluid Milk Promotion Programs 

The Dairy Board and the Fluid Milk Board continued to develop and implement programs to 

expand the human consumption of fluid milk and dairy products. Each promotion program had 

many unique activities. The Dairy Board continued its focus on partnerships and innovation to 

provide consumers with dairy products “how they want them, when they want them, and where 

they want them.” The Fluid Milk Board used the role of calcium-rich fluid milk products in 

successful weight loss for the first half of 2007 and weight maintenance for the second half of 

the year as a central theme and focal point for its activities.

National Dairy Promotion and Research Board

The mission of the Dairy Board is to coordinate a promotion and research program that 

maintains and expands domestic and foreign markets for fluid milk and dairy products produced 

in the United States. The Dairy Board is responsible for administering the Dairy Order, 

developing plans and programs, and approving budgets. Its dairy farmer board of directors 

administers these plans and monitors the results of the programs. 

The Secretary of Agriculture (Secretary) appoints 36 dairy farmers to administer the Dairy 

Order. The appointments are made from nominations submitted by producer organizations, 

general farm organizations, qualified State or regional dairy products promotion, research or 

nutrition education programs (Qualified Programs), and by other means as determined by the 

Secretary (7 CFR §1150.133(a)). Dairy Board members serve 3-year terms and represent 

1 of 13 regions in the contiguous 48 States. Dairy Board members elect four officers: Chair, 

Vice Chair, Treasurer, and Secretary. Current Dairy Board members are listed in Appendix A–1. 

A map of the contiguous 48 States depicting the 13 geographic regions is shown in

Appendix H–1. 

Total Dairy Board actual revenue for 2007 was $93.6 million (including assessments and 

interest). This amount was more than the Dairy Board Budget of $91.4 million for that period. 

The Dairy Board amended its budget to $114.3 million by incorporating program development 

funds not budgeted previously and a $15.2 million carry-forward from their 2006 budget. The 

Dairy Board budget for 2008 projects total revenue of $91.6 million from domestic assessments 

and interest. The Dairy Board administrative budget continued to be within the 5-percent-ofrevenue limitation required by the Dairy Order. A list of actual income and expenses for 2006–

2007 is provided in Appendix B–1. USDA’s oversight and evaluation expenses for 2006–2007 

are listed in Appendix B–2. Appendix B–3 displays the Dairy Board’s approved budget for 

2008. An independent auditor’s report for 2007 is provided in Appendix C–1. 

The Dairy Board has two standing committees: the Finance and Administration (F&A) 

Committee and the Executive Committee. The F&A Committee is made up of the Dairy Board 

officers and appointees named by the Dairy Board Chair. The Dairy Board Treasurer is the 

Chair of the F&A Committee, and the full Dairy Board serves as the Executive Committee. 
6

The remaining committees for the Dairy Board are joint program committees with the United 

Dairy Industry Association (UDIA). 

In March 1994, the Dairy Board approved the creation of Dairy Management Inc. (DMI), a 

management and staffing corporation. DMI is a joint undertaking between the Dairy Board and 

UDIA. UDIA is a federation of 18 of the 58 Qualified Programs under the direction of a board 

of directors. DMI merged the staffs of the Dairy Board and UDIA to manage the Dairy Board 

programs as well as those of the American Dairy Association® and National Dairy Council®

throughout the contiguous 48 States. DMI serves both boards and is structured into product 

platform and mission areas. These platform and mission areas include: Platforms, Partners, 

Sales and Marketing; Export, International Marketing, and Ingredients; Research, Regulatory 

and Scientific Affairs; Strategic Planning, Business Development and Information Management; 

Child Nutrition and Fitness Initiative, Nutrition Leadership, and Integrated Marketing 

Communications; and Image and Industry Relations; and Finance and Administration, Human 

Resources, Strategic Operations. During 2007, DMI successfully implemented a national 

staffing structure which utilizes personnel throughout DMI and the UDIA federation to plan and 

execute the national programs. 

Since January 1, 1995, the Dairy Board and UDIA have developed their marketing plans and 

programs through DMI. DMI facilitates the integration of producer promotion funds through a 

joint process of planning and program implementation so that the programs on the national, 

regional, State, and local level work together. The mission of DMI is to drive increased sales of 

and demand for U.S. dairy products and ingredients, on behalf of U.S. dairy farmers. DMI 

works proactively, and in partnership with leaders and innovators, to increase and apply 

knowledge that leverages opportunities to expand dairy markets. 

DMI funds 1 to 3-year research projects that support marketing efforts. Six Dairy Foods 

Research Centers and one Nutrition Institute provide much of the research. Their locations and 

the research objectives are listed in Appendix E–1. Additionally, lists of DMI’s dairy foods and 

nutrition projects can be found in Appendices E–2 and E–3, respectively. Universities and other 

industry researchers throughout the United States compete for these research contracts. 

At its inception, the DMI Board of Directors consisted of 12 dairy farmers from the Dairy Board 

and 12 dairy farmers from the UDIA Board. An amendment to the articles of incorporation of 

DMI to expand the DMI Board size took effect January 1, 2001, and the expanded DMI Board 

(77) now comprises all Dairy Board (36) and all UDIA (41) members. Voting is equalized 

between the Dairy Board and UDIA. 

The committees for program activities are comprised of board members from both the Dairy and 

UDIA Boards. The Dairy Board and UDIA Board separately must approve the DMI budget and 

annual plan before they can be implemented. In November 2006, both boards approved the 2007 

unified dairy promotion plan budget and national implementation programs. Similar to previous 

plans, the 2007 unified dairy promotion plan continued to support the underlying theme of 

investing dollars where the consumers are – not where dairy cows are. The unified dairy 
7

promotion plan was consistently implemented in the top 150 demand-building consumer markets 

nationwide.

DMI, through Qualified Programs, again hosted dairy director regional planning forums across 

the country to review and create marketing strategies for development of the unified dairy 

promotion plan. These forums are designed to create one unified dairy promotion plan and allow 

opportunity for Qualified Program board members to ask questions, raise concerns, and offer 

their thinking on the plan’s direction and development. 

At the 2007 forums, dairy directors across the country reviewed and endorsed a unified 

marketing plan that continued to focus on (1) 3-A-Day of DairyTM for Stronger Bones, a 

nutrition–based marketing and education program developed to help solve the Nation’s calcium 

crisis and increase consumption of milk, cheese, and yogurt; (2) New Look of School Milk 

which includes efforts to improve the school milk experience for the Nation’s children through 

improvements in packaging, flavors, and availability; (3) Foodservice, where dairy checkoff 

funds are invested to help promote the expansion of flavors and the range of packaging for milk 

in foodservice and restaurants, as well as other dairy product offerings; (4) Partnerships and 

Innovation, which include efforts to help provide consumers dairy products when, where, and 

how they want them; and (5) Dairy Image/Confidence, which aims to protect and enhance 

consumer confidence in dairy products and the dairy industry through correcting misinformation 

and inaccurate claims against dairy. The success of the unified marketing plan relies heavily 

upon DMI’s ability to expand partnerships with processors, retailers, schools, health professional 

organizations, and manufacturers. 

The joint Dairy Board and UDIA Board committee structure provides the framework for DMI 

program activities. The Dairy Board and UDIA Board Chairs assign their respective board 

members to the following joint program committees: Products and Relationships; Producer and 

Industry Relations; Industry Priorities; and Export, Ingredients and Science. Each committee 

elects a Chair and Vice-Chair. The joint committees and the DMI staff are responsible for 

setting program priorities, planning activities and projects, and evaluating results. The Joint 

Evaluation Committee continued to operate in 2007. During 2007, the Dairy Board and UDIA 

Board met jointly six times. 

The following information describes Dairy Board and UDIA program activities along with new 

programs and initiatives implemented in 2007. 

National Dairy Council®/School Marketing 

The National Dairy Council® www.nationaldairycouncil.org (NDC), 

the nutrition marketing arm of DMI, has been the leader in dairy 

nutrition research, education, and communication since 1915. NDC 

provides timely, scientifically sound nutrition information to the 

media, physicians, dieticians, nurses, educators, consumers, and other 

health professionals. NDC continues to work closely with school 

foodservice professionals and milk processors vis-à-vis the benefits of offering an enhanced milk 
8

product in the school cafeteria. The foundation of these efforts is comprised of the results of a 

year-long School Milk Pilot Test conducted in 2002. Currently, more than 50 processors now 

offer milk in single-serve plastic resealable containers on the school meal line and supply 9,200 

schools representing nearly 5 million students nationwide. This number grows each year as DMI 

continues to implement its “New Look of School Milk” initiative and represents over 55 million 

pounds of additional milk sold each year. DMI-funded market research shows that improving 

students’ school milk experience can help recapture school milk consumption of up to 400 

million gallons lost since 1993. NDC was honored at the 2007 Global Dairy Innovation Awards 

for “Best School Milk Initiative” category for its partnership with local dairy processors and 

school districts to encourage milk consumption among students. 

NDC also continued its active support and participation in 

the Action For Healthy Kids® (AFHK) initiative. AFHK 

to the Healthy Schools Summit in 2002 and its mission is 

to inform, motivate, and mobilize schools, school districts, 

and States to chart a healthier course for the Nation’s children and adolescents. AFHK is 

comprised of 51 State teams (including all 50 States and the District of Columbia) and a 

partnership of more than 40 national organizations and Government agencies spanning 

education, health, fitness, and nutrition arenas. AFHK, in 

partnership with the National Football League, continued to 

promote ReCharge! Energizing After-schoolTM, the first 

nationally distributed after-school program that fully integrates 

nutrition and physical activity through teamwork-based 

strategies for youth in grades 3-6. According to AFHK, 

ReCharge! has been distributed to over 8,000 after-school 

programs across the country, reaching over half a million 

students.

National Dairy Council®/Nutrient Rich Foods Coalition 

The activities of the Nutrient Rich Foods Coalition (Coalition) continued in 2007, with the 

National Dairy Council® and other Coalition members from all food groups dedicated to working 

with scientific researchers to develop an approach to address the complete nutrient package of a 

food and how to maximize nutrients from the calories they consume. Through research and 

education, the Coalition aims to shift the way people choose foods and beverages, from focusing 

on single “nutrients to avoid” to understanding the complete nutrient package as a way to build 

better diets and improve diet quality. On the science front, the Coalition worked in 2007 to 

complete a scientifically sound and validated definition of nutrient density, which was called for 

by the advisory committee of the 2005 Dietary Guidelines for Americans. The Coalition also 

developed tools to help health professionals and media spread the word about the importance 

and ease of choosing nutrient-rich foods first. The Coalition published several studies on 

nutrient-rich foods in academic journals and garnered the support of prominent nutrition thoughtleaders, with its scientific advisory panel of third-party experts continuing to guide the science. 

(www.actionforhealthykids.org) was created in response 
9

In addition to reaching kids through the classroom with “Pyramid 

Cafè” and “Pyramid ExplorationsTM,” NDC continued its distribution of 

“Little D’s Nutrition Expedition” and “Arianna’s Nutrition Expedition” 

as the primary focus of nutrition education activities in 2007. Similar 

to “Pyramid Cafè” and “Pyramid ExplorationsTM,” these two programs 

also are targeted to second and fourth grades and reach millions of 

students with messages that milk and dairy products are a key part of a 

healthy diet. Survey results continue to show a high utilization rate for 

these programs. These programs and other resources are available for 

teachers, school foodservice professionals, and consumers at: 

www.nutritionexplorations.org.

Research

In 2007, milk and dairy-related nutrition and product research was continued in the following 

areas: 

1. The role of milk and milk products in the prevention of colon cancer and reduction of blood 

pressure. 

2. Establishing the genetic basis for the activity of probiotic cultures.

3. Demonstration of milk consumption by teens to meet their calcium needs without adversely 

affecting weight.

4. The contribution of dairy’s nutrient package in the development and maintenance of strong 

bones.

5. Investigation of the added value of fortification through the use of probiotics, nutraceuticals, 

nutrient delivery, and flavor enhancement. 

6. The impact of differing milk options and experiences in schools on childhood fluid milk 

consumption behavior and attitudes. 

7. The role of dairy as part of a heart-healthy diet. 

8. The role of calcium-rich dairy products in weight loss and maintenance. 

Export and Dry Ingredients 

DMI’s export enhancement program is implemented by the U.S. Dairy Export Council 

(USDEC). USDEC receives primary funding from three sources: DMI, USDA’s Foreign 

Agricultural Service (FAS), and membership dues from dairy cooperatives, processors, 

exporters, and suppliers. In 2007, USDEC received $9.7 million from DMI; $5.6 million from 

USDA’s Market Access Program, Foreign Market Development Program, and other FAS 

programs that support commodity groups in promotion of their commodities in foreign markets; 

and $750,000 from membership dues. USDEC began its 12th year of operation in 2007 and its 

total budget was $16.6 million. 
10

Figure 1–1. USDEC Offices 

USDEC has offices in Washington, D.C.; Mexico City, Mexico; Tokyo, Japan; Seoul, South 

Korea; Hong Kong, Taipei, and Shanghai, China; Bangkok, Thailand; Beirut, Lebanon; London, 

England; and São Paulo, Brazil (Figure 1–1). In 2007, a weak dollar and strong global demand 

for dairy protein led to another record year for dairy exports. 

Final 2007 export data confirm that U.S. dairy product exports reached $3.06 billion in 2007 

(Figure 1–2). Dairy solids export volume is also a record high at 2.19 billion pounds, more than 

double the export volume of 5 years ago, according to analysis of trade date conducted by 

USDEC (Figure 1–3). This volume represented nearly 9.5 percent of the total U.S. milk 

production (Figure 1–4).

On a value basis, U.S. exports of milk powder, whey, cheese, lactose, butterfat and other dairy 

products were up 62 percent from the prior year, and nearly triple the export value posted in 

2002. It was the fifth straight year U.S. dairy exports increased in both volume and value. 

Figure 1–2. Value of U.S. Dairy Exports 

 Source: USDEC, USDA 

Mexico City, 

Mexico 

Washington, DC 

London, 

England Seoul, South Korea 

Shanghai Tokyo, Japan 

and Taipei, 

China 

Hong Kong, 

China 

Bangkok, 

Thailand 

Beirut,

Lebanon 

São Paulo, 

Brazil
11

Figure 1–3. Volume of U.S. Dairy Exports (total milk solids) 

Additionally, USDEC notes that although the trend had been developing for several years, a 

variety of elements converged to create worldwide “structural shortage” of dairy products in 

2007. Markets were characterized by strong global dairy demand, lower exportable surpluses 

from Europe and Oceania, and a lack of stocks to fall back on. 

Export gains in 2007 occurred in nearly all product categories. By value, the major U.S. dairy 

exports were skim milk powder/nonfat dry milk ($865 million), whey proteins ($759 million), 

cheese ($387 million), and lactose ($304 million). Mexico, Southeast Asia, and Canada 

remained the largest destinations for U.S. dairy products. USDEC continued working to improve 

the export capabilities of domestic dairy companies by providing up-to-date information on 

market conditions, global trade trends, and regulatory requirements for export. 

Figure 1–4. Exports as a percentage of U.S. Milk Production 

Source: USDEC, USDA 
12

Ongoing reverse trade mission activities provide opportunities for domestic dairy product 

suppliers to meet potential importers visiting the United States. 

DMI’s 2007 ingredients program was conducted through DMI’s Innovation and Ingredients 

DMI’s Innovation Program supports dairy product and nutrition research, ingredient applications 

development and technical assistance for the dairy, food, and beverage industries. DMI-assisted 

product development now in the marketplace include: (1) Hershey’s® PayDayTM Pro Bars, which 

use 200,000 pounds of U.S. dairy proteins annually, requiring about 15 million pounds of milk 

and (2) Yoplait® Ultra-Low Carb Yogurt, which created an outlet for 4 million pounds of 

additional milk volume during the year following the launch and more than 250,000 pounds of 

whey protein concentrate, which requires 25 million pounds of milk. Additionally, various 

Schwan’s® products, including Wolfgang Puck Frozen Pizza, Freshcetta Build and Bake Pizza, 

Toastwich grilled cheese sandwiches, and trans-fat free school pizzas, move more than 150 

million pounds of additional milk annually. Producer-funded product research and innovation, 

along with insights into consumer preferences are tools that DMI provides to U.S. dairy 

ingredient suppliers to help sell U.S. dairy ingredients to food and beverage manufacturers. 

Dairy, food, and beverage manufacturers look to DMI as a partner and resource. With food and 

beverage manufacturers, DMI provides know-how and laboratory and professional resources to 

help develop or improve foods using dairy ingredients. 

DMI’s Innovation Program hosted the 2007 Dairy Innovation Forum (Forum) in Scottsdale, 

Arizona. The invitation-only Forum, continued a DMI tradition of bringing together top decision 

makers in science and marketing to develop ways to increase consumption of dairy products. 

The forum attracted a record 189 participants and included industry representatives such as dairy 

processors and cooperatives, food manufacturers, Government officials, ingredient suppliers, 

State and regional representatives, and university researchers. Similar to 2006, the Forum 

continued to focus on innovation – a key to the future of the dairy and dairy ingredient industries.

Additionally, DMI co-sponsored the 10th Annual Dairy Ingredients Symposium in San Francisco, 

California, which highlighted research, manufacturing technology, market trends, and 

application of value-added dairy ingredients. Attendees included scientists, research and 

development managers, directors and decision-makers responsible for production, quality, 

marketing and sales of dairy ingredients, plus food and beverage industry professionals who buy 

or use dairy ingredients.

DMI publications that support the Innovation Program include: (1) Dairy Council Digest–

published six times per year and focuses on the latest dairy nutrition research relevant to dairy, 

food and beverage manufacturers and health professionals; (2) Ingredient Specification Sheets–

cover technical basics of a variety of dairy ingredients and are updated as new data is available; 

(3) Dairy Herald–reports periodically on how food formulators and markets can take advantage 

of taste, cost, functional, and nutritional appeal of dairy ingredients; (4) Application 

Monographs–published as necessary, provide a comprehensive look at how whey protein and 

other dairy ingredients can be used in foods and beverages for different functionality needs; (5) 

Tools for Innovation–a periodic supplement from DMI and Dairy Foods magazine that covers 

Program (Innovation Program) and through the new Web site www.innovatewithdairy.com.
13

dairy product trends and research; (6) Innovations in Dairy–a technical bulletin, published two to 

three times a year on specific topics in dairy products, ingredients, processing, and packaging;

and (7) Dairy Business View–an e-newsletter published bi-monthly with Dairy Foods magazine 

and covers dairy industry news, new technologies, business trends, innovative ideas, and 

research. 

3-A-DayTM of Dairy for Stronger Bones 

The 3-A-DayTM of Dairy for Stronger Bones (3-A-DayTM) marketing and 

nutrition education campaign was officially launched on March 3, 2003, 

and continued in 2007. The program objectives are to increase total 

consumption of dairy products and reinforce dairy as the leading source of 

calcium by providing simple guidance about dairy food selections. The 

development of the program was a joint dairy industry effort led by DMI. 

A key component of the 3-A-DayTM program is the logo, which appears on 

packages and labels of milk, cheese, and yogurt products containing 20 

percent or more of the daily value of calcium. 

Health professional outreach remained a critical component of the 3-A-DayTM program. The 

American Academy of Family Physicians, the American Academy of Pediatrics, the American 

Dietetic Association, and the National Medical Association all continued their support and 

partnership with DMI and 3-A-DayTM. The National Hispanic Medical Association and the 

School Nutrition Association are the latest health professional organizations to partner with dairy 

to educate the public about dairy’s role in a healthy diet and the need to consume three serving of 

milk, cheese, and yogurt daily. By working with key health professional partners like these, 

DMI continued to provide a clear, practical message to the public on the importance of dealing 

with the Nation’s calcium crisis. Combined, these organizations represent more than 250,000 

health professionals nationwide. DMI’s 3-A-DayTM advisory panel, comprised of leaders from 

these organizations along with other nutrition experts, continued to help guide the overall 

campaign as well as nutrition philosophy and principles.

In alignment with the 3-A-DayTM program, DMI continued to execute its overall strategy of 

promoting three servings of dairy a day, encouraging the public to consume, and health 

professionals to support, the government-recommended three servings. One aspect of the three 

servings strategy is to encourage industry to meet consumer needs by developing and marketing 

innovative products that fit changing consumer lifestyles. Through its Fluid Milk Platform, DMI 

worked with industry to develop and test milk products customized to meet specific consumer 

needs, such as lactose-free products or milk products fortified with Omega-3 for heart health. In 

addition to fluid milk, DMI’s Cheese Platform identified opportunities to build sales for cheese 

through industry innovation, including: developing new products to meet consumer health needs 

such as reduced-fat and low-fat cheeses; expanding the use of Hispanic-style and other specialty 

cheeses; and leveraging convenience and new uses for cheese with pizza, burgers, snacks, and 

sandwiches.
14

Foodservice/Partnerships 

DMI continued to work closely with top national restaurant chains, including Subway® and 

Domino’s Pizza®, to ensure that milk and cheese were featured prominently in menu items and 

offerings. Building upon previous efforts leading to the introduction of new milk offerings at 

McDonald’s® and Wendy’s®, DMI helped to motivate a single-serve milk launch in Subway®,

which represents 20,000-plus restaurants nationwide. To date, there are more than 60,000 

restaurants in the U.S. offering milk in single serve plastic resealable containers. Over the next 

year, more than one billion units of milk will be sold at foodservice, or 250 million pounds of 

additional milk sold. 

Also, DMI helped increase cheese use by partnering with national 

restaurant chains to introduce cheese-friendly items and drive 

innovation. DMI partnered with Domino’s Pizza® to develop the new 

“Cheesy Garlic Bread Pizza” that was offered at more than 6,000 

restaurants nationwide. In support of this launch, Domino’s® unveiled 

its new website and offered free music downloads by up-and coming 

artists, and a chance to appear in a television commercial. DMI 

provided funding for culinary and other marketing assistance during 

this effort. 

Additionally, DMI is working at supermarkets by partnering with retailers on a “dairy aisle 

reinvention” project that identifies new ways to position milk, cheese, and yogurt in the dairy 

case and throughout the store. The new merchandising ideas aim to increase traffic and sales in 

the dairy aisle. Partners include Kraft®Foods, Dannon®, Marva Maid, and major regional retail 

partners.

Communications and Technology 

Consumers receive mixed messages through the media about the nutritional value and benefits 

of food. DMI worked to provide consumers with education and information based on sound 

nutritional science and communicated the value of dairy products to consumers as well as to 

health professionals and educators. DMI also worked to inform dairy farmers about how their 

assessment dollars were being used. The organization continued to communicate to dairy 

producers and other industry audiences through publications (such as the annual report, joint 

newsletters with Qualified Programs, and dairy cooperative check inserts), dairy industry events 

(including major trade shows and producer meetings) and media relations (including press 

releases, feature placement, and farm broadcast interviews). DMI continued its “Dairy 

Ambassadors” program which uses a select group of board members to deliver consistent 

messages about the dairy promotion program to producers and other industry audiences. 

DMI continued its support for butter through cooperation and public relations activities with the 

center with current cooking trends and ideas, butter recipes, and links to other butter-related Web 

sites. DMI also continued to work with Wisconsin Milk Marketing Board to execute co-funded 

American Butter Institute, including the Web site www.butterisbest.com, a consumer resource 
15

retail butter promotion activities. The national effort helped to drive incremental retail butter 

sales in select markets across the United States. 

Another activity of the Communications and Technology program was the issues management 

program. The objective of this program is to identify, monitor, and manage key issues that may 

influence consumer perceptions of dairy products. DMI coordinated its issues management 

activities with Qualified Programs as well as with other dairy and agricultural groups. The 

organization worked with these groups to bring forth sound, science-based information to 

address consumer issues. Dairy Reputation Management, and industry-wide efforts that interact 

with the Issues Management, Industry Relations, and Dairy Image programs, continued a 

proactive program to educate consumers and to reinforce the positive attributes of dairy foods, 

dairy farmers, and dairy farming practices to this audience. 

As part of an effort to help protect the image of dairy producers and the dairy industry among the 

about how today’s dairy producers care for their animals, protect the land, and produce safe, 

wholesome milk. 

Qualified State or Regional Dairy Product Promotion, Research, or Nutrition Education 

Programs

Qualified Programs are certified annually by the Secretary. To receive certification, the 

Qualified Program must: (1) conduct activities that are intended to increase human consumption 

of milk and dairy products generally; (2) have been active and ongoing before passage of the 

Dairy Act, except for programs operated under the laws of the United States or any State; (3) be 

primarily financed by producers, either individually or through cooperative associations; (4) not 

use a private brand or trade name in its advertising and promotion of dairy products (unless 

approved by the Dairy Board and USDA); and (5) not use program funds for the purpose of 

influencing governmental policy or action (7 CFR §1150.153). A list of the Qualified Programs 

is provided in Appendix F. 

The aggregate revenue from the producers’ 15-cent per hundredweight assessment directed to the 

Qualified Programs in 2007 was $189 million (approximately 10 cents out of the 15-cent 

assessment). See Appendix B–7 and Appendix B–8 for aggregate income and expenditure data 

of the Qualified Programs. 

Some of these Qualified Programs participate in cooperative efforts conducted and coordinated 

by other Qualified Programs and/or other organizations such as DMI, the Dairy Board, and 

UDIA. Their goal in combining funding and coordinating projects is more effective and efficient 

management of producers’ promotion dollars through larger, broad-based projects. For example, 

UDIA coordinates nationally through DMI the programs and resources of 18 federation members 

and their affiliated units to support the unified marketing plan. 

public, DMI continued its Website, www.dairyfarmingtoday.org. The site educates the public 
16

National Fluid Milk Processor Promotion Board 

The National Fluid Milk Processor Promotion Board (Fluid Milk Board) as authorized in the 

Fluid Milk Act, administers a fluid milk promotion and consumer education program that is 

funded by fluid milk processors. The program is designed to educate Americans about the 

benefits of milk, increase fluid milk consumption, and maintain and expand markets and uses for 

fluid milk products in the contiguous 48 States and the District of Columbia. 

The Secretary of Agriculture appoints 20 members to the Fluid Milk Board. Fifteen members 

are fluid milk processors who each represent a separate geographical region, and five are at-large 

members. Of the five at-large members, at least three must be fluid milk processors and at least 

one must be from the general public. Four fluid milk processors and one public member serve as 

at-large members on the current Fluid Milk Board. The members of the Fluid Milk Board serve 

3-year terms and are eligible to be appointed to two consecutive terms. The Fluid Milk 

Promotion Order (Fluid Milk Order) provides that no company shall be represented on the Board 

by more than three representatives. Current Fluid Milk Board members are listed in 

Appendix A–2. A map of the Fluid Milk Board regions is shown in Appendix H–2.

The Fluid Milk Board elects four officers: Chair, Vice-Chair, Secretary, and Treasurer. Fluid 

Milk Board members are assigned by the Chair to the following committees: Advertising, 

Finance, Promotions, Public Relations, Hispanic, Medical/Scientific, and Strategic 

Thinking/Research. The program committees are responsible for setting program priorities, 

planning activities and projects, and evaluating results. The Finance Committee reviews all 

program authorization requests for funding sufficiency, the Fluid Milk Board’s independent 

financial audit, and the work of the Board’s accounting firm. The Fluid Milk Board met three 

times during 2007. 

The National Fluid Milk Processor Promotion Program (MilkPEP) is funded by a 20-cent per 

hundredweight assessment on fluid milk products processed and marketed commercially in 

consumer-type packages in the contiguous 48 States and the District of Columbia. The program 

exempts from assessment those processors who process and market 3 million pounds or less of 

fluid milk products each month, excluding fluid milk products delivered to the residence of a 

consumer. Assessments generated $107.7 million in 2007. The Fluid Milk Order requires the 

Fluid Milk Board to return 80 percent of the funds received from California processors to the 

California Milk Processor Board. The amount returned to California from 2007 assessments was 

$10.3 million. The California fluid milk processor promotion program uses the funds to conduct 

its promotion activities, which include the “got milk?®” advertising campaign. 

The actual income and expenses for 2006–2007 are provided in Appendix B–4. The Fluid Milk 

Board’s administrative expenses continued to be within the 5-percent-of-assessments limitation 

required by the Fluid Milk Order. USDA’s oversight and evaluation expenses for 2006–2007 are 

detailed in Appendix B–5. Appendix B–6 contains the Fluid Milk Board’s approved budget for 

2008. Appendix C–2 contains an independent auditor’s reports for the period of January 1 

through December 31, 2007. 
17

The following sections summarize the Fluid Milk Board medical and scientific; sponsorship; 

advertising; promotion; public relation; strategic thinking; and school marketing programs and 

activities for 2007. 

Medical and Scientific Activities

The Fluid Milk Board’s Medical Advisory Board (MAB), comprised of academic, medical, and 

health care professionals with expertise relevant to the health benefits of fluid milk, met twice in 

2007. The MAB provides guidance to the Fluid Milk Board’s development of key nutritional 

and health messages for consumers and health professionals. MAB members assisted the Fluid 

Milk Board in continuing relationships with health and health professional organizations such as 

the American Academy of Pediatrics, the American Dietetic Association, the American Heart 

Association, the National Cancer Institute, and the National Medical Association. They also 

appeared as medical professionals in the media, providing science-based statements supporting 

the health benefits of milk. 

The medical and scientific activities of the Fluid Milk Board also included preparing press 

materials and acting as spokespersons on breaking research with relevance to fluid milk. The 

MAB worked extensively over the past year to inform others in the scientific community of the 

new and emerging research showing that three servings of milk each day as part of a daily 

nutrition plan may help people maintain a healthy weight. These communications and activities 

continue to highlight milk’s nutritional profile that includes nine essential vitamins and minerals. 

The “Good For You” (GFY) program, with the primary goal of promoting milk’s nutritional 

benefits, continued to leverage breaking research with relevance to milk and is supported with 

advertising and public relations. The focus of GFY efforts was to inform consumers and the 

public about emerging research regarding the role milk may play in preventing weight gain and 

maintaining a healthy weight. The MAB was very involved in helping the Fluid Milk Board 

explore ways to leverage the information in public relations and advertising messages 

surrounding breaking research. A detailed accounting of 2007 research may be found in the 

National Fluid Milk Programs 

The Fluid Milk Board continued to execute a generic national fluid milk processor promotion 

program. The fluid milk marketing programs are research based and message focused for the 

purpose of positively changing the attitudes and purchase behavior of Americans regarding fluid 

milk. MilkPEP’s primary objectives are to increase the consumption of fluid milk and to identify 

and support growth opportunities for the fluid milk industry. The first half of 2007, the fluid 

milk marketing plans were designed to conduct marketing and promotional activities 

emphasizing milk’s role in supporting healthy weight loss. The latter half of the year, the 

messaging focused on milk’s weight maintenance benefits. Many communication media were 

used to accomplish these objectives, including television and print advertising, press releases, 

promotions, internet, and others. The program’s target audiences included women and moms, 

teens, and Hispanics. 

MilkPEP newsroom’s got news? section of www.milkpep.org.
18

The got milk?®/Milk Mustache advertising campaign, continued to provide the basis for 

advertising activities and other program delivery methods. A description of the 2007 program 

activities follows. 

Sponsorships

The Fluid Milk Board continued leveraging its multi-year partnership with Walt Disney 

Corporation®. The sponsorship provides a unique opportunity to raise milk’s image among teens 

and young adults by highlighting the message that milk is a great beverage of choice for active 

teens and for athletes of all ages. As part of the partnership, milk continued to be “the official 

training fuel” of Disney’s Wide World of SportsTM, while the “Milk House,” a state-of-the art 

facility that hosts more than 30 championships and 20 tournaments for more than 40 different 

amateur sports (including baseball, football, soccer, volleyball, and inline hockey) annually, 

remained the centerpiece arena. The “Milk House” features prominently displayed 

got milk?® signage and milk mustache posters throughout the complex. 

The Fluid Milk Board sponsored the Scholar Athlete Milk Mustache of the Year (SAMMY) 

program for the tenth year and awarded 25 high school students from various regions across the 

United States a $7,500 scholarship. Each applicant was required to list his/her high school 

achievements and tell why milk is an important beverage to include in his/her daily regimens. 

This year SAMMY received more than 66,000 applications. In addition to the scholarship 

award, each of the 25 winners were inducted into the SAMMY Hall of Fame and featured in a 

special milk mustache advertisement (Appendix G) which appeared in USA Today, Sports

Illustrated, and ESPN magazine. Winners were selected by milk mustache celebrity judges. 

Advertising

The Fluid Milk Board advertising program consisted of television and print advertising as well as 

media-driven promotions. The advertisements highlighted specific, relevant health-benefit 

messages about milk and its nutrient content, while media-driven promotions served to extend 

the advertising campaign. 

The “Little Victories” television advertisement was created 

encouraging women to include 24 ounces daily of lowfat or fat-free 

milk as part of their daily diet to promote milk’s benefits. As the 

Fluid Milk Board evolved it’s messaging the ad was subsequently 

revised to promote milk’s weight maintenance benefits. The ad 

prominently featured women being active with their families and 

consuming milk. Additionally, a public-service type vignette was 

created featuring actress Mariska Hargitay extolling the benefits of 

consuming more lowfat or fat-free milk and encouraging moms to 

think about their drink.

Fluid milk print advertisements produced in 2007 included celebrity advertisements targeting 

moms and women; celebrity advertisements with the active, bone growth, and healthy weight 
19

messages targeting teen boys and girls; contest and sweepstakes announcements and winners; 

Hispanic; school milk posters; and trade advertisements. The Fluid Milk Board leveraged a new 

logo for milk’s message: “Think About Your Drink”. Appendix G includes thumbnail images 

of the Fluid Milk Board’s television and print advertisements, public relations, and promotion 

efforts. 

The national Hispanic advertising campaign continued as part of industry outreach to the 

growing Hispanic population. The advertisements continued to feature the popular tagline,

“Más leche, Más logro” (“More milk, More achievement”), which reminds Hispanic moms to 

include 24 ounces daily of lowfat or fat-free milk to promote milk’s healthy weight benefits. 

Print advertising featured celebrities Maria Celeste, Barbara Mori, and Sara Ramirez, along with 

several Hispanic advertorials designed to compliment the general market’s weight maintenance 

message with an integrated Hispanic overlay. Hispanic consumers were directed to 

Promotions 

The Fluid Milk Board conducted promotions to help increase fluid milk sales in retail outlets.

The promotions worked to move more milk out of the grocery store refrigerator and to increase 

sales in other retail outlets such as convenience stores, independent grocery stores, drug stores, 

and mass merchandisers. For some promotions, the Fluid Milk Board worked with partners to 

increase the appeal to consumers. Promotional activities continued to focus on feature incentives 

to increase advertisements, displays of milk, and programs offering prizes directly to consumers 

to help drive incremental purchases. Qualified Programs play an important role in the execution 

of these retail programs. 

The Fluid Milk Board conducted four national promotions in 2007. The first promotion, “Think 

About Your Drink” was launched in January featuring personal fitness trainer Kathy Smith 

encouraging consumers to include lowfat or fat-free milk to support a healthy weight. The 

promotion offered consumers a chance to win 1 of 24 trips for 2 to La Costa Resort and Spa by 

Spanish versions. 

The second promotion, “Another Reason. Another Season.,” a 4-week retail promotion program 

launched in May, included a life-size refrigerator shipper in-store display encouraging women to 

think about their drink. Consumers were given free magnets with motivational slogans when 

win a 2-week free membership at Curves® fitness centers. 

The third promotion, “Give Your Family Something 

Smarter”, held in the August/September back-to-school 

period encouraged mom to give her family a beverage 

which could provide numerous health benefits for the 

whole family. 

www.2424leche.com for more information on Hispanic healthy weight activities.

registering at www.2424milk.com. Promotional materials were available in both English and 

they purchased milk and could enter online at www.thinkaboutyourdrink.com for a chance to 
20

The final promotion, “Chocolate Milk – the Official Drink of Halloween,” held in October, 

focused on flavored milk as a healthy treat for moms to give her kids at Halloween. Retailers 

could choose prizes such as MP3 players to offer as in-store giveaways, employee incentives, or 

other ways to help increase flavored milk sales. Promotional point-of-sale materials included 

banners, wobblers, and static clings to aid retailers in creating exciting in-store displays. This 

promotion also included a Hispanic component. Appendix G includes thumbnail images of the 

Fluid Milk Board’s promotional activities. 

Public Relations

The public relations programs continued to focus on (1) the nutritional benefits of milk; 

(2) emerging scientific studies that highlight milk’s benefits; (3) leveraging the high interest 

generated by the celebrities and the got milk?®/Milk Mustache campaign; and (4) preparing for 

and responding to misinformation and negative news about milk or the educational campaign. A 

wide variety of initiatives were implemented to reach specific target audiences. Almost 2 billion 

media impressions were garnered through the integrated public relations program. The program 

provided support for the four national retail promotions by helping to build public awareness and 

increase retailer participation. 

For the tenth consecutive year, the Milk Mustache Mobile Tour made its way around the United 

States. This year’s tour, “Think About Your Drink,” (TAYD) ran from April through August, 

covering 75 cities nationwide, with 8 cities conducting Hispanic overlays. Events included 

Curves® workout equipment, fluid milk sampling, and health assessments by a nutritional expert. 

This year the tour trucks’ signage was again dedicated solely to moms and women, and featured 

celebrity moms. The TAYD tour provided consumers a “What America Drinks” report 

detailing Americans’ beverage consumption habits and encouraging choosing three glasses of

lowfat or fat free milk daily as part of a healthy diet. 

The 2007 “Healthy Student Bodies” program encouraged 

students to get fit and healthy. Students could write 

testimonials regarding their school’s fitness and nutrition 

efforts toward students. Fifty schools were awarded $1,000 

grants to support fitness and nutrition programs and a special 

got milk?® recognition assembly. The students nominating 

the winning schools were awarded sports gear and apparel from Adidas® and a year’s 

subscription to Sports Illustrated and Teen People.

MilkPEP continued to raise consumer awareness of a recent study through television, radio, 

print, and online stories as well as visiting cities nationwide to promote lowfat chocolate milk as 

a recovery drink to athletes in local walk/runs and other sporting events and by engaging local 

processors. The February 2006 issue of the International Journal of Sport Nutrition and 

Exercise Metabolism, featured a study which touted lowfat chocolate milk as a recovery 

beverage after strenuous exercise. The study, conducted at Indiana University, had nine 

endurance cyclists pedal bicycles until their muscles were depleted of energy, rest 4 hours, then 

bike again until exhaustion on three separate occasions. During the rest period, the cyclists 
21

drank lowfat chocolate milk, a carbohydrate replacement sports drink, or a traditional fluid 

replacement sports drink. Cyclists who drank the lowfat chocolate milk were able to pedal 

nearly twice as long in the second round of exercise than those who consumed the carbohydrate 

replacement drink, and as long as those who consumed the fluid replacement drink. 

continued to help processors with their local media efforts. This 

feature gave processors access to customizable media materials from 

National Programs such as the Milk Mustache Mobile to use in their 

own public relations efforts. Additionally, the Web site provided a 

daily email to processors for breaking news, a list of dietetic spokespersons for use as a resource, 

processor success stories, and links to a searchable library of medical research studies. 

Brochures, news releases, and other information on milk were made available to consumers 

Strategic Thinking

The Fluid Milk Strategic Thinking Initiative (FMSTI) is a joint effort of the Fluid Milk Board, 

processors, and suppliers. This ongoing effort was established to address barriers to fluid milk 

consumption not targeted by the advertising, promotion, and public relations activities. 

Over the years, FMSTI has conducted market tests and studies in various business channels to 

develop proven ways to increase milk sales and subsequently turned these studies into customerinclude reports on milk’s opportunities in vending, foodservice, convenience and drug store, 

supermarket and school foodservice channels. Some of the materials included are brochures 

focusing on new ways to get kids to drink more milk; vending sales kits containing results from 

the 2003 Multi-Channel Vending Test; and many other reports and studies published in prior 

years highlighting opportunities for increased milk sales. 

Complete reports, studies, executive summaries, and press releases for FMSTI’s ongoing 

School Marketing 

FMSTI continued to conduct several seminars to educate processors on how to increase their 

milk sales at schools. The seminars were part of the “Capturing the School Milk Opportunity” 

program, which presents processors with a myriad of options they can implement to improve 

school milk. Seminar schedules continued to include presentations to representatives of the 

School Nutrition Association at various locations across the United States. 

The MilkPEP newsroom’s “got news?” section at www.milkpep.org

through Web sites www.whymilk.com, www.milkpep.org, www.bodybymilk.com, and 

www.thinkaboutyourdrink.com.

friendly processor materials which may be found at www.milkdelivers.org. These materials 

initiatives are available for processors on Web site www.milkpep.org and for customers at 

the milk hotline at 1-800-945-MILK (6455.) 

www.milkdelivers.org. The presentations, videos, and printed materials are available by calling 
22

The “Spotlight On” program continued in 2007 and recognized school professionals such as 

principals and food service directors who actively encouraged students to improve their health by 

consuming more milk. The program rewarded one contestant per month and a grand prize 

winner at the end of the year. Monthly winners received got milk?® cooler barrels for their 

schools and iPods® for themselves. Entrants shared their stories via essays submitted on 

officials or members, and all school administrators. Winners were selected by a panel of dairy 

industry experts. MilkPEP posted all entries on the Web site in order to inspire more entries and 

to help inspire schools to improve milk opportunities to students such as introducing new flavors 

and packaging, hosting milk sampling days, or adding milk to the à la carte selections. 

The Fluid Milk Board expanded its School Image Poster 

Program for the 2007–08 school year to help educate students 

and school food service professionals about the role milk 

plays in good nutrition. Kits were sent to 45,000 

participating public middle and high school foodservice 

directors in August for the beginning of the school year 

promoting the new BodyByMilkSM (BBMSM) campaign which spoke to teens directly about a 

healthy lifestyle which included drinking milk. Kits contained truck-sized posters, static clings, 

and banners to be displayed in school cafeterias. Smaller posters were sent to schools with 

cafeteria size limitations. More than 60,000 public elementary schools received posters with 

traditional health messages such as the “nine essential nutrients active bodies need.” 

This year’s posters featured various artists, actors, and athletes such as Amanda Bynes, Steve 

Nash, Shrek, the cast of High School Musical, Olympic athletes (male and female versions), 

Laila Ali, Hayden Panettiere, and Masi Oka. The posters and other school materials are 

displayed in Appendix G. The BBMSM message encouraged teens to drink three glasses of 

lowfat or fat-free milk daily to give their bodies the nutrients they need, like protein to build 

muscle. Additionally, some studies suggest teens that choose milk tend to be leaner than those 

who choose sugary beverages. The BBMSM program integrated messaging in print advertising 

and promotion in the schools’ cafeterias, online, and at retail. Students were encouraged to save 

their UPC codes from milk containers and redeem them online for free music downloads at 

www.milkdelivers.org. The program was open to school nutrition professionals, school board 

www.bodybymilk.com.
23

Chapter 2 

USDA Activities 

The Dairy Programs unit of USDA’s Agricultural Marketing Service has day–to–day oversight 

responsibilities for the Dairy Board and the Fluid Milk Board. Dairy Programs oversight 

activities include reviewing and approving the Dairy and Fluid Milk Boards’ budgets, budget 

amendments, contracts, advertising campaigns, and investment plans. Approval of program 

materials is a major responsibility of Dairy Programs. Program materials are monitored for 

conformance with provisions of the respective Acts and Orders, USDA’s My Pyramid, the 

U.S. Dietary Guidelines for Americans, and with other legislation such as the Nutrition Labeling 

and Education Act. 

Dairy Programs continues to ensure that the collection, accounting, auditing, and expenditure of 

promotion funds is consistent with the enabling legislation and orders; to certify Qualified 

Programs; and to provide for evaluation of the effectiveness of both promotion programs’ 

advertising campaigns. Dairy Programs assists the Boards in their assessment collection, 

compliance, and enforcement actions. 

Other Dairy Programs responsibilities relate to nominating and appointing Board members, 

amending the orders, conducting referenda, and conducting periodic management reviews. 

Dairy Programs representatives attend full Board and committee meetings, and other meetings 

of consequence to the program. 

National Dairy Promotion and Research Board Oversight

Nominations and Appointments 

The 36 members of the Dairy Board who administer the program serve 3-year terms, with no 

member serving more than two consecutive terms. Dairy Board members must be active dairy 

producers and are selected by the Secretary of Agriculture from nominations submitted by 

producer organizations, general farm organizations representing dairy producers, Qualified 

Programs, or other interested parties. 

Thirty-eight nominations were received by USDA for the 12 Dairy Board members whose 

terms expired October 31, 2007. A press release issued on October 16, 2007, announced the 

appointment of seven new members and five incumbents. All will serve 3–year terms ending 

October 31, 2010. Newly appointed were: James L. Zielinski, St. Paul, Oregon (Region 1); 

James L. Ahlem, Hilmar, California (Region 2); Stephen D. Maddox, Riverdale, California 

(Region 2); Brad J. Scott, Moreno Valley, California (Region 2); Pauline Tjaarda, Shafter, 

California (Region 2); William J. Herr, Greenwood, Wisconsin (Region 6); and Corrine M. 

Banker, Morrisville, New York (Region 12). Reappointed to serve second terms were: Grant 

Kohler, Midway, Utah (Region 3); Jose L. Gonzalez, Mesquite, New Mexico (Region 4); Paul L. 

Broering, Saint Henry, Ohio (Region 9); John M. Larson, Okeechobee, Florida (Region 10); and 

Paula A. Meabon, Wattsburg, Pennsylvania (Region 11).
24

A list of current Dairy Board members appears in Appendix A–1. Appendix H–1 is a map of the 

contiguous 48 States depicting the 13 geographic regions under the Dairy Promotion and 

Research Order (Dairy Order). 

Organic Exemption 

Effective February 14, 2005, any persons producing and marketing solely 100 percent organic 

products were exempted from paying assessments to any research and promotion program 

administered by the Agricultural Marketing Service (70 FR 2743, published January 14, 2005).

The final rule amended Section 1150.157 of the Dairy Order. In States that have mandatory 

assessment laws, dairy producers are only exempt from the Federal assessment. Producers are 

still responsible for remittance of State assessments. In 2007, approximately 863 dairy producers 

were granted exemptions representing approximately 1 billion pounds of production. The Dairy 

Order requires producers to re-apply annually to continue to receive the exemption. 

Amendment to the Dairy Act

On November 10, 2005, the President signed the Agriculture Appropriations Bill (Bill), which 

modified Section 781 of the Dairy Production Stabilization Act of 1983 (7 U.S.C. et seq.). The 

modification implemented a one-year allowance (during fiscal year 2006) for the National Dairy 

Promotion and Research Board to obligate and to expend funds for any activity to improve the 

environment and public health. Additionally, the Bill required the Secretary to review the impact 

of any expenditure pursuant to this change and include the review in the 2007 report of the 

Secretary to Congress on the dairy promotion program. 

At its January 2006 meeting, the Dairy Board passed a motion authorizing expenditure of up to 

$6 million, administered and overseen by the National Milk Producers Federation (NMPF), to 

fund a portion of the National Air Emissions Monitoring Study (NAEMS). The NAEMS is 

intended to collect air emission data and create tools that all dairies can use, whether they are 

participating in the Environmental Protection Agency Air Quality Compliance Agreement 

(Consent Agreement) or not, to determine whether their air emission levels are in excess of the 

Clean Air Act thresholds and Comprehensive Environmental Response, Compensation and 

Liability Act and Emergency Planning and Community Right to Know Act reporting 

requirements. The Consent Agreement was developed to offer protection to operations while 

research is conducted to determine the size and type of farms that may have regulatory 

responsibilities. Currently, little air emissions data exists for dairy operations.

NMPF is responsible for representing the interests of the Dairy Board with the Agriculture Air 

Research Council (AARC), through two board members on the AARC. The AARC is the nonprofit organization formed to administer the air emission study and manage the accounting of the 

funds for all livestock and poultry groups involved. 

The latest report of the AARC notes that the study is approximately 50 percent complete. The 

study is projected to conclude in the first half of 2010; and the focus will shift to wrap-up, 

equipment reconciliation, site decommissioning, and final data transfer to the Environmental 

Protection Agency (EPA). EPA will have up to 18 months to complete the data interpretation. 
25

Foreign Agricultural Service 

The Secretary of Agriculture has delegated oversight responsibility for all foreign market 

development activities outside the United States to the Foreign Agricultural Service (FAS) 

(7 CFR 2.43(a)(24)). FAS reviews the USDEC foreign market development plan and related 

export contracts. USDEC export contracts also are reviewed by AMS Dairy Programs to ensure 

conformance with the Dairy Production Stabilization Act of 1983 (Dairy Act), Dairy Order, and 

with established USDA policies. In 2007, the USDA’s Foreign Market Access Program and the 

Market Promotion Program provided matching funds to USDEC for dairy product promotion and 

market research in Japan, Mexico, Southeast Asia, South Korea, and Latin America. 

Contracts 

The Dairy Act and Dairy Order require that all contracts expending assessment funds be 

approved by the Secretary (7 CFR 1150.140). During 2007, Dairy Programs reviewed and 

approved 343 Dairy Board and Dairy Management Inc. (DMI) agreements, amendments, and 

annual plans. Funding approvals were from the 2005 and 2006 fiscal periods. Appendix D–1 

lists the contractors and corresponding Board initiatives approved by USDA. 

Contractor Audits

During 2007, DMI retained the certified public accounting firm Ernst & Young to audit the 

records of the following contractors: Edelman Public Relations Worldwide (public relations and 

communication), WebMD (marketing communications), Children’s Hospital, Oakland Research 

Institute (research), The NPD Group (marketing), and Arab Marketing Finance, Inc. (export).

These contractors represented expenditures totaling approximately $11.4 million. One of the 

five audits had minor findings, and the contractor has agreed to take corrective action based on 

the auditor’s recommendation. DMI continues to enhance procedures to improve management 

and internal controls over contracts.

Collections 

The Dairy Act specifies that each person making payments to a producer for milk produced in 

the United States and purchased from the producer shall, in the manner as prescribed by the 

order, collect an assessment based upon the number of hundredweights of milk for commercial 

use handled for account of the producer and remit the assessment to the Dairy Board. The 

current rate of assessment is 15 cents per hundredweight of milk for commercial use or the 

equivalent thereof as determined by the Secretary. 

The Dairy Act provides that dairy farmers can direct up to 10 cents of their 15-cent per 

hundredweight assessment to Qualified Programs. During 2007, the Dairy Board received

about 5.04 cents of the 15-cent assessment. 
26

Compliance 

Compliance by responsible persons in filing reports and remitting assessments continues in a 

timely manner and at a high rate. No significant differences were discovered when comparing 

the audit results to what was reported by the responsible persons. The Dairy Board verifies that 

the credits claimed by responsible persons are actually sent to Qualified Programs. This 

verification is done by contract with each Qualified Program. When noncompliance exists, the 

Dairy Board takes initial action on the matter. If the Dairy Board is unsuccessful in resolving the 

violation, the matter is referred to USDA for further action. 

Qualified Programs 

Dairy Programs reviewed applications for continued qualification from 58 Qualified Programs. 

A list of the active Qualified Programs is provided in Appendix F. Consistent with its 

responsibility for monitoring the Qualified Programs, Dairy Programs obtained and reviewed 

income and expenditure data from each of the programs. The data reported from the Qualified 

Programs are included in aggregate form for 2006 and 2007 in Appendix B–7 and

Appendix B–8.
27

National Fluid Milk Processor Promotion Board Oversight

Nominations and Appointments 

The 20 members of the Fluid Milk Board serve 3-year terms, with no member serving more 

than two consecutive terms. The Fluid Milk Promotion Order (Fluid Order) provides that no 

company shall be represented on the board by more than three representatives. Fluid Milk

Board members who fill vacancies with a term of 18 months or less are permitted to serve 2 

additional 3-year terms. Fluid Milk Board members are selected by the Secretary from 

nominations submitted by fluid milk processors, interested parties, and eligible organizations. 

In a news release issued on February 29, 2008, the Secretary announced three reappointments 

and six new appointments to the Fluid Milk Board. Reappointed to serve a second term were:

Brian Haugh, Dallas, Texas (Region 8); and Michael A. Krueger, Phoenix, Arizona (At-Large 

Processor). Re-appointed to serve a first term after filling a vacancy lasting less than 18 months 

was Jay B. Simon, Stockton, California (Region 14). Newly appointed were: James F. Walsh, 

Lynnfield, Massachusetts (Region 2); Michael R. Smith, Lakeland, Florida (Region 5); and 

Steven M. Turner, Covington, Tennessee (Region 11). The reappointed and newly appointed 

members were officially seated at the July 17-19, 2008, meeting. The terms for these appointees 

will expire on June 30, 2010. Filling vacancies with less than 18 months remaining were: John 

R. Zuroweste, Dallas, Texas (Region 12); Charles S. Mayfield, Jr. (At-Large Processor); and 

Janey K. Thornton, Ph.D. (At-Large Public), who were officially seated at the April meeting. 

Additionally, in a press release issued June 3, 2008, Jay S. Bryant, Reston, Virginia (Region 6) 

was appointed to fill a vacancy with less than 18 months remaining. The term for these positions 

expires June 30, 2009.

A list of current Fluid Milk Board members appears in Appendix A–2. Appendix H–2 shows a 

map depicting the 15 geographic regions under the Fluid Milk Order.

Program Development 

The Fluid Milk Board contracted with the International Dairy Foods Association (IDFA) to 

manage the program. Mid-year, the Fluid Milk Board restructured its operations and contracted 

directly with Lowe Worldwide; DRAFTFCB; Weber Shandwick; and Siboney, USA, to develop 

its mom and teen advertising, promotions, consumer education/public relations, and Hispanic 

advertising/public relations, respectively.

Contractor Audits 

The Fluid Milk Board retained the certified public accounting firm of Synder, Cohn, Collyer, 

Hamilton & Associates, P.C., to audit the records of Lowe Worldwide, in order to determine if 

the agency had conformed to the financial compliance requirements specified in its agreement 

with the Board for the period of January 1 through December 31, 2007. 
28

The Board continues to enhance its internal contract control system in order to ensure that the 

amounts invoiced to the Board are in compliance with established contracts and procedures.

Compliance 

Compliance by fluid milk processors in filing reports and remitting assessments continues in a 

timely manner and at a high rate. 
29

Chapter 3 

Impact of Generic Fluid Milk and Dairy Advertising and Promotion on

Dairy Markets: An Independent Analysis 

The Dairy Production and Stabilization Act of 1983 (Dairy Act; 7 U.S.C. 4514) and the Fluid 

Milk Promotion Act of 1990 (Fluid Milk Act; 7 U.S.C. 6407) require an annual independent 

analysis of advertising and promotion programs that operate to increase consumer awareness and 

sales of fluid milk and related dairy products. From 1988 through 1994, USDA conducted the 

independent analyses of the National Dairy Promotion and Research Program (Dairy Program), 

as authorized by the Dairy Act, and issued an annual Report to Congress on the effectiveness of 

the Dairy Program. From 1995 through 1997, the USDA analyses evaluated the effectiveness of 

the Dairy Program in conjunction with the National Fluid Milk Processor Promotion Program 

(Fluid Milk Program), authorized by the Fluid Milk Act. Since 1998, these independent analyses 

have been conducted by agricultural economists from Cornell University. 

The economic evaluation focuses on generic marketing activities by dairy farmers and fluid milk 

processors that are designed to increase the demand for fluid milk and dairy products. The results 

of two separate models are presented. The first model is a fluid milk-only demand model used to 

evaluate the economic impacts of all generic fluid milk marketing activities of both programs on 

fluid milk demand. The generic fluid milk marketing activities include fluid milk advertising 

and non-advertising marketing activities used to increase demand. Similar to last year’s study, 

the marketing activities are divided into two general categories: advertising and non-advertising 

marketing activities. Advertising includes all media activities such as television, print, radio, and 

outdoor advertising. Non-advertising marketing includes retail programs, school marketing, 

food service and manufacturing programs, integrated communications, public relations, sales 

promotions, nutrition education, retail programs, and sponsorships conducted by fluid milk 

processors and dairy farmers. The advertising and non-advertising marketing variables represent 

all demand enhancing activities by fluid milk processors and dairy farmers. They do not include 

expenditures on overhead, longer-term business development programs, research, loan and 

grants, technical support, industry relations, and corporate technology. While the dairy farmers’ 

and fluid milk processors’ programs utilize various types of marketing strategies to increase fluid 

milk consumption, the effects of fluid milk marketing under both programs are combined 

because the objectives of both programs are the same and data cannot be satisfactorily segregated 

to evaluate the two programs separately. 

The second model is a combined fluid milk and dairy product demand model (measured in terms 

of domestic commercial disappearance) used to evaluate the economic impacts of all generic 

marketing activities for those products. This model, which is hereafter referred as the “all-dairy 

products” model, is included because the dairy farmer programs now emphasize an “all dairy” 

promotion strategy over product-specific campaigns. As in the first model, marketing activities 

in the second include generic advertising and non-advertising marketing activities. Also, 

advertising and non-advertising marketing strategies are included as two separate variables in the 

demand model. Unlike the first model, the marketing activities in the second model include 

activities for all-dairy products (fluid and manufactured dairy products). This model provides a 
30

measure of the economic impact of all demand-enhancing, generic marketing activities by 

processors and farmers. 

Highlights 

While per capita fluid milk consumption has been declining for decades in the United States, 

generic fluid milk marketing activities sponsored by fluid milk processors and dairy farmers 

have helped mitigate some of this decline. We estimate that these marketing efforts have had a 

positive and statistically significant impact on per capita fluid milk consumption. Specifically, 

over the period 1995 through 2007, we estimate that a 1.0 percent increase in generic fluid milk 

advertising expenditures resulted in a 0.057 percent increase in per capita fluid milk consumption 

when holding all other demand factors constant. Over the same period, we estimate that a 

1.0 percent increase in generic fluid milk non-advertising marketing expenditures resulted in a 

0.062 percent increase in per capita fluid milk consumption when holding all other demand 

factors constant. 

In terms of total consumption of fluid milk, generic fluid milk marketing activities increased 

fluid milk consumption by 30 billion cumulative pounds from 1998 to 2007, or 3 billion pounds 

per year on average. Put differently, had there not been generic fluid milk marketing conducted 

by the two National Programs, fluid milk consumption would have been 5.4 percent less than it 

actually was over this time period. Hence, the combined fluid milk marketing efforts by dairy 

farmers and fluid milk processors have had a positive and statistically significant impact that is 

partially mitigating declines in fluid milk consumption. Moreover, it appears that the 

performance of these marketing programs has become more effective over time. For instance, in 

1998, it is estimated that fluid milk consumption would have been 4.8 percent lower in the 

absence of the two programs, while in 2007, milk consumption would have been 6.1 percent 

lower in the programs’ absence. 

In terms of the all-dairy product demand analysis, the average generic dairy advertising elasticity 

for this period on a non-fat and a fat basis was 0.027 and 0.029, respectively; a 1.0 percent 

increase in media advertising expenditures would increase per capita all-dairy product demand 

by 0.027 (non-fat basis) and 0.029 (fat basis) percent. The average non-advertising marketing 

elasticity for this period was 0.016 (non-fat) and 0.029 (fat); a 1.0 percent increase in media 

advertising expenditures would increase per capita all-dairy product demand by 0.016 (non-fat) 

and 0.029 (fat) percent. Thus, the total marketing (advertising and non-advertising) effort by 

dairy farmers and fluid milk processors has had a positive and statistically significant impact on 

dairy consumption. 

Cornell calculated the benefit–cost ratio (BCR) for the Dairy Program for the period 1998 

through 2007. The benefits of the Dairy Program were calculated as the change in dairy farmers’ 

net revenue (producer surplus) due to demand enhancement from all marketing activities under 

the Dairy Program by way of increased sales and higher prices. The costs of the Dairy Program 

were calculated as the difference in total assessment revenues before and after the National 

Program was enacted. The results show that the average BCR for the Dairy Program was 5.52 

(non-fat solids basis) and 5.94 (milk-fat basis) from 1998 through 2007. This means that each 

dollar invested in generic dairy marketing by dairy farmers during the period would return 
31

between $5.52 and $5.94, on average, in net revenue to farmers. The level of the marketing BCR 

suggests that the combined marketing programs supported by dairy farmers have been a 

successful investment. 

To make allowance for the error inherent in any statistical estimation, a 90 percent confidence 

interval was calculated for the average BCR, providing a lower and upper bound for the average 

BCR. One can be 90 percent “confident” that the true average BCR lies within those bounds. 

The estimated lower bounds for the average BCR in the non-fat and fat models were 1.12 and 

1.41, respectively. Hence, it is reasonable to conclude that these confidence intervals give 

credence to the finding that the benefits of the Dairy Program’s marketing activities have been 

considerably greater than the cost of the programs. 

Analysis of Generic Fluid Milk Marketing 

Per capita fluid milk consumption in the United States has been steadily declining for decades. 

Among the factors behind this decline are changes in U.S. demographics, changes in consumer 

preferences for fluid milk, how and where people consume food, changes in consumer income 

and retail fluid milk prices, changes in advertising and marketing by producers of beverages that 

compete with fluid milk, and changes in generic fluid milk advertising and marketing. The 

following is a brief graphical overview of changes in per capita fluid milk consumption and 

factors hypothesized to affect milk consumption from 1995 through 2007. It is important to 

emphasize, however, that the decline in per capita fluid milk consumption has occurred over a 

significantly longer period of time than since 1995. 

Figure 3–1 illustrates the declining trend in per capita fluid milk consumption since 1995. From 

Figure 3–1. Per Capita Fluid Milk Consumption. 

170.0

175.0

180.0

185.0

190.0

195.0

200.0

205.0

210.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Pounds
32

1995 through 2007, annual per capita consumption declined by 11.8 percent. This translates into 

an average annual rate of decline of about 1.0 percent per year. Annual per capita consumption 

actually increased slightly from 2005 to 2006, increasing from 183.8 pounds to 184.3 pounds, 

but declined from 184.3 to 182.7 pounds from 2006 to 2007. One potential cause for declining 

per capita fluid milk consumption may be the increasing trend in food consumed away from 

home. As people consume more food away from home, fluid milk consumption may be 

diminished by the lack of availability of many varieties of fluid milk products at the Nation’s 

eateries as well as the expanding availability of fluid milk substitutes. Many eating 

establishments carry only one type of fluid milk product, which causes some people who would 

normally drink fluid milk to consume a different beverage if the preferred fluid milk product is 

not available.

Figure 3–2 illustrates the trend in expenditures on food consumed away from home as a 

percentage of total food expenditures. From 1995 through 2007, the annual average percentage 

of expenditures on food consumed away from home increased by 11.8 percent. While there were 

some increases and decreases in the percentage of food consumed away from home over this 

period, the general trend is increasing from 1995 through 2007. From 1998-1999, there was a 

small dip in food away from home expenditures as a percent of total food expenditures and the 

decline in per capita fluid milk consumption lessened considerably. It is evident from 

Figures 3–1 and 3–2 that per capita fluid milk consumption and eating away from home are 

negatively correlated. Thus, the increase in food consumed away from home appears to be 

responsible for some of the decrease in per capita fluid milk consumption. 

Figure 3–2. Food Consumed Away From Home as a Percentage of Total Food Expenditures. 

44.0

45.0

46.0

47.0

48.0

49.0

50.0

51.0

52.0

53.0

54.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Percent
33

A second factor for declining per capita fluid milk consumption may be changes in U.S. 

demographics. One important change is the declining proportion of young children in the 

population since 1995 (the decline has leveled out since 2002). Since young children are one of 

the largest milk-consuming cohorts, any decline in that cohort negatively impacts per capita fluid 

milk consumption. Figure 3–3 shows the percentage of the population that was under 6 years old 

from 1995 through 2007, a segment of the population that decreased 9 percent between 1995 and 

2002. Therefore, there is a positive correlation between per capita fluid milk consumption and 

this age cohort—both are declining.

Since 1995, the retail price of fluid milk products has generally been rising relative to other 

nonalcoholic beverages. This pattern is displayed in Figure 3–4 (note that any value above

1.0 means the consumer price index for fluid milk is higher than the consumer price index for 

nonalcoholic beverages). While there have been some periods since 1995 where retail fluid milk 

prices declined relative to other beverage prices, there is clearly an increasing trend over time 

making milk more expensive than other nonalcoholic beverages. From 1995 through 2007, 

annual average fluid milk prices rose 34.3 percent relative to other beverages. These retail fluid 

milk price increases are likely responsible for some of the decline in per capita fluid milk 

consumption. Between 2004 and 2006, the price of fluid milk declined relative to other 

beverages, which may be an important reason for the slight increase in per capita consumption in 

2006. However, in 2007, the retail price of milk increased by almost 9 percent and per capita 

consumption declined by 0.9 percent. 

Fluid milk’s loss of market share to other beverages also may be due to aggressive marketing by 

Figure 3–3. Percent of Population Under 6 Years of Age. 

7.6

7.8

8.0

8.2

8.4

8.6

8.8

9.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Percent
34

Figure 3–4. Retail Price of Fluid Milk Relative to Other Nonalcoholic Beverage Prices. 

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

CPI Milk/CPI Other Beverages

competing beverage producers. Indeed, both dairy farmers and fluid milk processors started 

generic marketing programs to combat competing marketing from other beverage producers. 

Figure 3–5 displays the combined real advertising expenditures (in 2007 dollars) of several

Figure 3–5. Real Bottled Water, Soy Beverage, and Fruit Juice Advertising (in 2007 dollars). 

0

100

200

300

400

500

600

700

800

900

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Million $
35

Figure 3–6. Real Per Capita Disposable Income (in 2007 dollars). 

25

26

27

28

29

30

31

32

33

34

35

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Real $1,000

competing non-alcoholic beverages (fruit juice, bottled water, and soy beverages). Since 1995, 

there has been an increase in annual competing beverage advertising by 16 percent with most of 

the increase occurring between 1995 and 2003. Since then, there has been a trend down in 

competing beverage advertising with the exception of 2007, where competing advertising 

increased by 11.7 percent over 2006.

One factor that may have diminished some of the decline in per capita fluid milk consumption is 

the growth in real income over this period. Fluid milk is considered to be a “normal” good, 

which means that consumption increases as consumers’ disposable incomes increase. Figure 3–6 

illustrates the steady positive trend in real per capita income (in 2007 dollars) from 1995 through 

2007. Since 1995, real per capita income has increased by 20.6 percent. 

Another factor that may have diminished some of the decline in per capita fluid milk 

consumption over part of this time period is generic marketing efforts by fluid milk processors 

and dairy farmers. The dairy-farmer checkoff program is the largest checkoff program in the 

United States in terms of revenue, and the second largest program is the fluid milk processor 

program. 

Figure 3–7 shows combined nominal and real expenditures (in 2007 dollars) on generic fluid 

milk marketing efforts by these two programs. From 1995 to 1997, there was steady growth in 

real (2007 dollars) annual expenditures for generic fluid milk marketing, from $174 million in 

1995 to $269 million in 1997. Since 1997, however, such expenditures have been declining. 

Between 1995 and 2007, combined annual average real expenditures declined by 6.2 percent
36

Figure 3–7. Real and Nominal Total Fluid Milk Marketing Expenditures. 

0

50

100

150

200

250

300

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Million $

Nominal Real

reaching a low of $163 million in 2007. This decline may have had an impact on declining per 

capita fluid milk consumption over this period. In nominal terms, there has actually been a

53 percent increase in total annual generic fluid milk marketing expenditures since 1995. In 

1995, nominal annual expenditures totaled $106 million for the two programs, while in 2007 

nominal annual expenditures totaled $162 million. Hence, the erosion in real expenditures has 

been entirely due to inflation.

Most of the decline in fluid milk marketing has been due to decreases in expenditures by dairy 

farmers. Figure 3–8 displays real marketing expenditures fluid milk processors and dairy 

farmers separately 1995. Dairy farmers have significantly decreased their real marketing 

expenditures for fluid milk since 1995, from $174 million to $74 million, a 57.2 percent 

decrease. Fluid milk processors have had a slight decline in real expenditures from their peak in 

2001, but have not decreased expenditures nearly as much as dairy farmers. 

Figure 3-9 displays real generic fluid milk advertising expenditures and generic non-advertising 

marketing expenditures by dairy farmers and fluid milk processors. It is clear from this figure 

that there has been a shift away from advertising towards non-advertising marketing activities 

over this period. Indeed, real generic fluid milk non-advertising marketing expenditures 

increased by $57 million annually. The shift away from advertising has been primarily done by 

the dairy farmer program. 
37

Figure 3–8. Real Generic Fluid Milk Marketing Expenditures by Fluid Milk Processors and 

Dairy Farmers. 

0

20

40

60

80

100

120

140

160

180

200

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Million $

Processor Farmer

Figure 3–9. Real Generic Fluid Milk Advertising and Non-advertising Marketing Expenditures. 

0

50

100

150

200

250

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Million $

Advertising Nonadvertising marketing
38

Fluid Milk Model Estimation 

To more formally evaluate the relationship between per capita fluid milk consumption and 

factors hypothesized to influence that consumption, we used an econometric modeling approach. 

Because there are factors other than generic advertising by dairy farmers and fluid milk 

processors that influence the demand for fluid milk, we used this model to identify the effects of 

individual factors affecting demand. The following variables were included as factors 

influencing per capita fluid milk demand: the consumer price index (CPI) for fluid milk; the CPI 

for nonalcoholic beverages, which was used as a proxy for fluid milk substitutes; the percentage 

of the U.S. population under 6 years old; per capita disposable income; variables to capture 

seasonality in fluid milk demand; expenditures on food consumed away from home as a 

percentage of total food expenditures; expenditures on competing beverage advertising (bottledwater, juice, and soy beverage advertising combined), expenditures on generic fluid milk 

advertising, and expenditures on generic fluid milk non-advertising marketing activities.1

 Since 

the goals of the farmer and processor marketing programs are the same with regards to fluid 

milk, all generic fluid milk advertising by both programs were aggregated into a single 

advertising variable, and all generic fluid milk non advertising marketing by both programs were 

aggregated into a single advertising variable, and all generic fluid milk non-advertising 

marketing by both programs were aggregated into a single non-advertising marketing variable. 

The model was estimated with national quarterly data from 1995 through 2007. To account 

for the effects of inflation, prices and income were deflated by the consumer price index. Generic 

fluid milk advertising and competing advertising expenditures were deflated by a media cost 

index computed from annual changes in advertising costs by media type. Generic fluid milk 

advertising and competing advertising expenditures were deflated by the CPI for all items. 

Because both advertising and non-advertising marketing have a carry-over effect on demand, 

past fluid milk marketing expenditures also were included in the model as explanatory variables 

using a distributed-lag structure.2

 Similar procedures were used to capture this carry-over effect 

for competing advertising. 

The impacts of variables affecting demand can be represented with what economists call 

“elasticities.” Elasticities measure the percentage change in per capita demand given a

1.0 percent change in one of the identified demand factors while holding all other factors 

constant. Table 3–1 provides average elasticities for the period 1995 through 2007 for model 

1

 As mentioned in the introduction, the advertising expenditures include media expenditures for television, radio, 

print, and outdoor advertising, while the non-advertising marketing expenditures included funds spent on fluid milk 

public relations, sales promotions, nutrition education, retail programs, and sponsorships by dairy farmers and fluid 

milk processors. 

2

 Specifically, a second-degree polynomial lag structure with both end point restrictions was imposed. The demand 

model included current advertising expenditures and eleven quarters of lagged advertising expenditures to capture 

the carry-over effect of advertising. Similarly, current non-advertising marketing expenditures and seven quarters of 

lagged expenditures were included to capture the carry-over effect of non-advertising marketing. Competing 

advertising included current and five quarters of lagged expenditures. The length of lag used here indicates that 

such demand enhancing activities as the got milk?®, the 3-A-Day of DairyTM promotional campaign, and the milk 

mustache campaigns have long-lasting effects on consumers. 
39

Table 3–1. Average Elasticity Values (1995–2007) for Factors Affecting the Per Capita Retail 

Demand for Fluid Milk.*

Demand Factor Elasticity

Percent of population under 6 years of age 1.585**

Percent of food away from home expenditures –0.489**

Retail fluid milk price –0.096**

Per capita income 0.141**

Bottled-water + soy beverage + fruit juice advertising –0.018**

Generic fluid milk advertising 0.057**

Generic fluid milk non-advertising marketing 0.062**

 

*Example: A 1.0 percent increase in the retail price of fluid milk is estimated to reduce per capita sales of fluid milk 

 by 0.096 percent. For more information on the data used, see Table 3–3 at the end of this chapter. 

** Statistically significant at the 1.0 percent significance level or less.

variables all of which have a statistically significant effect on consumption.3 For example, a

price elasticity of demand for fluid milk equal to –0.096 means that a 1.0 percent increase in the 

real (inflation-adjusted) retail fluid milk price decreases per capita fluid milk quantity demanded 

by 0.096 percent when holding all other demand factors constant. 

The most important factors influencing per capita fluid milk demand are demographic changes 

and the proportion of food expenditures on food eaten away from home. While not as large in 

magnitude, retail fluid milk prices, income, expenditures on generic fluid milk advertising and 

non-advertising marketing efforts, and competing beverage advertising expenditures also 

impacted per capita fluid milk demand. Each factor is further discussed in detail. 

The percentage of the population under 6 years of age was the most important factor affecting 

fluid milk consumption. This factor has an estimated elasticity of 1.585, which means that a

1.0 percent increase in this age cohort measure would result in a 1.585 percent increase in per 

capita fluid milk demand when holding all other demand factors constant. This result is 

consistent with previous studies,4

 that show that one of the largest fluid milk-consuming 

segments of the population is young children. While this age cohort has declined since 1995, it 

has been slowly rising the last several years, which should have a mitigating influence on 

declining per capita fluid milk consumption. 

3

 The estimated model fits the data extremely well. All variables were statistically significant at the 1.0 percent 

significance level or better. The adjusted goodness-of-fit measure indicated that the explanatory variables explained 

over 98 percent of the variation in per capita fluid milk consumption. Various statistical diagnostics were performed 

and no statistical problems were found except for auto-correlation, which was corrected for using a moving average 

error correction procedure. 

4

 A fluid supply equation was also estimated in order to estimate the price response to the simulated increase in 

demand. The own price elasticity of supply was estimated to be 0.046 and was incorporated into this simulation. 
40

The amount of food that is consumed away from home, measured in this model as real per capita 

expenditures on food eaten away from home as a percentage of total expenditures on food, has 

an elasticity of –0.489. This means that a 1.0 percent increase in the food consumed away from 

home would measure result in a 0.489 percent decrease in fluid milk demand when holding all 

other demand factors constant. As mentioned previously, this negative relationship may be due 

to the limited availability of fluid milk products and high availability of fluid milk substitutes at 

many eating establishments, which frequently offer only one or two types of milk beverages. 

One can hypothesize that because of these limited choices, some people who would ordinarily 

choose fluid milk choose another beverage instead. This result suggests the need to target the 

retail food service industry in an effort to increase away from home consumption. Efforts to 

increase the variety of fluid milk beverages offered to customers may increase the 

competitiveness of fluid milk. Indeed, this year’s estimated elasticity is lower than last year’s 

which may be due to successful efforts by the dairy industry in expanding the availability of fluid 

milk products for away from home consumption. 

Not surprisingly, the retail price of fluid milk has a negative and statistically significant impact 

on per capita demand. The results indicate that a 1.0 percent increase in the real retail price of 

fluid milk would result in a 0.096 percent decrease in per capita fluid milk quantity demanded. 

The magnitude of this elasticity is relatively small, which indicates that U.S. consumers’ fluid 

milk purchasing behavior is relatively insensitive to changes in the retail price. This result, 

which is consistent with the other studies, is likely due to the fact that fluid milk is generally 

regarded as a staple commodity in the United States. However, as described in the previous 

section, the retail price of fluid milk has increased substantially since 1995 (34.3 percent) relative 

to the price of other beverages. Consequently, the increase in fluid milk prices has significantly 

contributed to the decline in per capita consumption. For instance, had the real price remained 

constant since 1995 instead of increasing by 34.3 percent, per capita fluid milk consumption 

would have been 3.3 percent higher today than it actually is. 

Per capita disposable income has a positive and statistically significant impact on per capita 

fluid milk consumption. A 1.0 percent increase in real per capita income would result in a

0.141 percent increase in per capita fluid milk demand, holding all other demand factors 

constant. Similar to the price elasticity in magnitude, the income elasticity is consistent with the 

notion of fluid milk products as a staple commodity in the United States. With income up by 

20.6 percent since 1995, this has lessoned the decline in per capita fluid milk consumption. 

Holding all other factors constant, this 20.6 percent increase in real income increased per capita 

fluid milk consumption by 2.9 percent. 

Combined soy beverage, juice, and bottled-water advertising also has had a negative impact on 

fluid milk demand during the study period. The estimated fluid milk demand elasticity with 

respect to soy beverage, juice, and bottled-water advertising is –0.018, and statistically 

significant. There has been a 16 percent increase in advertising expenditures for these three 

commodities since 1995, and hence, this likely had a negative impact on fluid milk consumption 

over this time period. In other words, had there been no increase in competing advertising since 

1995, per capita fluid milk consumption would have been almost 0.3 percent higher today than it 

actually is. 
41

Finally, the generic fluid milk marketing activities conducted by fluid milk processors and dairy 

farmers have had a positive and statistically significant impact on per capita fluid milk demand. 

The average advertising elasticity is computed to be 0.057 and is statistically significantly 

different from zero at the 1.0 percent significance level. Thus, a 1.0 percent increase in generic 

fluid milk advertising would increase per capita fluid milk consumption by 0.057 percent holding 

all other demand factors constant. The generic non-advertising marketing elasticity is computed 

to be 0.062 and is statistically significant at the 1.0 percent significance level. In terms of 

relative elasticities, there is no statistical difference in estimated advertising and non-advertising 

elasticities. One could say estimated effects of advertising and non-advertising are virtually the 

same. 

Fluid Milk Model Simulation 

To examine the impact of dairy farmer and fluid milk processor marketing on total consumption 

of fluid milk, the estimated demand equation was simulated for two scenarios for the period from 

1998 through 2007: (1) a baseline scenario in which the combined fluid milk marketing 

(advertising and non-advertising) expenditures were equal to actual marketing expenditures 

under the two programs, and (2) a no-national-Dairy-Program, no-Fluid-Milk-Processor-Program 

scenario in which there was no fluid milk-processor-sponsored marketing and dairy-farmersponsored fluid milk marketing was reduced to 42 percent of actual levels to reflect the 

difference in assessment before the National Program was enacted. A comparison of these two 

scenarios provided a measure of the impact of the national Dairy and Fluid Milk Programs. 

Figure 3–10 displays the simulation results for annual fluid milk consumption for the two 

scenarios. From 1998 through 2007, these marketing activities were responsible for creating

30 billion cumulative pounds of fluid milk consumption, which averages to 3 billion pounds per 

year. Put differently, had there not been generic fluid milk marketing conducted by the two 

National Programs, fluid milk consumption would have been 5.4 percent less than it actually was 

over this time period. Hence, the bottom line is that the fluid milk marketing efforts by dairy 

farmers and fluid milk processors combined have had a positive and statistically significant impact 

that is partially mitigating declines in per capita fluid milk consumption. Moreover, it appears that 

the performance of these marketing programs has become more effective over time. This can be 

seen by the widening of the gap in fluid milk disappearance between the two scenarios over time in 

Figure 3–10. For instance, in 1998, it is estimated that fluid milk consumption would have been 

4.8 percent lower in the absence of the two programs, while in 2007, milk consumption would 

have been 6.1 percent lower in the programs’ absence. 

Analysis of All-Dairy Product Generic Marketing

Unlike fluid milk, all-dairy product consumption (i.e., fluid milk plus dairy products) in the United 

States has been steadily increasing for decades. Among the factors behind this increase are 

changes in consumer preferences for dairy products, changes in income and retail dairy prices, and 

changes in generic advertising and marketing of milk and dairy products. The following is a brief 

graphical overview of changes in per capita all dairy product consumption and factors 

hypothesized to affect it from 1995 through 2007. 
42

Figure 3–10. Simulated Fluid Milk Consumption With and Without Generic Fluid Milk 

Marketing.

46

48

50

52

54

56

58

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Billion Pounds

Base No Program

 In all previous reports, total commercial disappearance (including exports) of all dairy products 

on a milk-fat equivalent basis was used as the measure of all-dairy product consumption. This 

was problematic for two reasons. First, the economic evaluation is for the domestic market and 

exports should not be included in the measure of consumption. Second, looking only at milk-fat 

completely ignores the other component of milk, solids-not-fat. To correct for these two 

problems, in this year’s report, we use domestic commercial disappearance net of exports on 

both a milk-fat and solids-not-fat basis. Figures 3-11 and 3-12 display the per capita domestic 

commercial disappearance of all dairy products since 1995 on a solids-not-fat and fat basis, 

respectively. The increase in per capita consumption has been almost three times higher on a 

milk-fat basis compared with a solids-not-fat basis. For instance, over the time period 1995 

through 2007, annual per capita commercial disappearance of all dairy products increased by

3.5 percent and 9.4 percent, respectively, on a solids-not-fat and on a fat basis. Although the 

trend has been positive, there have been some periods of annual declines in per capita 

consumption, particularly on a solids-not-fat basis from 1995-1999. 

An important factor influencing per capita commercial disappearance of all dairy products is the 

retail price of dairy products. Figure 3-13 displays the Consumer Price Index (CPI) for fluid 

milk and all dairy products relative to the CPI for all items. This figure indicates that there have 

been both ups and downs for retail dairy prices relative to all prices in the economy. From 

1995-1999, real dairy prices have actually trended down slightly, decreasing by 2.1 percent. 
43

Figure 3–11. Domestic Per Capita Commercial Disappearance of Fluid Milk and Dairy 

Products (Solids-not-fat milk Equivalent). 

535

540

545

550

555

560

565

570

575

580

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Pounds

Figure 3–12. Domestic Per Capita Commercial Disappearance of Fluid Milk and Dairy 

Products (Milk-Fat Equivalent). 

525

535

545

555

565

575

585

595

605

615

625

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Pounds
44

Figure 3–13. Retail Dairy Prices Relative to Price of All Items. 

0.82

0.84

0.86

0.88

0.90

0.92

0.94

0.96

0.98

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

CPI Fluid Milk and All Dairy Products/CPI All Items

A factor that had a positive impact on per capita commercial disappearance of all dairy products 

is the growth in real income over this period. All dairy products are considered to be “normal” 

goods, which means that consumption increases as consumers’ disposable incomes increase. 

Figure 3-6 illustrates the steady positive trend in real per capita income (in 2007 dollars) from 

1995 through 2007. Since 1995, real per capita income has increased by 20.6 percent. 

Another factor that may have contributed to increasing per capita domestic commercial 

disappearance of all dairy products over part of this time period is generic marketing efforts by 

fluid milk processors and dairy farmers. Figure 3-14 shows combined nominal and real 

expenditures (in 2007 dollars) on generic dairy product marketing efforts by these two programs. 

From 1995 to 1997, there was steady growth in real (2007 dollars) annual expenditures for 

generic dairy product marketing, from $342 million in 1995 to $452 million in 1997. Since 

1997, however, such expenditures have been declining. Between 1995 and 2007, combined 

annual average real expenditures declined by 13.5 percent reaching a low of $294 million in 

2006. In nominal terms, there has actually been a 38.2 percent increase in total annual generic 

dairy product marketing expenditures since 1995. In 1995, nominal annual expenditures 

totaled $212 million for the two programs, while in 2007 nominal annual expenditures totaled 

$293 million. Hence, the erosion in real expenditures has been entirely due to inflation. 

Figure 3-15 shows real generic marketing expenditures for fluid milk processors and dairy 

farmers (all dairy). Dairy farmers’ total marketing expenditures have consistently declined since 

1995 in real terms, falling by 39.4 percent since 1995. Fluid milk processors’ marketing 

expenditures peaked in 1997, but have fallen by 24.4 percent in real terms since then. 
45

Figure 3–14. Real and Nominal Generic Dairy Marketing Expenditures. 

0

50

100

150

200

250

300

350

400

450

500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Million $

Real Nominal

To examine the overall impact of the fluid milk processor and dairy farmer programs on overall 

dairy demand, we estimated a combined fluid milk/dairy product demand model that included all 

generic dairy advertising activities as one demand determinant, and all non-advertising dairy 

marketing activities as another demand determinant. Expenditures for the following advertising 

activities were aggregated into one variable assumed to impact the all-dairy product demand 

model: television, radio, print, and outdoor media advertising for fluid milk and manufactured 

dairy products by dairy farmers and fluid milk processors. Expenditures for the following nonadvertising, marketing activities were aggregated into one variable: school marketing, food 

service and manufacturing programs, integrated communications, public relations, sales 

promotions, nutrition education, retail programs, and sponsorships conducted by fluid milk 

processors and dairy farmers. In addition, the following variables were included as factors 

influencing per capita all-dairy product demand: the CPI for all-dairy products, per capita 

disposable income, and variables to capture seasonality in dairy product demand. Similar to the 

fluid milk demand model, the all-dairy products demand model was estimated on a per capita 

basis to control for the influence of population increases on demand. 

The model was estimated with national quarterly data for 1995 through 2007. To account for the 

impact of inflation, all prices and income variables were deflated by the CPI for all items. 

Generic fluid milk and cheese advertising expenditures were deflated by a weighted average 

media cost index (television, radio, print, and outdoor) for fluid milk and cheese. Generic fluid 

milk and cheese non-advertising marketing expenditures were deflated by the CPI for all items. 
46

Figure 3–15. Real Generic Dairy Marketing Expenditures By Fluid Milk Processors and Dairy 

Farmers. 

0

50

100

150

200

250

300

350

400

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Million $

Processor Farmer

Table 3–2 provides selected elasticities for the all-dairy product demand models on a fat and 

non-fat solids basis. (The models are for milk-equivalent, calculated on a fat solids basis and 

non-fat solids basis. Not to be confused with models for nonfat solids and fat solids. See 

cautionary statement below.) All variables were statistically significant. The most important 

factor impacting per capita disappearance of all-dairy products was per capita income. The 

results indicate that a 1.0 percent increase in per capita income would result in a 0.540 percent 

and 0.662 percent increase in combined per capita all-dairy product demand on a non-fat and fat 

basis, respectively, holding all other variables constant. The average price elasticity for 1995 

through 2007, using the CPI for all-dairy products, was –0.343 (non-fat basis) and –0.244 (fat 

basis); in other words, a 1.0 percent increase in the retail price of dairy products would result in a

0.343 (non-fat) and 0.244 (fat) percent decrease in per capita quantity demanded for all–dairy 

products holding all other variables constant.

The major interest here is the advertising and non-advertising marketing elasticities. The 

average advertising elasticity for this period on a non-fat and fat basis was 0.027 and 0.029, 

respectively; a 1.0 percent increase in media advertising expenditures would increase per capita 

all-dairy product demand by 0.027 (non-fat basis) and 0.29 (fat basis) percent. The average nonadvertising marketing elasticity for this period was 0.016 (non-fat) and 0.29 (fat), respectively; a 

1.0 percent increase in media advertising expenditures would increase per capita all-dairy 

product demand by 0.016 (non-fat) and 0.029 (fat) percent.
47

Table 3–2. Average Elasticity Values (1995–2007) for Factors Affecting Per Capita All-dairy 

Products Demand. 

Nonfat-solids basis Fat basis 

Demand Factor elasticity elasticity 

CPI for all-dairy products –0.343* –0.244* 

Per capita income 0.540* 0.662* 

Generic dairy advertising 0.027** 0.029** 

Generic dairy non-advertising marketing 0.016* 0.029* 

* Statistically significant at the 1.0 percent level or better. 

** Statistically significant at the 10 percent level. 

Benefit-Cost Analysis of the Dairy Program 

One way to measure whether the benefits of a program outweigh the cost is to compute a 

benefit–cost ratio (BCR). A BCR can be computed as the change in net revenue5

 due to generic 

dairy marketing divided by the cost of the checkoff program. While we were able to estimate a 

BCR for producers for the Dairy Program, we could not compute one at this time for fluid milk 

processors under the Fluid Milk Program because data on packaged fluid milk wholesale prices, 

which are necessary in calculating processor net revenue, are proprietary and, therefore, not 

available. 

It should be pointed out that Dairy Management Inc., (DMI) has made a significant shift in their 

marketing programs in 2007. Previously, the bulk of DMI’s marketing expenditures were 

allocated to media advertising and to non-advertising marketing activities. In 2007, these 

traditional marketing activities represented 57 percent of DMI’s marketing budget. The 

remaining 43 percent was spent on their new business plan of strategic business development 

with dairy processors and manufacturers. In the analysis that follows, this part of DMI’s 

marketing budget is not included. DMI has stated that they do not expect any short-term benefits 

of these programs for 2007, but rather expect to see these benefits to accrue in the longer-term. 

Hence, the BCR that follows only includes the advertising and non-advertising marketing 

activities. 

Cornell calculated BCRs6

 by simulating two scenarios: (1) a baseline scenario in which 

combined marketing (advertising and non-advertising marketing) levels were equal to actual 

marketing expenditures under the two programs, and (2) a no-national-Dairy-Program scenario 

in which there was fluid milk-processor-sponsored marketing but dairy-farmer-sponsored 

5

 “Net revenue” is defined as the aggregate gain in total revenue from price and product disappearance 

enhancements due to generic dairy advertising and non-advertising marketing less the increase in supply costs for 

the additional milk marketed by dairy farmers. Economists refer to this notion of net revenue as “producer surplus.” 6

 To measure market impacts, we estimated supply equations at the retail and farm levels to simulate supply 

response to any price increase due to a marketing-induced increase in demand. The results of these estimates are 

available from the authors upon request. 
48

marketing was reduced to 42 percent of actual levels to reflect the difference in assessment 

before and after the National Program was enacted. A comparison of these two scenarios 

provided a measure of the impact of the Dairy Program. The benefits of the Dairy Program were 

calculated as the change in dairy farmer net revenue (what economists call “producer surplus”) 

due to demand enhancement from all marketing activities under the Dairy Program (i.e., the 

difference in net revenue between scenarios 1 and 2). The demand enhancement reflects 

increases in quantity and price as a result of the marketing program. The costs of the Dairy 

Program were calculated as the difference in total assessment revenue before and after the 

National Program was enacted. These scenarios were run for the time period 1998 through 2007 

for the two milk-equivalent models: milk-fat and non-fat. 

The average all milk price from 1998 through 2007 in the base line scenario was $14.49 per 

hundredweight. In the counter-factual no-national-Dairy-Program scenario for the nonfat-solids 

model, the average all milk price was $14.17 per hundredweight, which is 32 cents lower. Thus, 

had there been no national Dairy Program over this period, the price farmers receive for their 

milk would have been 2.23 percent lower than it actually was. In the counter-factual nonational-Dairy-Program scenario for the milk-fat model, the average all milk price was $13.91 

per hundredweight, which is 58 cents lower. Thus, had there been no national Dairy Program 

over this period, the price farmers receive for their milk would have been 4.02 percent lower than 

it actually was. 

The results show that the average BCR for the Dairy Program was 5.52 (non-fat solids basis) and 

5.94 (milk-fat basis) from 1998 through 2007. This means that each dollar invested in generic 

dairy marketing by dairy farmers during the period would return between $5.52 and $5.94, on 

average, in net revenue to farmers. The level of the marketing BCR suggests that the combined 

marketing programs supported by dairy farmers have been a successful investment.7

In another interpretation of the BCR, the increase in real 2007 dollars generic dairy marketing 

expenditures resulting from the Dairy Program costs dairy producers an additional $117 million 

per year on average from 1998 through 2007. The additional generic dairy marketing resulted in 

higher demand, prices, and net revenue for dairy producers nationwide. Based on the 

simulations conducted, Cornell estimates that the average annual increase in producer surplus 

(reflecting changes in both revenues and costs) due to the additional generic marketing under the 

Dairy Program was $645.8 million on a non-fat basis and $695 million on a fat basis. Dividing 

$645.8 (or $695) million by the additional Dairy Program cost of $117 million results in the 

estimated benefit-cost ratios of 5.52 (non-fat basis) and 5.94 (fat basis).

To make allowance for the error inherent in any statistical estimation, a 90 percent confidence 

interval was calculated for the average BCR, providing a lower and upper bound for the average 

BCR. One can be 90 percent “confident” that the true average BCR lies within those bounds. 

The estimated lower bound for the average BCR in the non-fat and fat model is 1.12 and 1.41, 

respectively. Since both lower bounds are above 1.0, it is reasonable to conclude that these 

7

 To see how the BCR has varied over time, the models were simulated for an earlier time period (1998–99) and the 

latest time period (2006–07). The results indicate that the estimated BCR for the earlier and later time periods were 

almost identical. 
49

confidence intervals give credence to the finding that the benefits of the Dairy Program’s 

marketing activities have been greater than the cost of the programs. 

Questions often arise with respect to the accuracy of these BCR estimates. BCRs for commodity 

promotion programs are generally found to be large because marketing expenditures in relation 

to product value are small and, as such, only a small demand effect is needed to generate large 

positive returns. For example, the change in generic dairy marketing expenditures noted 

previously is a mere 0.48 percent of the recent average annual value of farm milk marketings 

from 1998 through 2007 ($24.63 billion). The marketing activities resulted in modest gains in 

the quantity of dairy products and a positive effect on milk prices, resulting in large positive net 

revenue from the marketing investment. 
50

Table 3–3. Description of Variables Used in Econometric Models.a

Variable Description Units Meanb

Consumption Variables 

RFDPC Quarterly retail fluid demand per capita lbs. 48.44 

(2.32)

RDDPCNF Quarterly retail all-dairy product demand per capita on a 

non-fat basis 

lbs. 138.66 

(3.30)

RDDPCF Quarterly retail all-dairy product demand per capita on a fat 

basis 

lbs. 146.14 

(6.23)

 

Price Indices

RFPCPI Consumer retail price index for fresh milk and cream 

deflated by consumer price index for nonalcoholic 

beverages (1982–84=1) 

# 1.17 

(0.10)

RDPCPI Consumer retail price index for all-dairy products deflated 

by consumer retail price index for all items (1982–84=1) 

# 0.93 

(0.03)

RBEVCPI Consumer retail price index for non-alcoholic beverages 

(1982–84=100) 

# 138.65 

(6.74)

Demographic and Income Variables

INCPC Quarterly per capita disposable income, deflated by the 

consumer retail price index for all items (2007=1) 

$ 30,980 

(1,860)

AGE5 Percent of the population under age 6 % 8.32 

(0.25)

FAFH% Food away from home expenditures as percent of total food 

expenditures

% 50.41 

(2.09)

Marketing Expenditures

GMA Quarterly generic fluid milk advertising expenditures 

deflated by media cost index (2007 $) 

$mil 35.28 

(14.93)

GMN Quarterly generic fluid milk non-advertising marketing 

expenditures deflated by consumer price index 

(2007 $) 

$mil 16.07 

(7.55)

GDA Quarterly generic milk and dairy advertising expenditures, 

deflated by media cost index (2007 $) 

$mil 61.89 

(19.37)

GDN Quarterly generic milk and dairy non-advertising marketing 

expenditures, deflated by media cost index (2007 $) 

$mil 30.95 

(13.70)

CBA Quarterly soy beverage + juice + bottled-water advertising 

expenditures deflated by media cost index (2007 $) 

$mil 166.71 

(52.31) 

a Quarterly dummy variables are also included in the model to account for seasonality in demand. 

b Computed over the period 1995–2007. Standard deviation in parentheses. 
51

Chapter 4 

Part I – Fluid Milk Market and Promotion Assessment:

Beverage Marketing Corporation 

Introduction 

In this report, Beverage Marketing Corp. (BMC) reviews the 2007 research and marketing 

programs for fluid milk, for inclusion in the USDA’s Report to Congress. These programs are 

authorized by the Dairy Production and Stabilization Act of 1983 (Dairy Act; 7 U.S.C. 4501)

and the Fluid Milk Promotion Act of 1990 (Fluid Milk Act; 7 U.S.C. 6401). The programs are 

intended to increase the appeal of milk and develop incremental consumption opportunities, 

and thus increase the overall sales of fluid milk and related dairy products. 

BMC’s review offers an objective evaluation of the effectiveness of the research and marketing 

programs implemented to drive fluid milk sales, and provides a third-party perspective on the 

competitive position of fluid milk in the broader U.S. beverage marketplace. Specifically, in this 

report BMC evaluates milk’s position relative to a growing competitive beverage set that now 

includes soy beverages, value-added bottled waters, energy drinks and ready-to-drink (RTD) 

coffee (in addition to carbonated soft drinks [CSDs], RTD teas, fruit beverages, bottled water 

and sports beverages), which are targeted to capturing the growing desire for health and wellness 

offerings in beverages. In addition, in the report BMC examines both the overall milk industry’s 

performance as well as the apparent impact of targeted advertising, promotion and specific 

messaging on milk’s consumer and channel targets. The following summarizes BMC’s findings 

based on the analysis of available data.

Key Highlights And Trends For 2007

Fluid Milk Category Performance 

BMC believes the producer and processor generic milk programs continued to effectively and 

efficiently use the available resources in 2007 to drive the relevance, consumer appeal and 

consumption of fluid milk. The generic milk programs achieved this by focusing on highopportunity consumer and channel targets, communicating meaningful messages about milk to 

these targets, and supporting these strategies with effective research, advertising, promotion, 

public relations and grassroots activities.

A key marketplace factor for fluid milk in 2007 was the high level of milk pricing, which 

created consumer price increases of approximately 13 percent from 2006 to 2007. In some 

regions, the increase was even higher. Prices reached an historical high in the last half of 2007.

In addition, consumers had a broader variety of healthier beverages to choose from than ever 

before, with more offerings such as enhanced waters and RTD teas, soy beverages, and

enhanced fruit beverages targeted toward nutrition and wellness.8 Yet, the fluid milk category 

8

 Healthy beverages include milk, bottled water, fruit beverages, teas, sports drinks, and soy beverages, among 

others. 
52

Figure 4–1

avoided significant volume declines in 2007, and achieved flat volume performance vs. 2006, 

at 6,252 million gallons, a -0.1 percent change from the prior year (see Figure 4–1). 

In the past few years, the competitive environment for healthier beverages has grown 

dramatically across a wide variety of chilled and shelf-stable categories, creating more robust 

competition for milk usage occasions. Thus, it is an indicator of the positive effect of the milk 

marketing programs that from 2005-2007, fluid milk volume grew slightly at a +0.45 percent 

2-year compound annual growth rate (CAGR). 

Over the last 5 years, fluid milk volume has essentially been stable, fluctuating within a narrow 

band of volume between 6.2 and 6.3 billion gallons. Milk’s 5-year CAGR from 2002 to 2007 

was essentially flat, at -0.1 percent. 

Fluid Milk Competitive Position and Performance 

As noted in the Introduction, the competitive set for milk in the 2007 analysis has been expanded 

to include additional competitively relevant beverage offerings (e.g., enhanced waters, soy 

beverages, energy drinks, RTD coffees). In terms of overall volume, milk maintained its 

position as the third largest beverage category, following bottled water by about 7 share points 

(see Figure 4–2). In 2007, the beverage categories outside the top 3, approached the 20 percent 

volume share mark (at 19.6 percent share), indicating the strong, continued growth in demand for 

perceived healthier beverage offerings by consumers. 

6,281 6,252

6,202

6,196

6,258

6,252

5,000

5,500

6,000

6,500

2002 2003 2004 2005 2006 2007

Fluid Milk Volume and Growth*

2002 - 2007

* Not adjusted for leap year 

Source: Beverage Marketing Corporation, USDA

+0.3% -0.5% -0.8% -0.1%

+1.0%

CAGR 02/07: 

-0.1%

CAGR 02/07: 

-0.1%

-0.1%

Millions of Gallons
53

Figure 4–2

Source: Beverage Marketing Corporation

Within the broader competitive set, milk was the sixth largest contributor to volume growth from 

2005 through 2007 (see Figure 4–3).

As a whole, the total volume of the combined competitive set categories increased by 1 percent 

in 2007, or 1.4 million gallons, to 37 billion gallons in 2007. From 2002 to 2007, the 

competitive set grew by a 2.3 percent 5-year CAGR,9 a moderate compound 5-year growth rate 

(see Figure 4–4). 

Figure 4–3

9

 CAGR stands for compound annual growth rate. It’s a growth rate measurement using the first and last values 

over the period. It is the geometric mean growth rate that generates the end value starting from the beginning value. 

As such, it smoothes out deviations from the trend. 

Milk’s Competitive Set Volume Shares 

2007 

Soy

0.6%

Value-Added 

Water

1.5%

Energy

0.8%

RTD Coffee

Carbonated Soft 0.1%

Drinks

39.7%

Bottled Water

23.8%

Milk

16.9% Fruit Bevs

10.5%

Sports Bevs

3.7%

RTD Tea

2.4%

Milk Competitive Set

Share of Volume Growth – Millions of Gallons

2005- 2007

Total Competitive Set 35,612 37,022 +1,410 100%

RTD Coffee 40 45 +5 +1%

Energy Drinks 161 303 +142 +10%

Soy Beverages 186 217 +31 +2%

Enhanced Waters 307 547 +240 +17%

RTD Tea 603 875 +272 +19%

Sports Beverages 1,191 1,355 +164 +12%

Fruit Beverages 4,119 3,900 -219 -16%

Milk 6,196 6,252 +56 +4%

Bottled Water 7,537 8,822 +1,285 +91%

CSDs 15,272 14,707 -565 -40%

2005 – 2007

Share of Growth

2005 – 2007

Vol. Change(1)

2007 Volume 2005 Volume (1) (1)

Total Competitive Set 35,612 37,022 +1,410 100%

RTD Coffee 40 45 +5 +1%

Energy Drinks 161 303 +142 +10%

Soy Beverages 186 217 +31 +2%

Value-Added Waters 307 547 +240 +17%

RTD Tea 603 875 +272 +19%

Sports Beverages 1,191 1,355 +164 +12%

Fruit Beverages 4,119 3,900 -219 -16%

Milk 6,196 6,252 +56 +4%

Bottled Water 7,537 8,822 +1,285 +91%

Carbonated Soft Drinks 15,272 14,707 -565 -40%

2005 – 2007

Share of Growth

2005 – 2007

Vol. Change 2005 Volume 2007 Volume 

Source: Beverage Marketing Corp. 
54

Figure 4–4

Without milk, the performance of the competitive set would have been slightly better – 

increasing at a 5-year CAGR of 2.8 percent from 2002 to 2007. Excluding the primary growth 

category, bottled water, the competitive set grew by a 5-year CAGR of just 0.7 percent 

(see Figure 4–5).

To better understand the performance of milk against its key competitor categories over time, 

Beverage Marketing has indexed milk’s share of volume growth vs. its share of the overall 

competitive set (specifically, the index calculates milk’s share of total competitive volume 

change, divided by milk’s volume share of the total competitive set at the onset of the year). 

Figure 4–5

33,038

33,740 34,557

35,612

36,626 37,022

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Millions of Gallons

2002 2003 2004 2005 2006 2007

(1)

 Includes milk, CSDs, fruit beverages, bottled water, RTD tea, sports 

beverages, RTD coffee, soy beverages, energy drinks and value-added water 

Source: Beverage Marketing Corporation

Total Competitive Beverage Set

(1) Volume and Growth

2002 – 2007 

CAGR 02/07: 

+2.3%

Competitive Beverage Set Growth 

5 Year CAGR

2002 – 2007

Milk Competitive

Set

Competitive

Set w/o Milk

-0.1%

2.3%

2.8% 2.8%

0.7%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Source: Beverage Marketing Corporation

Competitive Set 

w/o Bottled 

Water 

Competitive 

Set w/o Fruit 

Beverages
55

Figure 4–6

This index shows whether milk has gained or lost competitive ground year-to-year. An index 

greater than 1 indicates milk is gaining competitive volume share, thus outperforming the 

competitive set; an index less than 1 shows that milk is losing volume share to competitors. As 

seen in Figure 4–6, milk has consistently lost competitive share over the past 20 years. 

As shown in Figure 4–7 below, the major competitive volume gains in 2007 were realized by the 

value-added water and energy drink categories, followed by RTD teas. Each of these categories 

offered an array of beverages positioned to address both general and specific health and wellness 

benefit areas. Value-added waters, in particular, were able to successfully position themselves 

within the “healthy” beverage arena by adding specific ingredients/flavors/functionalities to the 

plain bottled water platform, which had already achieved broad consumer appeal and acceptance 

as a healthy beverage alternative.

Figure 4–7

(1) Share of competitive turnover divided by share of competitive set 

Source: Beverage Marketing Corporation

6.0

-2.9

2.3

12.2

21.9

18.5

6.1

1.3

-0.1

-2.5 -5.0

0.0

5.0

10.0

15.0

20.0

25.0

CSD B. Water Milk Fruit

Beverages

Sports RTD Tea ValueAdded

Water

Energy

Drinks

Soy Bevs RTD Coffee

Indexed Share of Competitive Turnover(1)

2007

-100.1% 143.7% -1.5% -30.4% 8.3% 28.8% 32.3% 15.1% 3.6% 0.2% 

39.7% 23.8% 16.9% 10.5% 3.7% 2.4% 1.5% 0.8% 0.6% 0.1%

1.0 = maintain 

competitive position

Categories that 

captured more 

than fair share 

of incremental 

volume 

Categories that 

captured less 

than fair share 

of incremental 

volume Share of Competitive Turnover

Share of Competitive Set

(1) Share of competitive turnover divided by share of competitive set 

Source: Beverage Marketing Corporation

6.0

-2.9

2.3

12.2

21.9

18.5

6.1

1.3

-0.1

-2.5 -5.0

0.0

5.0

10.0

15.0

20.0

25.0

CSD B. Water Milk Fruit

Beverages

Sports RTD Tea ValueAdded

Water

Energy

Drinks

Soy Bevs RTD Coffee

Indexed Share of Competitive Turnover(1)

2007

-100.1% 143.7% -1.5% -30.4% 8.3% 28.8% 32.3% 15.1% 3.6% 0.2% 

39.7% 23.8% 16.9% 10.5% 3.7% 2.4% 1.5% 0.8% 0.6% 0.1%

1.0 = maintain 

competitive position

Categories that 

captured more 

than fair share 

of incremental 

volume 

Categories that 

captured less 

than fair share 

of incremental 

volume Share of Competitive Turnover

Share of Competitive Set

1.0 = maintain 

competitive position

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

Milk Indexed Share of Competitive Turnover(1)

1987 – 2007

(1) Share of competitive turnover divided by share of competitive set 

Source: Beverage Marketing Corporation

Indexed Share of Competitive Turnover 

1.0 = maintain 

competitive position

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

Milk Indexed Share of Competitive Turnover(1)

1987 – 2007

(1) Share of competitive turnover divided by share of competitive set 

Source: Beverage Marketing Corporation

Indexed Share of Competitive Turnover 
56

Analysis Of Key Beverage Category Growth Drivers 

In this section, Beverage Marketing analyzes and discusses specific marketplace factors that 

affect the overall performance of the fluid milk category, particularly within the context of the 

competitive and market landscape. These factors are: 

x Category and Consumer Positioning 

x Branding and Media Spending 

x Retail Channel Distribution 

x Consumer Pricing 

x New Product Activity 

Historically, the milk category has been disadvantaged relative to the other competitive 

categories across most of these areas. However, the milk category has begun to make progress in 

many of them, by strategically focusing its resources against key growth opportunity areas. 

Category and Consumer Positioning 

In recent years, the growth in beverages positioned to address “wellness and functional” needstates/benefit areas has outpaced the growth in all other types of beverages (e.g., those 

addressing basic refreshment, hydration, mood enhancement, etc.), and is having a significant 

influence on the marketplace. From 2006-07, wholesale sales of wellness and functional 

beverages more than doubled the growth rate of “all other” beverages (see Figure 4–8). Indeed, 

when redefining the beverage landscape by need-state/benefit area, the “wellness/nutrition” 

category is the largest competitive space among beverages. 

This consumer demand dynamic presents an opportunity for fluid milk to capture a portion of 

this sizeable and growing beverage market, with the evolution to its Healthy Weight 

messaging/category positioning. In 2007, the shift from the Weight Loss to the Healthy Weight 

messaging in the second quarter appeared to have a slight effect on overall awareness of the 

linkage of milk consumption to weight loss, with recall of the Weight Loss/Healthy Weight 

message and milk consumption link among moms going from 77 percent awareness in Q1 2007 

to 75 percent in Q2-Q3 2007, and to 66 percent in Q4 2007 (source: DDW/Lowe). In terms of 

believability of the milk consumption and Weight Loss/Healthy Weight claims in 2007, the level 

Figure 4–8

 * Wellness and functional categories include milk, bottled water, fruit juice, RTD tea, soy milk, meal replacement drinks, flavored water, protein drinks, sports 

 beverages, energy drinks and nutrient-enhanced drinks. 

 Source: Beverage Marketing Corporation 

Wellness & Functional Beverage Market vs. Total Liquid Refreshment Beverages

Volume, Share and Growth 2001 – 2007

Change CAGR

Categories 2001 2006 2007 2001 2007 06/07 01/07

Wellness & Functional $45,728 $57,854 $61,105 29.4% 32.2% 5.6% 4.9%

All Other $109,949 $126,216 $128,855 70.6% 67.8% 2.1% 2.7%

 Total $155,677 $184,070 $189,960 100.0% 100.0% 3.2% 3.4%

Millions of Wholesale Dollars Share
57

of believability among adult women increased from 45 percent in Q1 2007 to 54 percent in Q4 

2007. For moms, the level of believability of the claims dipped slightly, from 50 percent in Q1 

2007 to 45 percent in Q4 2007.

Branding and Media Spending 

While target consumer awareness of the generic milk advertising messaging and programs is 

high, the category continues to spend less on media, as compared to other key categories, placing 

it at a competitive disadvantage. One of the more significant differences between milk and its 

competitive set is the dominance of private label milk in the category, and the lack of major 

national brands to compete with significant brands in competitive categories. 

In 2007, private label milk comprised 69 percent volume and branded milk 31 percent volume, 

compared with very high branded volume levels in categories such as sports beverages

(99 percent branded volume), energy drinks (98 percent branded volume), RTD tea (93 percent 

branded volume), and carbonated soft drinks (89 percent branded volume). BMC believes this 

disparity places milk at a definite disadvantage with regard to the rest of the competitive set 

because of the challenges inherent in marketing a category versus brands. Additionally, many 

private label products, across most categories, are generally sold in less-premium, 

undifferentiated packages and with little or no marketing support. Thus, the high share of private 

label milk reinforces milk’s commodity image, making competitive premium-image branded 

products more attractive to consumers. 

In 2007, a year which saw significant retail price increases on fluid milk, the fluid milk generic 

advertising budget decreased 3.2 percent from $56.7 million in 2006 to $54.9 million. Within 

this 2007 budget, advertising dollars allocated to the key consumer target, moms, increased by 

4.7 percent from $40.5 million in 2006 to $42.4 million in 2007, while advertising budget for 

teens dropped by nearly 23 percent in 2007 (Figure 4–9).

Figure 4–9

Fluid Milk Generic Advertising Budget(1)

2000 – 2007

$59.8

$10.4

$11.4

$56.5

$15.0

$10.5

$37.6

$8.0

$28.4

$37.4

$5.9

$25.2

$25.1

$4.6

$36.0

$16.3

$42.7

$16.2

$40.5

$12.5

$42.4

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2000 2001 2002 2003 2004 2005 2006 2007e

Adults Teens

Kids Women/Moms $81.6 $82.0

$68.5

$74.0

$65.7

$59 $56.7 $54.9

Source: Beverage Marketing Corporation; Lowe Millions of Dollars

(1) These figures represent only national advertising spending and not State/Regional spending

e=estimated; based on MilkPEP actual plus DMI estimated; DMI total media advertising spending allocated to Women/Moms
58

In addition, total estimated media spending for fluid milk in 2007 (i.e., national/regional 

spending and brand-specific spending) of $70.5 million, constitutes a 24.5 percent drop in 

spending from 2006, and generated a per-gallon spending rate of 1.1 cents per gallon – the 

second-lowest media spending rate among milk’s competitive beverage set. As the industry has 

diverted marketing dollars to public relations programs, school programs and other promotions, 

media spending has declined. (Figure 4–10). 

Within the competitive set, media spending growth was realized for only a handful of categories 

in 2007: energy drinks (57 percent), RTD teas (53 percent), value-added waters (40 percent), and 

fruit drinks (20 percent). Overall media spending for the total competitive beverage set 

decreased by 11.7 percent in 2007, driven mostly by a decline in carbonated soft drinks 

(per-gallon spending down nearly 18 percent). In comparison to other categories in the 

competitive set, bottled water’s success has been primarily driven by pervasive distribution, 

convenient packaging, aggressive pricing and local promotions/marketing, without major, 

national advertising expenditures. 

As a result of the declines in fluid milk media spending in 2007, milk’s share of voice dropped to 

6.6 percent among its competitive set from 8.7 percent in 2006, creating a share of voice vs. 

market share index of 39, vs. an index of 53 only 5 years ago. Milk’s low share of voice, 

declining over a number of years, is likely to have a current and cumulative negative impact on 

milk consumption, despite the category’s highly relevant and differentiated messaging. 

It should be noted that the tracking of media spending does not signify the effectiveness of the 

advertising, nor does it measure the impact of millions of dollars spent on promotions and other 

non-media programs. While promotional spending cannot be tracked across competitive 

Figure 4–10

Source: Beverage Marketing Corp.; Lowe; Ad Views 

Competitive Set Media Spending per Gallon 

2007

$0.263

$0.173

$0.121

$0.055 $0.044 $0.039

$0.011 $0.006

$0.317 $0.317

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

RTD Coffee Energy

Drinks

ValueAdded

Water

Sports

Drinks

Soy Bevs RTD Tea Fruit

Beverages

Soft Drinks Milk PET

Bottled

Water

Dollars per Gallon

’06-’07 Change NA NA NA -12.9% NA 292.6% -40.7% -17.8% -46.5% -76.2% ’06-’07 Change NA NA NA -12.9% NA 292.6% -40.7% -17.8% -46.5% -76.2% 
59

Figure 4–11

 * Local in-market activities by MilkPEP such as Milk Mustache Mobile 

 Source: Marketing Management Analytics 

categories, MilkPEP promotions targeted to mom and Hispanics as measured by Marketing 

Management Analytics (MMA), have shown a highly positive impact (see Figure 4–11). 

According to MMA, each of MilkPEP’s programs has had some positive incremental volume 

benefit, and some had a growth impact, comparing 2007 versus 2006.10 Even with this positive 

impact, it is BMC’s belief based on its decades of industry knowledge and experience that the 

milk category continues to be outspent in promotions by some of the major competitive 

categories, such as carbonated soft drinks, sports beverages, bottled water and perhaps even 

energy drinks.

Retail Channel Distribution 

The availability of fluid milk across the continually expanding and fragmenting retail channels 

has historically been an area of competitive disadvantage for the category. In 2007, the 

estimated volume of milk sold in retail channels primarily serving at-home consumption was 

80.2 percent, and the estimated volume of milk sold in channels primarily serving on-the-go, 

immediate consumption was 19.8 percent, showing very little growth in the ratio of immediate 

vs. take home volume from 2006. This take-home vs. immediate consumption retail channel 

sales balance is in sharp contrast to competitive categories such as CSDs, sports beverages, 

energy drinks and enhanced waters, and is likely driven by a combination of more limited singleserve packaging, flavor variety and distribution reach in immediate consumption retail channels, 

when compared to competitive categories, as well as inherent product drawbacks like being more 

viscous and thus less refreshing and gulpable (see Figure 4–12). 

However, the milk category is continuing to achieve more diversified availability in nontraditional take-home channels such as club stores and dollar stores, with an estimated 

16.4 percent volume coming from Drug, Mass and Club retail channels in 2007, up from 

10 Source: 2007 MilkPEP Marketing Mix Analysis, conducted by MMA, which builds regression based econometric 

models using actual sales, marketing and non-marketing factors to decompose the volume impact of various inmarket stimuli, while controlling for outside variables 

Incremental Gallons Generated (MM) 

by MilkPEP Marketing Programs

26.3

1.4 3.2

26.0

1.0 1.6

4.7 5.1

18.9

0.4

36.0

6.6 5.9

3.5

11.5

14.3

2.6

18.2

32.2

6.2 7.3 7.1

22.2

18.7

0.7 1.6

Moms TV Hisp TV Moms Prt Teens Prt Hisp Prt Nat'l PR Grassroots

PR*

Hisp PR In-Store

/Promo

BBM

Posters

Word of

Mouth

Internet

Advert.

Hisp.

Internet

Advert.

2006 (Through 11/5)

2007 (Through 11/4)
60

Figure 4–12

10 percent total volume in 2002 (see Figure 4–13). This distribution channel shift is important to 

fluid milk’s overall growth and market presence, as consumers continue to fragment their 

shopping trips across a wider variety of outlets, and non-traditional grocery outlets continue to 

proliferate.

Consumer Pricing 

As mentioned earlier in this report, the average retail price for milk in 2007 increased by 

approximately 15 percent, from $2.42/gallon in 2006 to $2.78/gallon in 2007 (source: IRI).

Based on the Consumer Price Index for 2007, the milk category experienced an 11.6 percent 

Figure 4–13

e = Estimated

Source: Beverage Marketing Corporation

U.S. Fluid Milk Market

Share of Volume by Distribution Channel

2002 - 2007

Distribution Channels 2002 2003 2004 2005 2006 2007e

Supermarkets 74.6% 73.7% 70.9% 68.3% 67.2%

Drug Stores 1.3% 1.4% 1.6% 1.8% 2.2%

Mass Merchandisers 5.2% 6.8% 7.7% 8.6% 8.8%

Club Stores 3.5% 2.9% 4.0% 4.8% 5.0%

Down-the-Street 1.3% 1.3% 1.3% 1.3% 1.3%

Foodservice 3.2% 3.1% 3.2% 3.3% 3.3%

Convenience/Gas 3.3% 3.0% 3.3% 3.5% 3.5%

Others 6.5% 6.6% 6.8% 7.0% 7.3%

Vending 1.1% 1.1% 1.3% 1.4% 1.5%

TOTAL 100.0% 100.0% 100.0% 100.0% 100.0%

66.5%

2.3%

9.0%

5.1%

1.3%

3.4%

3.5%

7.4%

1.5%

100.0%

CAGR

02/07

-2.3%

11.2%

11.6%

7.9%

0.0%

1.1%

1.4%

2.5%

6.4%

Source: Beverage Marketing Corp.; Information Resources, Inc.

53.8 49.3 51.3

27.5 29.4

19.8

46.2 50.7 48.7

72.5 70.6

80.2

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sports

Beverages

RTD Tea CSD Fruit

Beverages

Bottled

Water

Milk

Share of Volume

Immediate Consumption Take Home

Immediate Consumption

2006/2007 Growth +2.0% +17.0% -3.0% -2.0% +8.8% +1.7%
61

Figure 4–14

increase in pricing, well beyond that of total non-alcohol beverages (which increased 4.1 percent, 

and higher than both carbonated soft drinks (4.4 percent) and retail PET water (–2.3 percent) (see 

Figure 4–14).

In an economic climate where retail pricing was an important factor, the percentage of milk 

volume sold on price promotion in 2007 remained stable, at 16.7 percent, a rate among the 

highest within the competitive set except for refrigerated juice (17.9 percent volume sold on 

feature price). Other key categories with relatively high rates of volume sold on feature were 

mature, large-scale categories such as sports beverages (16.1 percent) and carbonated soft drinks 

(12.1 percent). In 2007, price promotion continued to be one of several key drivers of volume 

for milk and its core competitors. 

New Product Activity 

Along with the increased focus on healthier “wellness” beverages in 2007, the beverage market 

saw a significant amount of new product introductions. New product growth in 2007 occurred 

primarily with sports drinks (+48 percent), RTD tea and coffee (+8 percent), and fruit beverages 

(+7 percent). Some of these new products positioned themselves against a key ingredient or 

combination of ingredients such as antioxidants and protein, and against benefit areas such as 

rejuvenation, energy, satiety, and weight management. 

The number of new product/package introductions (also known as stock keeping units or SKUs) 

for white fluid milk in 2007 is estimated to have reached 86 new entries, a significant 59 percent 

increase over 2006 activity. For flavored milk, the number of new product/package SKU 

introductions is estimated at 68 new entries, a decrease of 21 percent vs. 2006 (source: Mintel 

Global New Products Database). The new product activity for white and flavored milk 

combined in 2007 increased by 10 percent. A few mature competitive categories saw declines in 

4.1% 4.4%

3.1%

-2.3%

2.8%

11.6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Change in Consumer Price Index (CPI) 

2006 – 2007 

All Items Milk, All 

Types

NonAlcoholic 

Beverages

Carbonated

Drinks

Non-Frozen 

Juice & 

Drinks

Retail PET

Water*
62

Figure 4–15

new product activity in 2007, with carbonated soft drinks introductions dropping by 11 percent, 

and bottled water introductions declining by 15 percent (see Figure 4–15) 

Going forward, to remain well-positioned within the competitive environment, the milk category 

will need to continue to innovate, in both products (e.g., flavors, ingredients, functions) and 

packaging (e.g., sizes, designs, formats, new technologies). Many competitive new products are 

geared to the specific needs, ingredients, functional benefits, package sizes/shapes of highly 

specific consumer targets and usage occasions. The net result is that consumers have more 

choices than ever outside of milk, and the milk category will need to provide innovation to 

capture some of the growth in “healthier” beverage alternatives.

Beverage Marketing’s Assessment Of 2007 Milk Marketing Programs 

In 2007, the fluid milk category performed surprisingly well, given the increasingly tough 

market and competitive environment. Specifically, milk maintained a steady volume level, 

sustaining the increases achieved in 2006 despite the high price increases that occurred for

consumers (particularly toward the latter half of the year). This volume performance may 

indicate the strength of milk’s benefit positioning and relevance in the marketplace. 

In addition, the competitive landscape again in 2007 became more challenging for fluid milk, 

with a growing number of entries into the “healthier” beverage arena striving to capture some of 

the nutrition and “wellness” usage occasions. In particular, milk’s new product activity, relevant 

messaging and promotional/communications strategies, and expanding availability for out-ofhome occasions all helped to sustain milk’s current volumes. Because of milk’s superior health 

characteristics, the emphasis on health may enhance milk’s competitive stature in the market. 

Change in New Product Introductions*

2006 – 2007

6.8% 7.6%

-10.8%

10.0%

-13.1% -15.4%

48.4%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Bottled

Water

Fruit 

Beverages

Sports

Beverages

CSDs

* Includes SKU’s for White and Flavored Milk

Source: Beverage Marketing Corporation; Mintel

Milk Energy *

Drinks

RTD Coffee & 

Tea

New SKUs

for 2007 46 166 187 154 149 438 170
63

Beverage Marketing believes that the marketing campaigns developed under the Dairy Act and 

the Fluid Milk Act have played a key role in maintaining the category’s growth, and volume 

declines would have been more significant without the major programs and initiatives 

implemented in 2007. Moreover, Beverage Marketing believes the key initiatives implemented 

by MilkPEP and DMI for the milk category are successfully targeting and addressing the 

strategic growth opportunity areas evident in the marketplace: 

x On-trend messaging continued in 2007 with the Healthy Weight message 

x Effective use of both traditional and non-traditional media, to reach key consumer 

targets in a cost-efficient approach 

x Identifying Quick Service Restaurants (QSRs) as a key strategic retail channel to 

capture out-of-home usage occasions 

x Both the New Look of School Milk program from DMI and Capturing the School 

Milk Opportunity program from MilkPEP are reaching Teens/Kids by positioning 

milk as a relevant, appealing beverage choice in schools 

x Promotion programs are geared to moms making purchase decisions for the 

family as the nutrition gatekeeper 

x Hispanics are being targeted in a culturally relevant way with communications on 

the core benefits of milk consumption 

Beverage Marketing believes the positioning strategy for the milk category was an important 

driver of sustained consumer demand in 2007, with the evolution from the Weight Loss to 

Healthy Weight messaging fitting with consumers’ shifting consumption habits toward healthier, 

more natural beverages. The Healthy Weight messaging and related Body by Milk 

program/messaging for teens enabled milk to compete more effectively as a viable beverage 

alternative within an expanding competitive set of beverages aimed at health and wellness 

needs/occasions. As a result, Beverage Marketing believes milk is increasingly seen as a key 

component in the wellness and nutrition offerings in a wide variety of occasions and venues.

In 2007, overall MilkPEP spending generated an estimated 3.2 percent share of total milk 

volume, or approximately 140 million gallons (source: Marketing Management Analytics). This 

is a solid performance, given the steep milk price increases experienced by the category, as well 

as the growing competitive set in 2007. Overall, the MMA analysis conducted for MilkPEP in 

2007 continues to show that the advertising and promotional campaigns of MilkPEP are effective 

in generating incremental milk volume. 

The communications strategy utilized by MilkPEP for the milk category also continued to evolve 

into meaningful new media for key consumer targets, resulting in improved media spending 

efficiencies and strong messaging impact in 2007. In 2007, the spending allocations were 

strategically allocated by consumer target, with moms as the core consumer target. The “Think 

about Your Drink” platform for moms and their families focused on public relations and specific 

website communications about increasing milk consumption. 

In 2007, teen print advertising continued to feature the Milk Mustache celebrity campaign, which 

has built very strong equity among teens over the years. In addition, spending on the teen target 
64

in 2007 utilized the Internet (Web sites, social networking, etc.), as well as traditional print. In 

addition, school communications utilized banners and expanded beyond cafeterias into 

gymnasiums, and also reached into elementary schools with age-appropriate messaging. 

The Body by Milk campaign to reach, educate and reward teens (originally launched in 2006) 

was continued in 2007 with a strong array of available in-school and interactive, online materials 

to help communicate the nutritional value of milk in a compelling, relevant format. In schools 

which ran the Body by Milk “Music to Move You” poster program, weekly milk servings per 

student in secondary schools increased an estimated 4.5 percent the fall 2007 (source: PCI 

tracking report). 

This Body by Milk program was one component of an overall school channel outreach effort by 

MilkPEP in 2007, incorporating the School Nutrition Association, dairy processors, school trade 

publication advertising and trade show attendance, and in-school materials, to educate school 

nutrition professionals about increasing milk consumption in schools. In addition, MilkPEP 

worked to increase milk consumption in schools through the Capturing the School Milk 

Opportunity program, which shows schools and processors how to improve school milk sales. 

Beyond the teen demographic, the Milk Mustache campaign continued to be utilized to deliver 

the Healthy Weight message to moms. This iconic and highly-recognizable campaign has helped 

milk to cut through the clutter to reach both moms and teens in a marketplace in which milk has 

been heavily outspent by competitive categories. 

For the QSR initiative, DMI continued partnering with chains to establish single-serve milk as a 

viable beverage choice for kids in immediate consumption outlets. In late spring 2007, DMI 

succeeded in partnering with the Subway chain of 22,000 outlets to offer 12-ounce plastic bottles 

of lowfat white and chocolate milk. This initiative continued to expand milk’s visibility and 

relevance as a contemporary beverage alternative in on-the-go, impulse venues such as QSRs, 

reaching an estimated 60,000 outlets in 2007. 

The New Look of School Milk program, begun in 2002, continues to focus on enhancing the 

visibility and merchandising of plastic bottled single-serve milk in schools. In 2007, DMI 

worked with large foodservice management companies to promote and implement the core 

strategies of New Look of School Milk, and also continued to convert school districts to the 

program. As a result, New Look of School Milk has generated an estimated 200.6 million 

pounds of incremental milk volume in schools from 2002 through 2007, reaching 9,200 schools 

and an estimated 5.5 million students.11 In addition, DMI continues to develop and implement 

the Expanding Breakfast Program, with the goal of promoting breakfast consumption, including 

milk, as part of the overall child nutrition program.

As part of the strategic emphasis of driving school milk consumption, both MilkPEP and DMI 

are assisting processors in a variety of ways with flavored milk reformulations, to address the 

11

National Dairy Council and School Nutrition Association. School Milk Pilot Test. Beverage Marketing Corporation, 2002. 

School Market Access database - National Dairy Council, 2007. 
65

needs of school “wellness” policies. These programs involved efforts such as identifying 

flavored milk products that meet nutrition, wellness and taste requirements, conducting flavored 

milk testing with kids, and developing and making flavored milk formulations available to 

processors.

Finally, the MilkPEP efforts targeting Hispanics across TV/print advertising and public relations, 

increased in effectiveness and spending efficiency in 2007, with noteworthy increases in 

incremental volume generated with Hispanic moms (source: Marketing Management Analytics). 

Overall, Beverage Marketing’s assessment of the performance and impact of the milk marketing 

programs in 2007 is positive. We believe the efforts to support ongoing improvements in all 

retail channel availability, product/package innovation, and utilization of consumer relevant 

messaging and media utilization are critical to the short and long-term growth and competitive 

viability of the fluid milk category. 
66

Part II – National Fluid Milk Processor Promotion Program: Highlights by 

the National Fluid Milk Processor Promotion Board 

In addition to the independent econometric analysis of dairy industry performance in Chapter 3 

and the overall assessment of the impact of dairy promotion in 2007 submitted by Beverage 

Marketing Corp. in Part I of Chapter 4, the purpose of this analysis is to demonstrate the 

beneficial effect of the National Fluid Milk Processor Promotion Program (MilkPEP) by 

providing specific examples of the program’s success. Though it is encouraging that the 

marketing/communication community continues to laud the national Milk Mustache/“got milk?” 

campaign as among the most notable and successful communication efforts in history, it is 

important to know that the program is responsible for real and measurable improvement in the 

milk market. 

An extensive range of marketing and communication disciplines are utilized to execute the 

program, and these are integrated in every manner possible to achieve the greatest impact. This 

section will: 1) explain the unexpected and favorable results of this integrated approach on 

industry sales in 2007, and 2) provide a specific example of how MilkPEP is playing the lead 

role to reduce the calories in flavored school milk as the Nation and education community 

address the growing childhood obesity issue. 

Sustaining Milk Sales Despite Historically High Pricing 

Milk prices, which actually began to rise in the last quarter of 2006, gradually increased through 

the second quarter of 2007 and then remained at historically high levels through the remainder of 

the year, with the average annual price 14.4 percent above 2006 in major retail channels, 

according to IRI (FDMx). (Figure 4–16) For consumers and processors, 2007 was arguably the 

worst pricing environment for milk in history, with milk prices at their greatest disparity 

compared to the overall grocery products and soft drinks. (Figure 4–17) The historically high 

milk prices in 2007 might have predicated a decline in sales. In fact, however, actual sales 

remained essentially unchanged, declining only 0.1 percent between 2006 and 2007. 

One potential contributor to the unexpected stability of milk sales despite significantly higher 

prices may have been the fact that the price increase did not occur as quickly or as dramatically 

as in prior periods, e.g., 2004. Thus, the ‘sticker shock’ was not as great as in 2004. Another 

market factor was likely that the price of orange juice, a key competitor for milk, increased even 

more than milk price. Additionally, however, consumer research conducted on the effects of 

MilkPEP’s “weight loss/healthy weight” messaging indicates it has positively influenced 

consumer awareness, attitudes and perceptions of milk and milk’s benefits. This message has 

been timely and relevant in light of the country’s health/obesity crisis and MilkPEP has 

maintained the message for 4 years, possibly leading consumers to value milk at such a level as 

to sustain milk sales in an environment of higher pricing, and thus lending support to sustained 

and positive effect of MilkPEP messaging. 
67

Figure 4–16 Fluid Milk Sales and Retail Price Changes – 2004 - 2007 

Source: Information Resources, Inc. (FDMx) 

Using the full range of our program’s measurement resources, we are able to assess the impact 

and value of the program in terms of providing the industry with a Retail Return on Investment 

(RROI) estimate for its marketing investment, and in achieving the national nutritional goals 

specified in its congressional mandate. MilkPEP’s Marketing Mix Analysis12 showed that the 

Figure 4–17 Relative Pricing of Milk, Soft Drinks and "Food Basket CPI" 

156

132

119

80

90

100

110

120

130

140

150

160

170

Jan00

May

Sep

Jan01

May

Sep

Jan02

May

Sep

Jan03

May

Sep

Jan04

May

Sep

Jan05

May

Sep

Jan06

May

Sep

Jan07

May

Sep

 Price Index

Whole Milk

Food at Home

Carbonated Soft-drinks

Source: Bureau of Labor Statistics 

12 Source: 2007 MilkPEP Marketing Mix Analysis, conducted by MMA, which builds regression based econometric 

models using actual sales, marketing and non-marketing factors to decompose the volume impact of various 

in-market stimuli, while controlling for outside variables 

-0.15

-0.1

-0.05

0

0.05

0.1

0.15

0.2

0.25

0.3

Jan04

Feb04

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan05

Feb05

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan06

Feb06

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan07

Feb07

Mar

Apr

May

Jun

Jul

Aug

Sep

percent changes

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

average price per eq. gallon

% Change Price/Eq. Gallon

% Change Volume

 Monthly Average Price
68

share of total milk volume attributable to the short term MilkPEP activities, though down slightly 

from 3.5 percent in 2006, remained a significant 3.3 percent in 2007. In actual volume, that 2007 

contribution represents approximately 173 million gallons, or an estimated $522 million in retail 

sales revenue nationwide. This represents a retail impact of $6.60 for every dollar spent by fluid 

milk processors in 2007. The short term RROI to the fluid milk industry, measured in terms of 

total retail sales ($6.60 for every dollar spent) remains highly favorable, basically flat compared 

to 2006 ($6.61 for every dollar spent). 

While incremental volume is defined as volume directly attributable to specific marketing 

activity in the current year, base volume reflects “intrinsic demand” and is defined as volume 

that can not be directly linked to current or very recent (within the current year) marketing 

activities such as in-store promotion or advertising. Base volume is a product of consumers’ 

long-term affinity for a product and is affected over time by marketing programs, particularly 

awareness and equity building media such as advertising and public relations.

In 2007, despite the historically high prices for milk, the base volume as measured by the 

Marketing Mix Analysis was roughly flat versus 2006, thus not diminishing the recent growth.

The continued strength of base volume is likely a function of the long-term behavior change 

advocated by the campaign, and adopted by consumers for what is a very “habitual 

consumption” product (Figure 4–18). 

Continuing a long-term trend, once again in 2007, lower-fat milks volume increased and whole 

milk volume declined. (Figure 4–19). All of MilkPEP’s ongoing messaging specifies low-fat 

and fat free milk, and the healthy weight message awareness and believability among target 

consumers are very high, (69 percent and 54 percent of adult women in Q4 2007, respectively13).

Figure 4–18 Growth of Base during Modeled Time Period 

Source: 2007 Marketing Mix Analytics Corporation Study; 2007 is a year-end estimate based on actual base volume 

generated through 11/4/07 

13 Source: Data Development Worldwide Q4, 2007 tracker 

5.5 5.4 5.7 5.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2004 2005 2006 2007 Projected

Base Volume 

(Billions of Gallons)
69

Figure 4–19 Milk Volume Changes by Segment – 2006-2007 

78.5

-77.7

-100

-80

-60

-40

-20

0

20

40

60

80

100

USDA

Volume Changes (mil gal)

Whole

Fat Reduced

Source: USDA-AMS; IRI-FDMw 

Thus, it seems likely that the program is influencing consumers to choose the lower-fat products.

Also based on the quarterly consumer tracking studies, both of MilkPEP’s key targets, Moms 

and Teens, indicate they are drinking more milk, with general health sited as the primary reason. 

(Figures 4–20 and 4–21)14

Based on the Marketing Mix Analysis and other indicators as detailed above, in this highly 

competitive beverage marketplace, the MilkPEP program in 2007 was effective in driving 

incremental volume and helping to mitigate the long-term loss of market share. The program 

advanced its effectiveness by focusing on new ideas, such as science supporting the positive 

impact of milk consumption on maintaining a healthy weight and data showing that those with 

higher milk consumption and lower consumption of sugary drinks have lower BMI (Body Mass 

Index)15 and healthier diets overall. MilkPEP’s public relations efforts communicated the 

emerging science linking milk with anti-aging, bone health and lowered risk of diabetes and 

certain types of cancer. 16

Addressing At-Risk Flavored Milk in School Channel 

Continued concern for the growing childhood obesity epidemic has created heightened attention 

to, and scrutiny of the foods and beverages marketed and sold to children, with schools in

14 Source: Data Development Worldwide quarterly advertising, attitude and consumption tracking study utilizing an 

Internet panel of over 450,000 households, built as a randomly sampled construct of the U.S. consumer population, 

continuously interviewing 300 adult women, 150 mothers of kids 2 to 14 and 300 teens (split between boys and 

girls) each month 

15 BMI provides a reliable indicator of body fatness for most people and is used to screen for weight categories that 

may lead to health problems (Source: Centers for Disease Control) 

16 Detailed findings and published studies can be found on whymilk.com 
70

Figure 4–20 Drinking More/Less White Milk Compared to Six Months Ago (Moms) 

Question: “Do you feel that you are drinking more, less or the same amount of white milk as six months ago?” 

 

Source: Data Development Worldwide 

Figure 4–21 Drinking More/Less White Milk Compared to Six Months Ago (Teens) 

Question: “Do you feel that you are drinking more, less or the same amount of white milk as six months ago?” 

Total Teens 

Less More 

Q4 2007 

Q3 2007 

Q2 2007 

Q1 2007 

Q4 2006 

Q3 2006 

Q2 2006 

Q1 2006 

Q4 2005 

Q3 2005 

Q2 2005 

6%

9%

8%

7%

6%

7%

7%

10%

6%

8%

10%

34%

31%

30%

36%

26%

36%

30%

33%

29%

33%

31%

11%

14%

9%

11%

6%

11%

11%

12%

13%

32%

24%

29%

29%

26%

26%

21%

26%

25%

Source: Data Development Worldwide, 3/08 report. 

Reasons For Drinking More Milk

2006 2007 

Q3 Q4 Q1 Q2 Q3 

Among Those Drinking More (36)* (45)* (45)* (41)* (35)* 

% % % % % 

Healthier For Me/Child 13 32 23 21 31 

Pregnant/Nursing My Baby 4 12 7 5 18 

Trying To Cut Back On Fats/Trying 

To Lose Weight 11 24 14 22 12 

Just Have/Have More Around 

Lately/It's What Is Available At The 

Time 

2 2 2 8 11 

Just Like It 12 14 17 17 11 

Like It More/Prefer It With Certain 

Foods/Drink/Meals 8 2 2 0 10 

Good for bones 5 7 4 5 9 

Need The Calcium 7 4 7 12 6 

Reasons For Drinking More Milk

2006 2007 

Q4 Q1 Q2 Q3 Q4 

Among Those Drinking More (89*) (107) (90*) (97*) (270) 

% % % % % 

Healthier for me 31 32 27 29 28 

Just like it 19 18 24 12 15 

Like the taste/Child likes the taste 8 12 5 14 11 

Like it more/Prefer it with certain 

foods/drink/meals 7 1 4 8 8 

Enjoy it with cereal 4 5 6 11 7 

Good for bones 6 3 2 7 6 

Trying to cut back on fats/ lose weight 13 8 3 6 6 

Total Moms 

Less More 

Q4 2007 

Q3 2007 

Q2 2007 

Q1 2007 

Q4 2006 

Q3 2006 

Q2 2006 

Q1 2006 

Q4 2005 
71

Figure 4–22 Share of Flavored Milks in Schools that Met Initial AHG Guidelines – 2006/07 

School Year 

Source: School Marketing Access database – DMI and Prime Consulting 

particular targeted for changes. Pressure to reduce fat, sugar and calorie levels of flavored milk 

in schools is being applied at every level, from government to consumer advocacy organizations. 

Several public interest groups have initiated action to address childhood obesity in schools, in

particular the Alliance for a Healthier Generation (AHG), a partnership of the American Heart 

Association, the Clinton Foundation, and the American Beverage Association. The AHG 

“School Beverage Guidelines” have gained significant influence in schools and have been 

adopted by the major beverage companies. The AHG voluntary guidelines call for 150 calories 

per 8 ounce beverage serving. When the AHG guidelines were announced in 2006, only about 

1/3 of the chocolate milk and less than 30 percent of other flavor offerings in schools met the 

150-calorie criteria. (Figure 4–22)

Flavored milk, with the same nine essential nutrients as white milk, plays a very important role 

in child nutrition and the school meal programs (Figure 4–23). An estimated 70 percent of milk 

sold in schools is flavored milk. Research has shown that when students have a variety of milk 

flavors to choose from, more milk is consumed (Figure 4–24). In schools that served 2 flavors

in addition to white and chocolate, weekly per student consumption was 0.42 ounces, or 

12.2 percent, higher than in schools where only white and chocolate milk were available, 

according to PCI’s Annual School Survey. In addition, intake of nutrients such as calcium, 

magnesium and phosphorus increases. Children who drink flavored milk tend to drink fewer 

nutrient-poor sodas and sugary fruit drinks, and flavored milk contributes only a fraction of the 

total added sugars (<2.0 percent) consumed by children and adolescents; and children who drink 

flavored milk tend to be leaner than those who do not. 17

The risk of negatively impacting milk consumption among school-aged children is real and 

serious. Already, milk consumption declines dramatically during the teen years. (Figure 4–25) 

Limiting the availability and/or the appeal of flavored milk in schools is likely to result in lower

17 Detailed findings and published studies can be found on whymilk.com 

30% 70%

36%

22%

28% 72%

78%

64%

ALL FLAVORS

Chocolate

Strawberry

Others

< 150 Calories > 150 Calories
72

Figure 4–23 Children Who Drink Flavored Milk have Better Nutritional Profiles

Source: What America Drinks: How Beverages Relate to Nutrient Intakes & Body Weight; Jan 2007 

consumption at school, and potentially translate to lower consumption of milk overall by the 

students currently as well as later in life. 

Recognizing that milk’s long standing position on the school lunch line will be in jeopardy if 

processors do not move quickly to meet the AHG guidelines, MilkPEP made a commitment to 

protect our current ability to deliver nutrient-rich flavored milk to children, improve the health 

profile of flavored milk via lower calories and deliver the healthiest flavored milk product 

possible.

Figure 4–24 Students Consume More Milk In School When Offered More Flavors 

Weekly Servings of Milk per Student 

Source: Annual School Survey ‘06/’07, Prime Consulting Inc. 

3.69

3.45

3.77

3.87

TOTAL White + 

Choc + 1 

Flavor 

White + 

Choc Only 

White + 

Choc + 2 

or More 

26.3%

32.9%

24.4%

21.7%

2.6%

Whole Milk Flavored

Milk

Soft Drink Sports

Drinks

Non-Milk

Drinkers

% of Children Who Meet or 

Exceed Calcium RDI 

And Who Are Heavy Users of 
73

Figure 4–25 Milk Consumption Declines in Teen Years 

Source: Share of Intake Panel 2004, TNS-NFO 

The industry has thus far invested approximately $1 million toward addressing the issue through 

research, flavor testing and training the industry on ways to improve flavored milk health 

profiles through the School Milk Flavor Formulation Workshops. The Workshops reach out to 

milk processors to provide potential solutions for reducing calories in flavored school milk by 

August 2008. The first workshop was held in August 2007, and to date about 25 dairies and 225 

fluid milk processors have participated in the program. This cadre of processors represents 

roughly 60 percent of milk volume in the U.S., and all participants have committed to having 

150-calorie flavored milk offerings by August 2008, with some already having attained this goal. 

In Summary 

MilkPEP continues to promote the fluid milk industry, supporting the Federal nutrition goals 

outlined in the legislative act establishing the program – as well as the nutrition goals as outlined 

in the U.S. Dietary Guidelines for Americans and USDA’s Food Guide Pyramid. MilkPEP is a 

national marketing voice for milk in a marketing environment subject to a high degree of Federal 

and State regulation, helping to maintain the strength and stability of the fluid milk industry, to 

the benefit of the Nation’s health.

0

10

20

30

40

50

60

70

80

90

100

Under 6 6 to 12 13 to 17 18 to 24 25 to 34 35 to 49 50 to 59 60 yrs+

Per Capita Milk Volume (oz per week)
74

Part III – National Dairy Promotion and Research Program: Highlights by 

Dairy Management Inc. 

Introduction: DMI’s Changing Role 

In 2007, dairy checkoff organizations continued the transition from direct consumer 

programming to a more aggressive business strategy focused on working with influential 

industry partners with the goal of meeting dairy demand. DMI is working with industry partners 

to identify the products customers want, where and how they want them. 

Over the years, the buying power of promotion dollars has decreased due to inflation. At the 

same time, consumers are becoming more sophisticated, and accustomed to niche marketers 

meeting their needs. Rather than continuing to fund programs to promote only the products that 

are currently available, dairy farmers have shifted their focus to address the issue of unmet 

demand: the products consumers want, need, and are willing to pay for.

With limited promotional funding, it has become increasingly important to find the most costeffective way to fund programming to drive sales. The Board of Dairy Management Inc. has 

made a strategic decision to maximize the dollars available by partnering with leaders and 

innovators in the dairy industry in order to find synergies between branded and generic efforts.

Several years ago, dairy checkoff staff tested the theory that if the market leader in a given 

category could be persuaded to enhance the milk experience, soon the rest of the category would 

have to follow suit in order to compete. While the initial outlay in money and manpower may 

have been more than in years past, the theory proposed that once the market leader converted, it 

would take less involvement to convert the next tier of players, and finally, the marketplace – 

and consumers themselves – would demand the change of the rest of the category. This theory is 

referred to as the Analytic/Catalytic Concept.

This theory is demonstrated graphically in Figure 4–26: The very top of the pyramid represents 

the highest level of involvement by DMI/dairy checkoff staff. This phase could include product

development, market testing, and support of advertising concepts. It represents the highest level 

of input in both dollar value and staff time. This is referred to as the Analytic phase – the direct 

expenditure of time and money. Tier two represents where the change has been shown to be 

valuable to other market participants, and competitors realize they must make similar changes or 

risk losing market share. Finally, at the base of the pyramid lies the third tier, where the change 

becomes an accepted part of doing business, with little or no involvement from dairy checkoff. 

This pyramid shows the Catalytic Concept with a Return on Investment indicator. As shown, 

dairy farmer resources allocated to these projects will be the greatest in the beginning stages, and 

will decrease exponentially downward as the greater impact within the market is demonstrated. 

Fully Executed Model: Quick Serve Restaurants (QSRs) 

An example of the fully executed pyramid is the 2004 launch of single-serve, low- fat white and 

chocolate milk, in plastic, re-sealable containers at two of the top five quick serve restaurant 
75

Figure 4–26 

Measurement Pyramid

DMI Initiative Model

Tier 1 = Direct 

DMI involvement 

with industry 

rollout

Tier 2 = Catalytic Impact 

Multiple partners; industry 

acceptance; competitors copy 

leader

Tier 3 = Mass acceptance by industry; 

initiative becomes ‘price of doing business’

DMI Influence

Level of Industry Impact

Source: Dairy Management Inc. 

chains in the country. Foodservice – a traditionally under-developed, away-from-home business 

segment for milk – is a critical channel to reach kids despite the historical market dominance of 

carbonated soft drinks. 

DMI staff approached key foodservice chains with the proposition that milk as part of a balanced 

diet could be part of a solution to the rising obesity levels among children. The excellent results 

of the School Milk Pilot Test conducted by DMI was the basis for proving that, given more 

attractive packaging and flavors, children would increase their milk consumption dramatically. 

In order to convince franchisees that promotion of single serve milk in plastic bottles would pay 

both long-term and short-term dividends, a four-market test was conducted using milk as a part 

of the kid’s meal offerings. The test was successful. Key competitors in the four test markets 

observed the success and began to push their national offices for a similar program. The race 

was on to be first to launch the product nationally. 

One of the barriers to overcome was the habitual ordering of soft drinks by both moms and 

children. The decision was made to offer a broad spectrum of marketing and merchandising 

techniques to break this traditional pattern. DMI collaborated on advertising that announced the 

new meal offerings and developed point-of-sale materials both in-store and at the drive-through.

In-store materials prominently featured milk and tied in with restaurant/movie promotions and 
76

other themes throughout the promotional period. At the grassroots level, local promotion 

agencies created incentives for the restaurant staff to suggest milk with kid’s meals, cookie and 

milk promotions, and public relations events that featured nutrition and exercise tips. 

In this Analytic phase of the program DMI enabled these fast food giants to build the business 

case for single-serve milk in plastic containers by providing milk sales/trend information, 

consumer insights, milk-specific consumption data, and the results of the School Milk Pilot Test.

The success realized by these chains, in terms of milk sales, merchandising and overall restaurant 

traffic gains, has served as a catalyst for other quick-serve competitors to add milk to their menus 

in 2007 and beyond (Figure 4–27).

In the following years additional top-ten chains were supported with selling propositions and 

point of sale materials. The program entered the Catalytic Phase and the model was proving to 

be more than a theory. These chains were given a decreasing amount of assistance in both 

monetary and staff resources. As this program progressed additional chains began to adopt 

single-serve milk in plastic containers, without assistance from DMI, as a way to build traffic 

and their nutrition profile.

Now, more than 60,000 quick-serve outlets nationwide offer single-serve milk, in plastic 

resalable containers, and they support this offering with attractive marketing. 

Figure 4–27 

183.0 190.6 195.9

285.8

378.1

427.1

449.4

2001 2002 2003 2004 2005 2006 2007

Source: NPD CREST 

1 QSR Hamburger + QSR other Sandwich Categories 

Continued Growth in Milk 

Milk Servings (MM)

 +4% +3% +46 +32 +13 +5% % Chg vs Yr 

Servings at QSRs1
77

New Product Development: A New Test For The Model 

In April 2006, DMI conducted an in-depth segmentation study involving 3,000 consumers. 

From a marketing management viewpoint, market segmentation divides a market into distinct 

groups who might be attracted to different products or services. This technique is widely 

accepted as one of the requirements for successful marketing. By dividing the market into 

relatively homogenous subgroups or target markets, both strategy formulation and tactical 

decision making can be more effective. 

The survey offered insights on how milk can better address beverage-consumption occasions, 

packaging, process and product development, and marketing and merchandising efforts. A goal 

of the study was to identify the key occasions upon which one consumes a beverage. In addition, 

the survey report offers insights into how milk and dairy-based beverages can better address 

those occasions through package, process and product development and marketing and 

merchandising efforts. The study uncovered seven beverage “need-states” which are needs that 

drive consumers to buy certain products. Of these, DMI identified four need-states as having 

great potential for value-added milk: Health Focused, Replenish, Meal Replacement/Other and 

Comfort/Indulgence. These are the segments where milk has a significant opportunity to gain 

share, and together, they represent 62 percent of total beverage consumption. 

Value-added milk is broken down into two categories: 100 percent milk products, which include 

products made with 100 percent milk with specific benefits such as flavoring, reduced lactose, 

extra nutrients and single serve bottles; and milk-based beverages, which are beverages where 

milk is a key ingredient but less than 100 percent. This includes drinks such as lattes, nutritional 

drinks and smoothies.

Around the same time, DMI partners were trying to grow the fortified milk category. A

1.0 percent lowfat milk product with the rich creamy taste of whole milk, plus additional protein 

(25 percent) and calcium (20 percent) was trying to find the right niche. Some of these products 

use the ultra-filtration process to remove extra liquid from the milk to create the creamy 

consistency and mouth feel of whole milk. 

Positioning the right product to the right consumer at the right place and time is the key to 

growth for the milk category. Market research from DMI on who those customers might be, 

combined with the reach and influence of State and regional units from throughout the Northeast 

and Southern States, helped position protein fortified milks in these markets (Figure 4–28). 

Marketing support included traditional efforts, such as sampling, radio tags and print advertising.

In addition, through State and regional organizations’ close relationships with local health 

professional groups, the chocolate version of this product gained access to key influencers – 

namely dietitians, pediatricians, and other members of medical groups, including American 

Academy of Pediatricians, National Medical Association, American Academy of Family 

Physicians, and the American Dietetic Association. These health professional groups received 

information explaining the nutritional attributes of the product and received samples at industry 

meetings in order to encourage endorsement of the product to clients and the media. 
78

Figure 4–28 

As of this writing, this value added program is work in progress, and remains at the analytic 

phase of the evaluation. 

Together, the repositioning of this value-added milk through increased marketing support plus 

the introduction of a chocolate product is working positively to turn around the brand. This 

increase in brand sales was sufficient to lift the entire category of enhanced milk products in the 

face of declining fluid milk sales overall. The information gathered in this test concerning valueadded milks is available to all brands in the market and with proper marketing should further 

build fluid milk category sales, which is the ultimate goal of the checkoff program. 

Incremental Sales Definition, Explanation and Results 

Incremental sales, as defined by The American Marketing Association, is, Units of the product 

sold to retailers or consumers through a sales promotion effort over and above the amount 

that would have been sold in the absence of the promotional deal. 

Growth in sales is converted into pounds based on the amount of milk used within the product.

The resulting sales are reported by DMI’s partners as agreed with DMI in the beginning of the 

program. 

Careful consideration is given to interpreting what sales occurred specifically due to the program 

and what dairy product consumption may have been replaced by the promoted product, resulting 

in lower sales increases for the dairy farmer. 
79

Single-Serve Milk in QSRs: The growth in sales shown in Table 4–1 is based on the average 

unit sales of milk per store per week provided by the partnering Quick Serve Restaurants for both 

pre-plastic bottle and post-plastic bottle time periods. Total milk unit sales were tracked for the 

year, establishing a baseline prior to the plastic bottle switch. The calculation for incremental 

sales in a given month for a QSR is (Average Weekly Sales Units – Pre-Existing Weekly Sales 

Units) x Number of Stores x Number of Weeks. Those units are then converted into pounds of 

milk using the following calculation: Units x 8 fluid ounces per unit/128 fluid ounces per gallon 

x 8.6 pounds per gallon. 

Value-added Milk (Table 4–2): The equation for calculating incremental sales for enhanced 

milk that DMI partnered on in established markets is the Current 18 months – Previous 18 Month 

Sales (Base Line), provided the category experienced overall growth. The partner’s growth rate, 

3.6 percent was compared to the category growth rate of 7.5 percent, both of which outpaced 

total fluid milk growth rate of –3.9 percent.

Table 4–1 

Year

Growth in 

Sales, lbs.

Cost of 

Program

Change in 

Production, 

lbs.

Change in AllMilk Price, 

$/cwt.

Change in 

Gross 

Producer 

Revenue

Change in Net 

Producer 

Revenue

2004 Fluid milk, 2%, ndm fortified 66,587,737 $8,272,000 7,422,645 $0.0150 $30,399,133 $29,307,583

2005 Fluid milk, 2%, ndm fortified 53,282,118 $60,000 25,381,313 $0.0234 $49,525,817 $45,793,322

2006 Fluid milk, 2%, ndm fortified 7,551,546 $560,000 38,560,574 $0.0215 $47,637,598 $41,967,003

2007 Fluid milk, 2%, ndm fortified 35,968,029 $750,000 49,318,298 $0.0276 $61,139,487 $53,886,895

Fluid milk, 2%, ndm fortified 0 $0 61,203,975 $0.0240 $55,999,174 $46,998,712

$9,642,000 181,886,805 $0.0223 $244,701,209 $217,953,514

Estimated Project Benefit:Cost ratio: 21.60:1

Assessment of QSR Single Serve Program

Present Value of First 5 Years

Table 4–2 

Year

Growth in 

Sales, lbs.

Cost of 

Program

Change in 

Production, 

lbs.

Change in AllMilk Price, 

$/cwt.

Change in 

Gross 

Producer 

Revenue

Change in Net 

Producer 

Revenue

2007 Fluid milk, 2%, ndm fortified 3,127,556 $1,243,740 348,634 $0.0007 $1,427,815 $1,376,546

20081 Fluid milk, 2%, ndm fortified 1,563,778 $0 1,087,481 $0.0009 $1,897,575 $1,737,654

Fluid milk, 2%, ndm fortified 0 $0 0 $0.0000 $0 $0

Fluid milk, 2%, ndm fortified 0 $0 0 $0.0000 $0 $0

Fluid milk, 2%, ndm fortified 0 $0 0 $0.0000 $0 $0

$1,243,740 1,436,115 $0.0003 $3,325,391 $3,114,200

Estimated Project Benefit:Cost ratio: 1.50:1

1 2008 Growth in sales is the result of the first 2 quarters off the year.

Assessment of Added Value Milk Program

Present Value of First 5 Years

The tables above show that these programs generate positive returns. 
80

The balance of the incremental sales came from new markets in the southeast region to which the 

partner’s brand was expanded. According to branded sales information from the processor, in 

the southeast region the new product expansion grew the category 84.2 percent, and the new 

product represented 92.3 percent of that growth. 

Conclusion

Dairy checkoff has long been viewed as an innovation leader and catalyst for change in the 

industry. As we continue to move forward with fresh ideas for maximizing dairy farmer 

investments, we will need not only to look critically at our initiatives and activities, but take 

further steps to determine how best to analyze what works best to move dairy sales. Based on 

the experience detailed above, we are confident our direction of working with industry leaders to 

develop ways to serve unmet markets will lead to increased sales and future dairy consumers. 

The Evaluation Model 

In order to effectively measure the past performance and future potential of producer invested 

programs, DMI is measuring the impact of each program’s sales increases on the value of farm 

milk. The evaluation tool developed for this purpose has the flexibility to measure impacts of 

sales over time in all classes of milk by converting incremental unit sales into pounds of protein 

and milkfat, then assessing the market-wide impacts. 

This spreadsheet model was developed for DMI by Dr. Roger Cryan of the National Milk 

Producers Federation. The demand analysis in the model is adapted from demand elasticities for 

milk components calculated and provided by Dr. Scott Brown at the Food and Agriculture Policy 

Research Institute. The supply analysis is adapted from supply equations developed by 

USDA/AMS, Dairy Programs.18 Other model parameters include baseline milk and component 

prices and supply. The primary raw inputs for the model are the costs of each promotion project 

and the incremental pounds of dairy product sales generated by each project; these are generally 

projected or estimated in connection with the project itself; in the model they are assumed to be 

additions to overall demand (i.e., they represent an outward shift of the demand curve). 

The model calculates estimated changes in producer prices, gross producer revenue, and 

producer revenue net of the cost of additional production. Finally, it generates a project rate of 

return to dairy farmers, based on the promotion cost and net revenue benefit. 

Sum Cost of Program / Sum Impact on Producer Revenue 

The objective in using this model is to look at the future value of today’s investment and analyze 

potential payback. This also allows us to evaluate programs where the payback is not expected 

within the same year of the investment or where there is an expected catalytic impact on sales 

stemming from a direct investment. 

18 USDA Agricultural Marketing Service (AMS) Dairy Programs National Econometric Model Documentation.

April 2007. Available at http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5056334
81

This model has the flexibility to compare projects across all dairy product types. Therefore, 

DMI can rank projects based on value added to the industry whether the sales source is fluid 

milk, cheese, ingredient, or some other processed dairy product. The spreadsheet allows us to 

investigate various incremental sales and investment scenarios by easily changing input 

assumptions, and is, therefore, a usable tool for valuation and budgeting exercises. This model 

may also be used to measure investment projects in which maintaining existing volume is the 

measure of success. 

In summary, this model evaluates investments by the amount of value that the investors will 

receive by measuring the base elements from which processor’s payments derive. It looks at a 

multiple-year period allowing the programs time to gain acceptance with the initiating partner 

and consumer. Additionally, it allows us to apply consistent quantitative thinking to projects 

across all areas of dairy investment. 

Definitions

• Growth in Sales (lbs.) 

– The increase in annual sales of the specified dairy product that were sold over and 

above the previous year due to a particular program. (If a project increases sales 

for only 1 year, there is an offsetting negative change in the second year.) 

• Cost of Program 

– The total dollar investment made each year by check-off organizations for the 

project.

• Change in Production (lbs.) 

– The estimated increase in U.S. production resulting from the price impacts of the 

project.

• Change in the All-Milk Price ($/cwt.) 

– The estimated impact on the all-milk price, relative to the baseline, for each year, 

including the impact from shifting demand and a change in the “blend” value 

based on the Class price for the product. 

• Change in Gross Producer Revenue 

– The estimated change in total producer revenue, resulting from changes in price 

and production. 

• Change in Net Producer Revenue 

– The estimated change in net producer revenue, based on the change in price and 

the net returns from new milk production. 

x Benefit Cost Ratio 

– The change in the total Net Producer Revenue divided by the total Cost of the 

Program. 
82

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83

Appendix A–1

National Dairy Promotion and Research Board 

Current Member Listing 

Region 1 (Oregon and Washington) 

Elizabeth I. Anderson James Zielinski 

Onalaska, Washington St. Paul, Oregon 

Term expires 10/31/2009 Term expires 10/31/2010 

Region 2 (California) 

James L. Ahlem Mary E. Cameron 

Hilmar, California Hanford, California 

Term expires 10/31/2010 Term expires 10/31/2009 

Kimberly K. Clauss Ronald L. Koetsier 

Hilmar, California Visalia, California 

Term expires 10/31/2009 Term expires 10/31/2008 

Stephen D. Maddox Brad J. Scott 

Riverdale, California Moreno Valley, California 

Term expires 10/31/2010 Term expires 10/31/2010 

Pauline Tjaarda 

Shafter, California 

Term expires 10/31/2010 

Region 3 (Arizona, Colorado, Idaho, Montana, Nevada, Utah, and Wyoming) 

Lester E. Hardesty Grant B. Kohler 

Greeley, Colorado Midway, Utah 

Term expires 10/31/2008 Term expires 10/31/2010 

William C. Stouder 

Wendell, Idaho 

Term expires 10/31/2009

Region 4 (Arkansas, Kansas, New Mexico, Oklahoma, and Texas) 

William R. Anglin Jose L. Gonzalez 

Bentonville, Arkansas Mesquite, New Mexico 

Term expires 10/31/2008 Term expires 10/31/2010 

Lawrence A. Hancock 

Muleshoe, Texas 

Term expires 10/31/2009 

MEMBERSHIP

APPENDIX A
84

Appendix A–1, continued

Region 5 (Minnesota, North Dakota, and South Dakota) 

Paul L. Kent Donna L. Sharp 

Mora, Minnesota Bath, South Dakota 

Term expires 10/31/2009 Term expires 10/31/2008 

Region 6 (Wisconsin) 

William J. Herr Peter J. Kappleman 

Greenwood, Wisconsin Two Rivers, Wisconsin 

Term expires 10/31/2010 Term expires 10/31/2009 

Bradford A. McCauley Randy G. Roecker 

Viola, Wisconsin Loganville, Wisconsin 

Term expires 10/31/2008 Term expires 10/31/2009 

Carl F. Van Den Avond 

Green Bay, Wisconsin 

Term expires 10/31/2008 

Region 7 (Illinois, Iowa, Missouri, and Nebraska) 

Douglas D. Nuttelman Larry G. Purdom 

Stromsburg, Nebraska Purdy, Missouri 

Term expires 10/31/2008 Term expires 10/31/2009 

 

Region 8 (Alabama, Kentucky, Louisiana, Mississippi, and Tennessee) 

Michael M. Ferguson 

Senatobia, Mississippi 

Term expires 10/31/2008 

Region 9 (Indiana, Michigan, Ohio, and West Virginia) 

Paul Broering Donald E. Gurtner 

St. Henry, Ohio Fremont, Indiana 

Term expires 10/31/2010 Term expires 10/31/2009 

Carl A. Schmitz 

Wadesville, Indiana 

Term expires 10/31/2008 

Region 10 (Florida, Georgia, North Carolina, South Carolina, and Virginia) 

John M. Larson 

Okeechobee, Florida 

Term expires 10/31/2010 

MEMBERSHIP

APPENDIX A
85

Appendix A–1, continued

Region 11 (Delaware, Maryland, New Jersey, and Pennsylvania) 

Joyce A. Bupp Rita P. Kennedy 

Seven Valleys, Pennsylvania Valencia, Pennsylvania 

Term expires 10/31/2008 Term expires 10/31/2009 

Paula A. Meabon 

Wattsburg, Pennsylvania 

Term expires 10/31/2010 

Region 12 (New York) 

Corinne M. Banker Ronald R. McCormick 

Morrisville, New York Java Center, New York 

Term expires 10/31/2010 Term expires 10/31/2008 

Sanford Stauffer 

Nicholville, New York 

Term expires 10/31/2009 

Region 13 (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and 

Vermont)

Debora A. Erb 

Landaff, New Hampshire 

Term expires 10/31/2008 

MEMBERSHIP

APPENDIX A
86

Appendix A–2

National Fluid Milk Processor Promotion Board 

Current Member Listing

Region 1 (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and 

Vermont)

Michael F. Touhey, Jr. 

Dean Foods Company 

Franklin, Massachusetts 

Term expires 06/30/2010 

Region 2 (New Jersey and New York) 

James F. Walsh 

H.P. Hood, L.L.C. 

Lynnfield, Massachusetts 

Term expires 06/30/2011 

Region 3 (Delaware, District of Columbia, Maryland, Pennsylvania, and Virginia) 

Michael F. Nosewicz 

The Kroger Company 

Cincinnati, Ohio

Term expires 06/30/2009 

Region 4 (Georgia, North Carolina, and South Carolina) 

Charles L. Gaither, Jr. 

Milkco, Inc. 

Asheville, North Carolina 

Term expires 06/30/2010 

Region 5 (Florida) 

Michael R. Smith 

Publix Super Markets, Inc. 

Lakeland, Florida 

Term expires 06/30/2011 

Region 6 (Ohio and West Virginia) 

Jay S. Bryant 

Maryland and Virginia Milk Producer’s Cooperative Association, Inc. 

Reston, Virginia 

Term expires 06/30/2009 

MEMBERSHIP

APPENDIX A
87

Appendix A–2, continued 

Region 7 (Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin) 

James B. Green 

Kemps, L.L.C. (a subsidiary of HP Hood, L.L.C.) 

St. Paul, Minnesota 

Term expires 06/30/2010 

Region 8 (Illinois and Indiana) 

Brian Haugh 

National Dairy Holdings 

Dallas, Texas 

Term expires 06/30/2011 

Region 9 (Alabama, Kentucky, Louisiana, Mississippi, and Tennessee) 

Edward L. Mullins 

Prairie Farms Dairy, Inc. 

Carlinville, Illinois 

Term expires 06/30/2009 

Region 10 (Texas) 

Robert Bruce McCullough 

H. E. Butt Grocery Company 

San Antonio, Texas 

Term expires 06/30/2010 

Region 11 (Arkansas, Iowa, Kansas, Missouri, Nebraska, and Oklahoma) 

Steven M. Turner 

Turner Dairy, L.L.C. (a subsidiary of Prairie Farms Dairy, Inc.) 

Covington, Tennessee 

Term expires 06/30/2011 

Region 12 (Arizona, Colorado, Nevada, New Mexico, and Utah) 

John R. Zuroweste 

Dean Foods Company 

Dallas, Texas 

Term expires 06/30/2009 

Region 13 (Idaho, Montana, Oregon, Washington, and Wyoming) 

Jerry N. Tidwell 

Safeway, Inc.

Pleasanton, California 

Term expires 06/30/2010 

MEMBERSHIP

APPENDIX A
88

Appendix A–2, continued

Region 14 (Northern California) 

Jay B. Simon 

Super Store Industries 

Stockton, California 

Term expires 06/30/2011 

Region 15 (Southern California) 

Paul W. Bikowitz 

Heartland Farms 

City of Industry, California 

Term expires 06/30/2009 

Members-At-Large (Processors) 

Charles S. Mayfield, Jr. 

Mayfield Dairy (a subsidiary of Dean Foods Company) 

Athens, Tennessee 

Term expires 06/30/2009 

Michael A. Krueger 

Shamrock Foods Company 

Phoenix, Arizona 

Term expires 06/30/2011 

Randy D. Mooney 

Hiland Dairy Foods Company, L.L.C. 

Springfield, Missouri 

Term expires 06/30/2010 

Teresa E. Webb 

Farmland Dairies, L.L.C. 

Wallington, New Jersey 

Term expires 06/30/2010 

Members-At-Large (Public) 

Janey K. Thornton, PhD.

Elizabethtown, Kentucky 

Term expires 06/30/2009 

MEMBERSHIP

APPENDIX A
89 

Appendix B–1

National Dairy Promotion and Research Board 

Actual Income and Expenses 

 (Thousands)

 2006 2007 

Income

Assessments $90,320 $91,951 

Program Development Fund (NAEMS1 Study) - 2,000 

Interest 965 1,720

Total Income $91,285 $95,671 

General Expenditures 

General and Administrative $3,759 $3,753 

USDA Oversight 757 712

Total General Expenditures $4,516 $4,465 

Program Expenditures 

Communications and Member Relations $15,474 $25,405 

Domestic Marketing 40,143 34,681 

Export Enhancement 5,199 6,432 

Disbursement for NAEMS1

 Study 6,000 2,000 

 Investment in NAEMS1

 Study (5,833) - 

Planning and Research 3,078 3,519

Total Program Expenditures $64,061 $72,037 

Excess of Revenue (Under) Over Expenditures $22,708 $19,169 

Fund Balance, Beginning of Year $15,321 $37,966 

Fund Balance, End of Year $38,029 $55,135 

1

National Air Emissions Monitoring Study. 

Source: Independent Auditor’s Report of the National Dairy Board and USDA records. 

APPENDIX B

FINANCES
90 

Appendix B–2

USDA Oversight Costs for the 

National Dairy Promotion and Research Board 

 (Thousands) 

 2006 20073

USDA Oversight Costs 

Salaries and Benefits $382,865 $370,581 

Travel 46,394 62,733 

Miscellaneous1 51,688 66,920 

Equipment 5,131 5,016 

Printing 5,269 6,604

USDA Oversight Total $491,347 $511,854 

Independent Evaluation $95,154 $122,062 

Total2 $586,501 $633,916 

1

Includes overhead, transportation, rent, communications, utilities, postage, contracts, supplies, photocopying, and 

 Office of the General Counsel costs. 

2

The totals for USDA expenses differ slightly from those shown in Appendix B–1 because of end-of-year estimates 

 which are adjusted in the following year. 

3

The 2007 totals correspond to the Federal fiscal year, which runs from October1 through September 30. 

Source: USDA accounting reports.

APPENDIX B

FINANCES
91 

Appendix B–3

National Dairy Promotion and Research Board 

2008 Approved Budget 

 (Thousands) 

 2008 

Revenues

Assessments $91,000 

Program Development Fund Draw 27,915 

Carryover from Prior Year 11,110 

Interest 600

Total Income $130,625 

Expenses

General and Administrative $4,100 

Amortization of NAEMS1 Study 2,000 

USDA Oversight 800

Subtotal $6,900 

Program Budget 

Milk $10,075 

Cheese 8,330 

Ingredients 6,136 

Export Enhancement 11,731 

Children’s Fitness and Nutrition Initiative 21,688 

Product Research 6,598 

Nutrition Research 9,669 

Nutrition Affairs 9,614 

3-A-Day 3,400 

Public and Industry Communications 8,419 

Foodservice 3,261 

Retail 5,972 

Strategy and Insights 11,172 

Other2 8,042

Subtotal $124,107* 

Total Budget Expenditures $131,007 

1

National Air Emissions Monitoring Study. 

2

Other includes fixed commitments, butter promotion, value added milk, value-added cheese, value-added milk and 

 cheese. 

*UDIA Expense share of total is $26,897. 

Source: Budgets received and approved by USDA from the National Dairy Board. 

APPENDIX B

FINANCES
92 

Appendix B–4

National Fluid Milk Processor Promotion Board 

Actual Income and Expenses 

 (Thousands) 

 2006 2007 

Income

Assessments $107,850 $107,736 

Late-Payment Charges 91 102 

Interest 990 899 

Other 1 71

Total Income 108,932 108,808 

General Expenditures 

California Refund $10,308 $10,257 

Administrative 2,140 2,875 

USDA Oversight 508 425 

USDA Assessment Verification 107 89

Total General Expenditures $13,063 $13,646 

Program Expenditures 

Media $66,335 $72,122 

Public Relations 11,566 12,662 

Promotions 10,372 12,468 

Strategic Thinking 1,303 1,157 

Medical Advisory Panel 271 268 

American Heart Association 120 - 

Medical Research 71 100 

Research, Local Markets, and Program Measurement 1,991 2,228 

Program Management - 120

Total Program Expenditures $92,029 $101,125 

Excess of Revenue (Under) Over Expenditures $3,840 ($5,963) 

Fund Balance, Beginning of Year $24,427 $28,268 

Fund Balance, End of Year $28,267 22,304 

Source: Independent Auditor’s Report of the Fluid Milk Board and USDA Records 

APPENDIX B

FINANCES
93 

Appendix B–5

USDA Oversight Costs for the 

National Fluid Milk Processor Promotion Board 

 (Thousands) 

 2006 2007 

USDA Oversight Costs 

Salaries and Benefits $340,185 $309,978 

Travel 24,441 18,506 

Miscellaneous1 49,737 54,813 

Equipment 3,164 494 

Printing 2,306 6,629

USDA Oversight Total $419,833 $390,420 

Independent Evaluation $31,718 $16,995 

Total2 $451,551 $407,415 

1 Includes overhead, transportation, rent, communications, utilities, postage, contracts, supplies, photocopying, and 

 Office of the General Counsel costs. 

2 The totals for USDA expenses differ slightly from those shown in Appendix B–4 because of end-of-year estimates 

 which are adjusted in the following year. 

Source: USDA accounting reports.

APPENDIX B

FINANCES
94 

Appendix B–6

National Fluid Milk Processor Promotion Board 

Approved Budgets 

 (Thousands) 

 2008 

Revenues

Assessments $107,800 

Interest 340

Total Income $108,140 

Carryover from Previous Fiscal Year $4,646

Total Available Funds $112,786

Expenses

General and Administrative $2,865 

USDA Oversight 567 

California Refund 10,210

Subtotal $13,642 

Program Budget 

Advertising $67,500 

Public Relations 15,619 

Promotions 11,236 

Strategic Thinking 1,115 

Medical Advisory Panel 400 

Research 2835 

Medical Research 205 

Program Management - 

Program Measurement 230

Subtotal $99,140 

Unallocated 4

Total Budget Expenditures $112,786

1

Independent Evaluation costs are included in Program Measurement Expenses. 

2

Processor Compliance is included in General and Administrative Expenses. 

 Source: Budgets from the National Fluid Milk Board received and approved by USDA.

APPENDIX B

FINANCES
95 

Appendix B–7

Aggregate Income and Expenditure Data Reported to USDA 

by the Qualified Programs 

(Thousands)

 2006 2007 

Income

Carryover from Previous Years $53,8101 $60,6721

Producer Remittances 181,262 189,043 

Transfers from Other Qualified Programs2

 55,818 51,676 

Transfers to Other Qualified Programs í52,009 -51,501 

Other Income 7,941 9,037 

Total Adjusted Annual Income $246,822 $258,927 

 

Expenditures

General and Administrative $8,056 $8,435 

Advertising and Sales Promotion 72,403 74,982 

Unified Marketing Plan4

 63,534 67,249 

Dairy Foods and Nutrition Research 5,122 5,717 

Public and Industry Communications 14,019 14,556 

Nutrition Education 15,130 15,831 

Market and Economic Research 2,641 1,394 

Other5 1,538 2,126

Total Annual Expenditures $182,443 $190,290 

Total Available for Future Year Programs $64,379 $68,637 

 

1

 Differences are due to audit adjustments and varying accounting periods. 2

 Payments transferred between Qualified Programs differ due to different accounting methods and accounting 

 periods. 

3

 Includes interest, income from processors and handlers, sales of supplies and materials, contributions, and rental 

 income. 

4

 Unified Marketing Plan: Reported local spending by United Dairy Industry Association units participating in the 

 DMI unified marketing plan to fund national implementation programs. 5

 Includes capital expenses. 

Source: Aggregate income and expenditure data reported by the Qualified Programs. 

APPENDIX B

FINANCES
96 

Appendix B–8

Aggregate Advertising Expenditure Data Reported to USDA 

by the Qualified Programs 

(Thousands)

 2006 2007 

Advertising Programs

Fluid Milk $12,658 [17.5%] $13,763 [18.5%] 

Cheese 46,343 [64.0%] 48,008 [64.6%] 

Butter 2,717 [3.7%] 2,786 [3.8%] 

Frozen Dairy Products 411 [0.6%] 259 [0.3%] 

Other1

 10,274 [14.2%] 9,554 [12.8%] 

Total $72,403 [100%] $74,370 {100%] 

1 Includes “Real Seal,” holiday, multi-product, calcium, evaporated milk, foodservice, product donation at State 

 fairs, and other events and contributions for displays or promotional events. 

Source: Aggregate income and expenditure data reported by the Qualified Programs. 

 

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Appendix D-1 

National Dairy Promotion and Research Board

and Dairy Management Inc.

Contracts Reviewed by USDA

Advertising and Marketing Services

American Academy of Family Physicians–Sponsorship; 3-A-DayTM of Dairy Activities

American Academy of Pediatrics–Sponsorship; 3-A-DayTM of Dairy Activities 

American Association of School Administrators–Journal Advertising 

American Association of School Business–Sponsorship Activities 

American Dairy Association/Dairy Council, Inc.–Professional Staff Services

American Dietetic Association–Sponsorship; 3-A-DayTM of Dairy Activities 

American School Food Service Association–School Foodservice Publications 

Broadcast Traffic and Residuals, Inc.–Fluid Milk and Cheese Broadcast Materials and Talent

 Activities 

DDB Chicago–Media Services 

Dairy Farmers, Inc.–Professional Services 

Demo Sales–Product Demo Program 

Domino’s Pizza–Cheese Promotion Activity 

Flair Communications Agency–Marketing and Program Management Services 

G2 Promotional Marketing–Retail Activities

Global Dairy Platform–Management Services 

Initiative Media Worldwide–Advertising Commissions Review 

Interior Systems–Ultimate School Restyle 

Mass Connections–Value-Added Milk Demonstrations 

Media Management Services–School Marketing Program Support 

Midwest Dairy Association–National Retail Account Services; UMP Implementation 

NFL Properties, L.L.C.–Promotional Activities; Logo Usage Rights 

National School Board Association–Marketing Partnership; Conference Exhibits; Journal 

 Space 

Novak Birch–Marketing and Creative Services

Olson Communications–School Foodservice Merchandising Materials; Mealtime Sampler 

 Activities; Milk Vending Promotion Kits; School Cafeteria Promotion Activities; Foodservice 

 Program Activities; School Promotion Activities; ADA Trade Booth 

RTC–Dairy Aisle Reinvention 

School Foodservice and Nutrition–Nutrition Magazine Inserts 

Shook Kelley–Cheese Case Design 

Slack Barshinger and Partners–Integrated Marketing Communications 

Stagnito Communications–LISN Awards Program

Team Services, L.L.C.–NFL and Sports Marketing Services 

VNU, Inc.–Licensing Agreement 

WebMD–Newsletter and Quick Quiz Activities (Web-based) 

Willard Bishop–Category Management Consulting 

Wisconsin Milk Marketing Board–National Butter Program 

Richter Bros., Inc.–www.Dairyfarming.org Strategy 

CONTRACTS

APPENDIX D
140

Appendix D-1, continued 

Communications, Public Relations, and Nutrition Education

Action for Healthy Kids, Inc.–Sponsorship

Audrey Welper–Media Consulting 

Blu Skye Sustainability–Dairy Industry Sustainability Initiative

Child Nutrition Foundation–School Foodservice Program Activities 

Christopher Klose–Editorial Consulting, Communications 

Cleveland Dovington Partners, Inc.–Information Technology Services and Consulting; 

Dairy Farmers, Inc.–Communication Activities, UMP Implementation

Destination Imagination, Inc.–Destination Imagination Sponsorship; CNFI Research 

Edelman Public Relations Worldwide–Health Professional Public Relations;

 Dairy Spokesperson Network, Nutrition Communications Program; Dairy Image Media 

 Relations; 3-A-Day Public Relations-Retail/Foodservice; Dairy Image Program 

FoodMinds L.L.C.–Health Professional Public Relations; Nutrition and Scientific Affairs Public 

 Relations 

Food, Research, and Action Center–Food Breakfast Expansion 

The Fratelli Group–Dairy Image Protection 

Gagen MacDonald L.L.C.–Internal Communications Support 

Health and Nutrition Network–Media Training and Consulting Services 

IA Collaborative–Nutrient Rich Coalition-Systemic Brand Development 

I-Site Web Design–School Marketing Web Program 

Image Base Corporation–Video News Release Production; School Milk Video Project 

Integer Group–Dairy Producer Communications Program 

JDG Consulting–Dairy Issues Management 

John Folse & Co.–Cheese Friendly Ideation and Prototypes 

Kelley Czerwonka–Consulting Services 

LevCom–Communications Activity 

Media Management Services–Pyramid Café/Pyramid Explorations Newsletter 

National Cattleman’s Beef Association–Naturally Nutrient Rich Score Project 

National Dairy Shrine–Dairy Scholarship Program 

Novations Group, Inc.–Custom 360 Feedback Process 

Nutrition Impact L.L.C.–Nutrient Density Index

Osborn and Barr–Communications; Industry Relations Consulting Project

Results Direct–DMI Website Activities 

Richter Brothers–www.dairyfarmingtoday.org Web site activities 

Valecor Services–Industry Relations and Market Intelligence 

Weber Shandwick, Inc.–Issues Monitoring and Response; Crisis Communications Program 

Export and Ingredients

 3 A Business Consulting–European Newsletter; Milk Protein Ingredient Study 

ABC Translation Services–Technical and Safety Evaluation Assessments

American-Mexican Marketing–Mexican Market Representation and Program Activities; 

 Mexican Trade Show and Cheese Promotion Activities; Dairy Deserts Promotion 

www.TeamDairy.com and www.3aday.org Web site activities

CONTRACTS

APPENDIX D
141

Appendix D-1, continued

Export and Ingredients, continued

Another Color, Inc.–USDEC Publications Development and Design 

Arab Marketing Finance, Inc.–Middle East Market Representation and Program Activities 

Brooke Scientific Consulting–USDEC Export Guide 

Burson-Marsteller–Dairy Ingredient Vulnerability Audit 

Captive Media–Whey Sampling and Panel Advertising Campaign 

Contacts International Consulting, Ltd.–South American Market Representation and Program 

 Activities 

DH Business Consulting–Milk Permeate Study

Data Development Worldwide–Evaluation Study 

David L. Stiefer–USDEC Consulting Services 

GVI Productions–Development and Production of Promotional Video 

Garrison Group, L.L.C.–Consulting, Editorial, and Promotional Services 

Global Trade Information Services–Purchase of World Trade Atlas

Grassland Media–Production of Deli Training Video 

IFP–Supplement Packet Product; Whey Protein Formulations 

International Dairy Foods Association–Export Manual Updates 

International School of Baking–Dairy Ingredient Application in Bakery Products 

International Trade Services–International Manuals Updates 

IntNet–Korean Market Representation and Program Activities 

iRIS Consulting–Mexican Dairy Market Assessment; Middle East Ingredient Study 

JDG Consulting–USDEC Domestic Communications Plan 

Knechtel, Inc.–Design and Develop Dairy Protein Based Products 

Landell Mills–Global Dairy Ingredients Market Study; Brazilian Market Research; Milk

 Minerals Research; Chinese Dairy Ingredient Market Study; East African Dairy and Soy 

 Markets Research 

LBC Consulting–Canadian Marketing Research 

Levitt Communication–International Consulting Services 

Market Makers–High Value Whey Product Development; Japanese Market Representative and

 Program Activities 

Mistral Group, Ltd.–European Market Representation and Program Activities 

National Milk Producers Federation–Global and Domestic Research Activities; Trade Barriers 

Novak Birch–USDEC Website Redesign 

PR Consultants–Chinese Market Representation and Program Activities 

Pacrim Associates–Southeast Asian Market Representation and Program Activities 

Patricia R. Fuchs & Associates–USDEC Print Project Management 

Promar International–Consulting Services 

RB International–Consulting Services

Schonrock Consulting–Export Guide Analysis

Stanton, Emms, and Sia–Asian Market Study-Consumer Packaged Dry Formulas 

Story Consulting–Consulting Services

Strategic Pathfinders–Evaluation of Japanese Marketing Programs 

Results Direct–USDEC Web site Activities www.usdec.org

CONTRACTS

APPENDIX D
142

Appendix D-1, continued

Export and Ingredients, continued

TCE Consulting Group–Food and Nutrition Conference Activities

Uniflex Marketing–Japanese Market Representation and Program Activities; Japanese Dry 

 Ingredients Program 

World Perspectives–Evaluation of Southeast Asia Export Program 

Zenith International–Middle East Cheese Market Research; Caribbean Cheese Study 

Market and Economic Research, Consulting Services 

AC Nielson–Information Data Purchase 

Academic Network–Food Guide Pyramid Strategic Counseling 

ARS Group–Print Advertising Evaluation 

Baker Communications–Selling Skills Workshop 

Beverage Marketing Corporation of New York–Evaluation of the Effectiveness of Generic 

 Milk Programs; Contract Packer Directory 

Borden Dairy–Milk in Single-Serve Plastic Containers for Schools 

Burelle’s–Media Monitoring and Analysis 

CFE Solutions, Inc.–Consulting Services 

C & R Research–Educational Materials Research Evaluation 

 Convert Marketing–Away From Home Yogurt Consumption Tests

Creamland Dairies–Milk in Single-Serve Plastic Containers for Schools

Custom Research, Inc.–Cheese and 3-A-DayTM Advertising Campaign Impact Assessment; 

 Health Professional Dairy Nutrition Tracking Study

Datacore Marketing–Database Management and Consulting 

Data Development WorldWide–Marketing Publication Evaluation 

Decision Insights–Pizza Concept Screener 

Demeter Communication–Large Herd Producer Panel

Doyle Research Associates–Web Site Usability Qualitative Research; Business to Business 

 Qualitative Research; Chocolate/White Milk Qualitative Research 

Ellen Tuchler–Strategic Counseling 

Environ–Flavored Milk Research; Nutrition Research 

Farmland Dairies, L.L.C.– Milk in Single-Serve Plastic Containers for Schools 

Focus Management Services–U.S. Milk Industry School Audit 

Fresh Look Marketing Group–Deli Cheese Tracking Data

GFK Custom Research–3-A-DayTM Tracking Study; Health Professional Tracking Study; Kids

 Milk Tracking 

Green House Communications–Foodservice Program Activities

Harris Interactive, Inc.–New York City Milk Taste Test

Information Resources, Inc.–Milk and Cheese Category Volume Reports 

Kiddie-i-OH–Lactose Intolerance Study 

KRC Research–3-A-DayTM Tracking Survey 

Lori Stanwood–Strategic Counsel 

MSW–Qualitative Research 

CONTRACTS

APPENDIX D
143

Appendix D-1, continued 

Market and Economic Research, Consulting Services continued

Marketecture–Attitudes and Usage Trends Study Analysis; Tracking Activities of Public 

 Opinion Toward Dairy Products and the Dairy Industry (Issues Tracker); Whey Protein Study 

Marketing Concepts–Product Innovation and Research Program; Real Seal Administration 

Maskowitz-Jacobs–Hispanic Research; Chocolate Milk Sensory Research 

Meyers Research Center–Hispanic Cheese Market Research; Dairy Aisle Reinvention 

Mintel International Group–New Products Database and Market Intelligence Reports

Model People–Milk and Cereal Breakfast Research 

National Milk Producers Federation–Domestic Research Program Activities/Animal Health 

 and Welfare Issues Activities; Air Emissions Monitoring Study 

New American Dimensions–Hispanic Market Research

NFO Research–INFOfast Subscription; Dairy Restrictors Research; Purchase and Analysis of

 Marketing Data; Milk Segmentation (Value-Added) 

NPD Group–Snack Tracker; Cheese Consumption Tracking Activity; CREST Foodservice 

 Data; Eating Patterns Data Report; Food Safety and Dieting Monitor Report; Eating Trends and

 Beverage Study; Breakfast in America Report; Food World Subscription; Hispanic Market 

 Database; Shopper Insight Analysis 

Palma Companies–Qualitative Research

PHD Technologies–Meat Applications and Consulting; Trade Mission Activities 

Prevail!–Hispanic Consumer Research

Promar International–School Milk Analysis and Consultation 

Promata-Leemiss Services–Online Advertising Activity Data 

Pursuant, Inc.–Milk-Producing Livestock Cloning/Dairy Consumption Research; Dairy 

 Production Practices Attitude Research; Dairy Web Site Focus Groups 

Results Direct–Database Development; Multi-Lingual Activity Support

Shainwright Consulting–Consulting and Research Services 

Smith Dairy Products Company–Milk in Single-Serve Plastic Containers for Schools

Southern Foods Group, L.P.–Milk in Single-Serve Plastic Containers for Schools

Spectra Marketing Systems–Marketing Research Activities 

Summit Research, Inc.–Whey Protein Research 

Sunderg-Fear–Cereal and Milk On-the-Go Project 

Synovate–Milk Packaging Messages; Health Focused Beverage Research; Meal Replacement 

 Research

Synetics–Lactose Intolerance Research 

Talent Partners–Broadcast Traffic Services 

Technomic–Foodservice Trend Drivers 

Teri Gacek Associates–Qualitative Market Research Assignments; Focus Group Testing; 

 Organic Milk Focus Groups; Naturally-Nutrient Rich Qualitative Research; Specialty

 Cheese Study 

TNS Custom Research–SIP Data, iNFOfast Subscription 

Trion Group LP–Value-Added Milk; Consulting Services

Turover Straus Group–Strategic Counsel

Upshot Corporation–Sales Force Outreach and Data Delivery System 

CONTRACTS

APPENDIX D
144

Appendix D-1, continued 

Market and Economic Research, Consulting Services continued

Upstate Farms Cooperative–School Milk Research Activities 

Video Monitoring Services–Broadcast Monitoring

Watson Mulhern LLC–Consulting Services 

Werely Marketing–Non-Yogurt User Research 

Wirthlin Worldwide–Producer Communications Survey; Pyramid Education Program Research 

CONTRACTS

APPENDIX D
145

Appendix D-2 

National Fluid Milk Processor Promotion Board

Contracts Reviewed by USDA

Medical Advisory Board

Steve Abrams, M.D.-Baylor College of Medicine–Medical Advisory Board Member Services

Susan Barr, Ph.D.–Medical Advisory Board Member Services

Christine Economos, Ph. D.–Medical Advisory Board Member Services 

Frank R. Greer, M.D.–Medical Advisory Board Member Services

Robert P. Heaney, M.D.-Creighton University–Medical Advisory Board Member Services 

James O. Hill, Ph.D. –Medical Advisory Board Member Services

Rachel Johnson, Ph.D., R.D.–Medical Advisory Board Member Services 

Ronald M. Krauss, M.D.–Medical Advisory Board Member Services

Advertising, Promotion, and Public Relations

American Heart Association–Licensing Agreement 

CMGRP, Inc., d.b.a. Weber Shandwick–Public Relations Services and Website Activities 

Draft, Inc.–Promotional Services 

Fastspot–Website Service and Support 

Lowe Worldwide–Advertising Services 

Outloud, L.L.C.–Marketing Communications Plan 

Publicidad Siboney–Hispanic Marketing Program

Market Research and Evaluation, and Consulting Services

Automatic Merchandiser–Market Analysis 

Beverage Marketing Corporation–Consulting/Competitive Strategy Development; Tracking 

 Study 

Click IQ, Inc. –Online Survey

C&R Research Services–Market Research 

Data Development Corporation–Market Research

Energy Infuser–Focus Groups

Environ International Corporation–Research Analysis

Foley and Lardner, L.L.P. –Processor Survey 

Foresee Results–Consulting Services 

Greenfield Consulting–Consulting Services 

Harris Interactive–Market Research 

Information Resources, Inc.–Market Analysis 

International Dairy Foods Association–Professional Management Services 

Kelly Fisher–Consulting Services 

MarketMaker Interactive–Website Analysis 

Marketing Management Analytics–Marketing Mix Analysis 

Mc3staffing–Consulting Services 

Outloud–Marketing Communications/Strategic Planning 

CONTRACTS

APPENDIX D
146

Appendix D-2, continued 

Phoenix Marketing–Hispanic Market Research 

P.O.V. Marketing–Consulting Services

Prime Consulting Group–Consulting Services, Survey Analyses; Conducting Training 

 Workshops; and Strategic Planning 

RealMediaValue Company–Media Evaluation Services 

Technomic, Inc.–Market Study and Analysis 

Other Agreements

Hay Group–Organizational Structure Assessment 

Inland Printing–Customer Service Activities

Snyder, Cohn, Collyer, Hamilton & Associates, P.C.–Audit Services 

CONTRACTS

APPENDIX D
147

Appendix E-1 

Nutrition and Health Research Institute

and Dairy Foods Research Centers

Nutrition and Health Research Institute

Genetics and Nutrition Institute

Children’s Hospital, Oakland Research Institute: Relationship of Genetics, Dietary Fat 

(Especially Dairy Fat), and Heart Disease. 

Dairy Foods Research Center

California Dairy Research Foundation 

(University of California–Davis and California Polytechnic State University–San Luis Obispo): 

Specializes in product technology development, ingredient technology, product health 

enhancement properties, food safety, and quality assurance. 

Midwest Dairy Foods Research Center

(University of Minnesota–St. Paul, Iowa State University-Ames and South Dakota State 

University–Brookings): Concentrates on natural and processed cheese functionality and flavor, 

fluid milk flavor and shelf life, genomics of probiotic bacteria, and utilization of acid and salt 

whey.

Northeast Dairy Foods Research Center 

(Cornell University–Ithaca and University of Vermont–Burlington): Focuses attention on 

developing and improving processing technologies to enhance dairy product quality, safety, and 

functionality, improving the safety of foods and processing systems, and modifying dairy 

product composition to ensure that dairy foods and ingredients remain a part of a healthy diet. 

Southeast Dairy Foods Research Center 

(North Carolina State University–Raleigh and Mississippi State University–Starkville): 

Specializes in milk and whey ingredient functionality, thermal and biological processing, sensory 

properties of cheese and dairy ingredients, dairy food safety, and microbial technologies for 

starter cultures and probiotics. 

Western Dairy Center 

(Utah State University–Logan, Oregon State University–Corvallis, Washington State University–

Pullman, and University of Idaho–Moscow): Specializes in cheese flavor and functionality, fluid 

milk processing, whey and milk utilization, and microbial genetics and physiology. 

Wisconsin Center for Dairy Research 

(University of Wisconsin–Madison): Explores functional flavor and physical properties of 

cheese and cheese products, whey and whey components, and milk components used as 

ingredients and as finished products, cheese making and whey processing and separation 

procedures, use of milkfat, and food safety and quality technology. 

RESEARCH

APPENDIX E
148

Appendix E-2 

Dairy Foods Competitive Research Activities

Principal Investigator, Institution, and Project Title

NIZO Food Research (Private Company): Solubility of Milk Protein Concentrate [continued in 

2007]

Devin Peterson, Ph.D. (Pennsylvania State University): Inhibition of Off-Flavor Development 

in Non-Refrigerated Milk by Phenolic Chemistry [began in 2007] 

Hua Wang, Ph.D. (Ohio State University Research Foundation): Methods to Maintain Dairy 

Culture Genotypes [began in 2007] 

Shan-Tian Yang, Ph.D. (Ohio State University Research Foundation): Production of GalactoOligosaccharides from Whey Lactose [continued in 2007] 

RESEARCH

APPENDIX E
149

Appendix E-3 

Nutrition Competitive Research Activities

Principal Investigator, Institution, and Project Title

Sean Adams, Ph.D. (USDA-Agricultural Research Service-Western Human Nutrition Research 

Center): Evaluation of the Anti-Inflammatory Effects of Calcium and Dairy in a Polygenic Obese 

Mouse Model [began in 2007] 

David J. Baer, Ph.D. (USDA-Agricultural Research Service): Effects of Trans-Fatty Acids from 

Ruminant Sources on Risk Factor for Cardiovascular Disease [continued in 2007]; Effect of When 

Protein on Blood Pressure [began in 2007] 

Leann L. Birch, Ph.D. (Pennsylvania State University): Parental Influence on Girls’ Calcium 

Intake and Bone Mineral Content and Weight Status–Phase III [continued in 2007] 

Robert Brannan, Ph.D. (Ohio University): Whey Protein Inhibition of Oil Absorption in Fried 

Foods [began in 2007] 

Joseph Donnelly, Ph.D. (University of Kansas Center for Research, Inc.): The Effects of Dairy 

Intake on Weight Maintenance and Metabolic Profile [completed in 2007] 

Ellen M. Evan, Ph.D. (University of Illinois): Higher Protein Diet and Exercise for Optimal 

Weight Loss in Elderly Women [began in 2007] 

Michael Holick, Ph.D., M.D. (Boston University School of Medicine): The Effect of Dietary 

Calcium and Vitamin D on Prostate Cancer [continued in 2007] 

Michael Huncharek, Ph.D. (Meta-Analysis Research Group and Marshfield Clinic): Impact of 

Dairy Foods and Dairy Associated Nutrients on the Risk of Colorectal Cancer [completed in 

2007]; and Impact of Dairy Foods and Dairy-Associated Nutrients on the Risk of Prostate Cancer 

[completed in 2007] 

Elsa M. Janle, Ph.D. (Purdue University): Potential of Dietary Whey Protein to Ameliorate the 

Development of Diabetes in the Zucker Diabetic Rat [continued in 2007] 

Marlena C. Kruger, Ph.D. (Massey University): Investigation of Physiological Responses to 

Consumption of Whey or Soy Protein in the Obese Rat [completed in 2007] 

Donald K. Layman, Ph.D. (University of Illinois): Meal Responses to Whey Proteins Enhance 

Adult Health [continued in 2007] 

Joan M. Lappe, Ph.D. (Creighton University): Pilot Project Preparatory to a Definitive Study 

of the Efficacy of Milk Minerals in Human Bone Health [continued in 2007] 

RESEARCH

APPENDIX E
150

Appendix E-3, continued

Roy Martin, Ph.D., Jun Zhou (Pennington biomedical Research Center): Mechanisms of 

Reduced Appetite with Whey Protein [began in 2007] 

Lynn L. Moore, Ph.D. (Boston University School of Medicine): The Effect of Dietary Calcium 

on Body Fat Levels in Children and Adults– Phase II [completed in 2007]; Dairy Intake: Its 

Determinants and Relation to a Healthy Diet [completed in 2007]; Dairy Intake and Metabolic 

Risk in Adolescent Girls [began in 2007]; Effects of Early Dairy Intake on Adolescent Bone 

Density and Content [completed in 2007]; and The Effects of Dairy Intake in Girls Over Ten 

Years Old [completed in 2007] 

Mary Murphy, M.S., R.D. (ENVIRON): Nutrient and Energy Intakes of Children and 

Adolescents Consuming Flavored Milk in Schools [began and completed in 2007]; Nutrient 

Intakes by School Age Children and Adolescents [began and completed in 2007] 

Theresa Nicklas, Ph.D. (Baylor College of Medicine): Dietary Calcium Intake and Dairy 

Product Consumption by Minority Mothers: Nutritional Impact and Health Outcomes 

[completed in 2007] 

Troy Ott, Ph.D. (Pennsylvania State University): A Critical Evaluation of Sterols in Milk and 

Dairy Products [continued in 2007] 

Stuart Phillips, Ph.D. (McMaster University): Impact of Whey, Casein, and Soy 

Supplementation on Human Muscle Protein Turnover after Resistance Training [completed in 

2007]; and Responses of Muscle and Whole-Body Protein Turnover to Ingestion of Differing 

Doses of Whey and Soy Protein with and without Resistance Exercise in Elderly Men [began in 

2007]

Karen Rafferty, M.S., R.D., Robert Heaney, M.D. (Creighton University): A Project to 

Advance a Research Data Infrastructure by Creating a Master Data Bank [began in 2007] 

Nancy Rodriguez, Ph.D. (University of Connecticut): Milk’s Impact on Protein TurnoverSpecific Intracellular Signaling Protein in Human Skeletal Muscle During Recovery from 

Endurance Exercise [began in 2007] 

Dale Schoeller, Ph.D. (University of Wisconsin-Madison): A Novel Stable Isotope 

Measurement to Monitor Macronutrient Intake for Future Use in the Study of Interactions of Diet 

and Dairy on BMI and Bone Health [continued in 2007] 

Debra Sullivan, Ph.D. (University of Kansas Medical Center): A Qualitative Study of 

Children’s Perceptions of Dairy Foods [began in 2007] 

Angelo Tremblay, Ph.D. (Hopital Laval): Effect of Milk Supplementation on Appetite Control 

in Obese Women Following a Weight Loss Program [began in 2007] 

RESEARCH

APPENDIX E
151

Appendix E-3, continued 

Frances Tylavsky, Ph.D. (University of Tennessee): Role of Dairy Products in Decreasing 

Insulin Resistance and Modulating the Release of Glucagon-Like Peptide-1 in Obese African 

American Adolescents [began in 2007] 

Marta VanLoan, Ph.D. (USDA-Agricultural Research Service-Western Human Nutrition 

Research Center): The Role of Dairy Foods in Enhancing Central Fat Loss and Weight Loss 

with Moderate Energy Restriction in Overweight and Obese Adults [continued in 2007];

Jeff Volek, Ph.D. (University of Connecticut): Investigation of Whey Protein Supplementation 

for Physiological Enhancement to Resistance Training and Dietary Regimes in Young Adults 

[began in 2007] 

Richard A. Washburn, Ph.D. (University of Kansas Center for Research): Whey Protein 

Supplementation with Resistance Training: Effect on Body Composition of Young Adults 

[began in 2007] 

Connie Weaver, Ph.D. (Purdue University): Influence of Dairy on Bone Mass Accrual, Bone 

Size and Fat and Lean Body Mass in Early Pubertal Overweight vs Healthy Weight Girls [began 

in 2007]; and Calcium, Dairy, and Body Fat in Adolescents [continued in 2007] 

Michael B. Zemel, Ph.D. (University of Tennessee Research Foundation): Dairy Attenuation of 

Oxidative and Inflammatory Stress in Metabolic Syndrome [began in 2007]; Dietary Calcium 

and Dairy Modulation of Oxidative and Inflammatory Stress in Mice [completed in 2007]; and 

Dairy Modulation of Oxidative and Inflammatory Stress in Overweight and Obese Subject 

[continued in 2007]

RESEARCH

APPENDIX E
152

[This page is intentionally blank.]

RESEARCH

APPENDIX E
153

Appendix F 

Qualified State or Regional Dairy Product Promotion, 

Research, or Nutrition Education Programs 

Allied Milk Producers’ Cooperative

495 Blough Road 

Hooversville, PA 15936–8207

American Dairy Association and Dairy

Council Mid East

5950 Sharon Woods Blvd. 

Columbus, OH 43229 

American Dairy Association and Dairy

 Council, Inc. 

219 South West Street, Suite 100 

Syracuse, NY 13202 

American Dairy Association of Alabama 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

American Dairy Association of Georgia

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

American Dairy Association of Kentucky 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

American Dairy Association of Michigan 

2163 Jolly Road 

Okemos, MI 48864 

American Dairy Association of Mississippi 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

American Dairy Association of Nebraska 

8205 F Street 

Omaha, NE 68127–1779

American Dairy Association of

 North Carolina 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

American Dairy Association of

 South Carolina 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

American Dairy Association of

 South Dakota 

2015 Rice Street 

St. Paul, MN 55113 

American Dairy Association of Virginia 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

California Manufacturing Milk Producers 

 Advisory Board 

3800 Cornucopia Way, Suite D 

Modesto, CA 95358–9492

California Milk Producers Advisory Board 

3800 Cornucopia Way, Suite D 

Modesto, CA 95358–9492

Dairy Council of California 

1101 National Drive, Suite B 

Sacramento, CA 95834–1945

Dairy Council of Michigan 

2163 Jolly Road 

Okemos, MI 48864 

APPENDIX F

QP’S
154

Appendix F, continued 

Dairy Council of Nebraska

8205 F Street 

Omaha, NE 68127–1779

Dairy Farmers, Inc. 

166 Lookout Place, Suite 100 

Maitland, FL 32751–4496

DairyMAX

2214 Paddock Way Drive, Suite 600 

Grand Prairie, TX 75050 

Dairy Promotion, Inc. 

10220 NW Ambassador Drive 

Kansas City, MO 64153 

Georgia Agricultural Commodity 

 Commission for Milk

19 Martin Luther King Jr., Dr., SW, Room 328 

Atlanta, GA 30334 

Granite State Dairy Promotion 

c/o New Hampshire Department of Agriculture 

25 Capitol Street, Box 2042 

Concord, NH 03302–2042

Idaho Dairy Products Commission 

10221 West Emerald, Suite 180 

Boise, ID 83704 

Illinois Milk Promotion Board 

1701 Towanda Avenue 

Bloomington, IL 61701 

Indiana Dairy Industry Development Board 

9360 Castlegate Drive 

Indianapolis, IN 46256 

Louisiana Dairy Industry Promotion Board 

c/o Louisiana Department of Agriculture 

 and Forestry 

P.O. Box 3334 

Baton Rouge, LA 70821–3334

Maine Dairy and Nutrition Council 

333 Cony Road 

Augusta, ME 04330 

Maine Dairy Promotion Board 

333 Cony Road 

Augusta, ME 04330

Michigan Dairy Market Program 

P.O. Box 8002 

Novi, MI 48376–8002

Mid–Atlantic Dairy Association 

325 Chestnut Street, Suite 600 

Philadelphia, PA 19106 

Midwest Dairy Association 

2015 Rice Street 

St. Paul, MN 55113

Midwest Dairy Council 

2015 Rice Street 

St. Paul, MN 55113

Milk for Health on the Niagara Frontier, Inc. 

4185 Seneca Street 

West Seneca, NY 14224 

Milk Promotion Services of Indiana, Inc. 

9360 Castlegate Drive 

Indianapolis, IN 46256 

APPENDIX F

QP’S
155

Appendix F, continued 

Minnesota Dairy Research and Promotion

 Council

2015 Rice Street 

St. Paul, MN 55113 

Nebraska Dairy Industry Development

 Board 

8205 F Street 

Omaha, NE 68127–1779

Nevada Farm Bureau Dairy Producers 

Committee 

2165 Green Vista Drive, Suite 205 

Sparks, NV 89431 

New England Dairy and Food Council, Inc. 

1034 Commonwealth Avenue 

Boston, MA 02215 

New England Dairy Promotion Board 

1034 Commonwealth Avenue 

Boston, MA 02215 

New Jersey Dairy Industry Advisory 

 Council c/o New Jersey Dept. of Agriculture

PO Box 330 

Trenton, NJ 08625–0330

New York State Dept. of Agriculture and 

 Markets 

Division of Milk Control and Dairy Services 

10 B Airline Drive 

Albany, NY 12235–0001

North Dakota Dairy Promotion Commission

2015 Rice Street 

St. Paul, MN 55113 

Oregon Dairy Products Commission 

10505 Southwest Barbur Boulevard 

Portland, OR 97219 

Pennsylvania Dairy Promotion Program 

c/o Pennsylvania Department of Agriculture 

2301 North Cameron Street 

Harrisburg, PA 17110–9408

Promotion Services, Inc. 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

Rochester Health Foundation, Inc. 

c/o ADADC, Inc.

219 South West Street, Suite 100 

Syracuse, NY 13202 

St. Louis District Dairy Council 

1254 Hanley Industrial Court 

St. Louis, MO 63144–1912

Southeast United Dairy Industry Association 

5340 West Fayetteville Road 

Atlanta, GA 30349-5416 

Southwest Dairy Museum 

P.O. Box 936 

Sulphur Springs, TX 75483 

Tennessee Dairy Promotion Committee 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

United Dairymen of Arizona 

2008 S. Hardy Drive 

Tempe, AZ 85282 

Utah Dairy Commission 

1213 East 2100 South 

Salt Lake City, UT 84106 

Vermont Dairy Promotion Council 

116 State Street, Drawer 20 

Montpelier, VT 05620–2901

APPENDIX F

QP’S
156

Appendix F, continued 

Washington State Dairy Council 

4201 198th Street, SW, Suite 102 

Lynnwood, WA 98036–6751

Washington State Dairy Products 

Commission 

4201 198th Street, SW, Suite 101 

Lynnwood, WA 98036 

Western Dairyfarmers’ Promotion

 Association

12000 North Washington Street, Suite 200 

Thornton, CO 80241 

Wisconsin Milk Marketing Board, Inc. 

8418 Excelsior Drive 

Madison, WI 53717

APPENDIX F

QP’S
157

Appendix G 

National Fluid Milk Processor Promotion Board

Active, Weight Loss, and Healthy Weight Messages 

Target Audience: Moms/Women 

Source: MilkPEP/Lowe Worldwide 

Mariska Hargitay Dancing with the Stars

 Semi Finalists 

 

 Laila Ali 

Dancing with the Stars

 Tour

 

 Sara Ramirez Dancing with the Stars 

 Winners

Kathy Smith Bill Germanakos

 Jillian Michaels, Bob

 Harper, and Kim Lyons 

APPENDIX G

IMAGES
158

Appendix G, continued

Active, Bone Growth, and Healthy Weight Messages 

Target Audience: Teen Girls and Teen Boys 

Source: MilkPEP/Lowe Worldwide 

High School Musical Masi Oka Rex Grossman and 

Marvin Harrison

Vince Carter Marvin Harrison Steve Nash

Avery Johnson and

Josh Howard 

Hayden Panettiere Fantastic Four 

APPENDIX G

IMAGES
159

Appendix G, continued 

Active, Bone Growth, and Healthy Weight Messages 

Target Audience: Teen Girls and Teen Boys 

Source: MilkPEP/Lowe Worldwide 

Amanda Bynes Alex Rodriguez Teddy Geiger and

 Rebecca Eden 

Beyoncé and Solange 

Knowles

 Sasha Cohen

APPENDIX G

IMAGES
160

Appendix G, continued 

School Milk Posters

Source: MilkPEP/Lowe Worldwide 

Elementary Schools: 

 Amanda Bynes High School Musical 

 Shrek Steve Nash 

Middle and High Schools: 

 Fantastic Four Masi Oka 

 Laila Ali Vince Carter 

APPENDIX G

IMAGES
161

Appendix G, continued 

Middle and High Schools: 

Amanda Bynes Hayden Panettiere 

Female Olympic Athletes Male Olympic Athletes 

Steve Nash High School Musical

APPENDIX G

IMAGES
162

Appendix G, continued 

School Materials 

Source: MilkPEP/DRAFTFCB 

Posters:

Alien Girl Rocker Soccer Girl Pro Wrestler 

Milk The Rewards – Girl Milk The Rewards – Boy 

Clings:

Alien Girl Robot Rocker Pro Wrestler

Grab a Milk Reward Your Body Bar Codes Reward Yourself

APPENDIX G

IMAGES
163

Appendix G, continued 

BBMSM Web Banners 

Source: MilkPEP/Lowe Worldwide, Weber Shandwick, and DRAFTFCB 

BBMSM – Steve Nash BBMSM - Amanda Bynes BBMSM – Fantastic Four 

BBMSM – Heroes BBMSM – Vince Carter BBMSM – Marvin Harrison 

BBMSM – Steve Nash 

 BBMSM – Beyoncé and

 Solange Knowles 

BBMSM – Hayden Panettiere 

APPENDIX G

IMAGES
164

Appendix G, continued

Hispanic Materials 

Source: MilkPEP/Siboney, U.S.A. 

 Maria Celeste Barbara Mori Lili Estefan and Family 

 Barbara Mori Web Banner Recipe Booklet En 

 Español Sara Ramirez En Español 

 Dr. Aliza Advertorial Lili Estefan And Family Sofia Vergara Mobile 

 Lili Estefan - Halloween Lili Estefan –Chocolate 

 Milk Advertorial 

APPENDIX G

IMAGES
165

Appendix G, continued

Hispanic Materials 

Source: MilkPEP/Siboney, U.S.A. 

 Another Reason Another Season 

 En Español 

 Another Reason Another Season 

 En Español 

 Halloween POS

 En Español 

 Lili Estefan – Halloween 

 Advertorials 

 Maria Celeste and Family 

 Web Banner 

 Mom Summit Tips and Booklet Meredith Advertorial 

APPENDIX G

IMAGES
166

Appendix G, continued

Public Relations Materials

Source: MilkPEP/Weber Shandwick 

MMM Tour 

Information Kit 

 Body By MilkSM Logo 

MilkPEP Web Banner 

TAYD Handout 

 2007 SAMMY Logo 

 2007 SAMMY Winners 

TAYD Family Challenge 

 Healthiest Student Bodies

 TAYD Homepage 

TAYD Logo 

 Chocolate Milk 

 Recovery Beverage

 TAYD Table Top Sign 

APPENDIX G

IMAGES
167

Appendix G, continued

Promotions Materials

Source: MilkPEP/DRAFTFCB

Give Your Family Something 

Smarter (GYFSS) Cling GYFSS Wobbler GYFSS Cling 

 GYFSS Wobbler 

 GYFSS Channel Strip 1 

 GYFSS Wobbler 

 GYFSS Cling 

GYFSS Channel Strip 2 

 GYFSS Hispanic Wobblers 

 GYFSS Monster Cling 

GYFSS Cling En Español 

APPENDIX G

IMAGES
168

Appendix G, continued

Retail Promotions Materials 

Source: MilkPEP/DRAFTFCB

 Another Reason / Season POS Another Reason / Season POS

 Another Reason / Season POS Another Reason / Season POS

 Another Reason / Season POS Another Reason / Season POS

 Another Reason / Season POS Curves In-Club Poster Curves Web Banner 

 Web Banner Web Banner Web Banner Web Banner

APPENDIX G

IMAGES
169

Appendix G, continued

Promotions Materials

Source: MilkPEP/DRAFTFCB

 Official Drink of Halloween Horizontal Cling 

 Official Drink of Halloween Chocolate Milk Banner

 Official Drink of Halloween Gallon Channel Strip 

Official Drink of Halloween 

 Vertical Cling 

Official Drink of Halloween 

Frankenstein and Dracula 

Clings

Official Drink of Halloween 

 Hispanic Vertical Cling 

 Official Drink of Halloween Hispanic Channel Strip 

APPENDIX G

IMAGES
170

Appendix G, continued

Sweepstakes Promotional Web Banners and Local Marketing POS 

Source: MilkPEP DRAFTFCB

Web Banner 

Web Banner 

Web

Banner

Web Banner Web Banner Web

Banner

 Local Marketing Cling 

Vertical 

Cling

 Wobbler Carton Art Local Marketing

 Cap Art 

Gallon Art 

APPENDIX G

IMAGES
171

Appendix G, continued

Television Advertisements – Little Victories and Milk Vignette 

Source: MilkPEP/Lowe Worldwide 

Little Victories: 

 Milk Icon Woman in Park 

 “My secret admirer?” “My husband.” 

 “40 is the new 20.” “I still love my little black dress.” 

 “Summer? Bring it on.” “My daughter steals my clothes.” 

APPENDIX G

IMAGES
172

Appendix G, continued 

 “High school reunion? Can’t wait.” Woman drinking milk 

 Think about your drink got milk? 

Milk Vignette: 

 Mariska Hargitay Mariska Hargitay 

 Mariska Hargitay Mariska Hargitay 

APPENDIX G

IMAGES
173

Appendix G, continued 

Hispanic Television Advertisements 

Source: MilkPEP/Siboney, U.S.A. 

 Flamenco Dancer Girl Flamenco Dancer Girl 

 Superhero Boy Superhero Boy 

Milk Vignette: 

 Dr. Aliza Dr. Aliza 

 

APPENDIX G

IMAGES
174

Appendix H-1

Regions of the National Dairy Promotion and Research Board

Region 1

[1]

Region 2

[8]

Region 3

[4]

Region 4

[4]

Region 5

[2]

Region 7

[2]

Region 6

[5]

Region 9

[3]

Region 11

[2]

Region 12

[2]

Region 8

[1]

Region 10

[1]

Region 13

[1]

Note: The number in brackets below each region

indicates the number of members within that region.

APPENDIX H

MAPS
175

Appendix H-2

 Regions of the National Fluid Milk Processor Promotion Board

Region 13

Region 14

Region 15

Region 12

Region 7

Region 11

Region 10

Region 8

Region 2

Region 1Region 3 Region 6

Region 9 Region 4

Region 5

APPENDIX H

MAPS