Report to Congress

on the 

National Dairy Promotion

and Research Program

and the 

National Fluid Milk

Processor Promotion Program

July 1, 2007

Report to Congress

on the 

National Dairy Promotion

and Research Program

and the 

National Fluid Milk

Processor Promotion Program

July 1, 2007
Report to Congress 

on the 

National Dairy Promotion 

and Research Program 

and the 

National Fluid Milk 

Processor Promotion Program 

July 1, 2007 
ii

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iii

Contact Information 

To obtain additional copies of the 2007 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 

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

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 

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
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.bodybymilk.com

The U.S. 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 

3-A-DayTMof Dairy for Stronger Bones..................................................................................8 

Foodservice/Partnerships .......................................................................................................9 

Communications and Technology .........................................................................................9 

Export and Dry Ingredients....................................................................................................10 

National Dairy Council®/School Marketing ..........................................................................13 

Research.................................................................................................................................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...................................................................................................................22 

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 ................................................................................................................26 

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 

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

Benefit-Cost Analysis of the Dairy Program.........................................................................43 

Chapter 4................................................................................................................................47 

Part I – Fluid Milk Market and Promotion Assessment: 

 Beverage Marketing Corporation ........................................................................................47 

BMC’s Assessment of Current Milk Industry Environment .................................................47 

Consumer Attention...............................................................................................................52 

Product Attributes and Innovation.........................................................................................53 

Branding.................................................................................................................................53 

Distribution ............................................................................................................................53 

Pricing....................................................................................................................................54 

BMC’s Assessment of Current Milk Marketing Programs....................................................54 

Part II – National Fluid Milk Processor Promotion Program: 

 Highlights by the National Fluid Milk Processor Promotion Board....................................57 

Overall Sales Impact..............................................................................................................57 

Competitive Assessment of Milk Industry’s Position ...........................................................58 

Success of Weight-Related Benefit Promotion......................................................................60 

Results of the Teen Body By MilkSM Program......................................................................61 

Summary Assessment of Program Effectiveness ..................................................................62 

Part III – National Dairy Promotion and Research Program: 

 Highlights by Dairy Management Inc..................................................................................65 

Dairy Producer Promotion Program Drives Dairy Sales and Consumption..........................65 

Leveraging Dietary Guidelines for Three Servings of Dairy a Day ......................................66 

Growing Fluid Milk Through School and Foodservice Channels.........................................67 

Recapturing Milk as Kids’ “Beverage of Choice”.................................................................67 

Milk Sales Soar in Foodservice .............................................................................................69 

Satisfying Unmet Demand by Growing Cheese Through Innovation...................................70 

Satisfying Unmet Demand Through Ingredients and Exports...............................................71 

Conclusion .............................................................................................................................72 

Appendix A: Membership.....................................................................................................73 
vii

Contents, continued 

Appendix B: Finances...........................................................................................................81 

Appendix C: Independent Auditors’ Reports .......................................................................89 

Appendix D: Contracts Reviewed by USDA, 2006..............................................................129 

Appendix E: Research Activities, National Dairy Promotion and Research Board, 2006...135 

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

 or Nutrition Education Programs........................................................................................139 

Appendix G: Thumbnail Images of Advertising, Promotion, and Public Relations ............143 

Appendix H: Maps................................................................................................................158 
viii

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1

Executive Summary 

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

programs (7 U.S.C. 4501 et seq. and 7 U.S.C. 6401 et seq.) 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 by July 1. The producer and processor 

programs are conducted under the Dairy Promotion and Research Order (Dairy Order) 

(7 CFR § 1150) and the Fluid Milk Promotion Order (Fluid Milk Order) (7CFR § 1160), 

respectively. This report includes a description of activities for both the producer and processor 

programs and summarizes activities of the national dairy and fluid milk programs. An 

accounting of funds collected and spent, an independent analysis of the effectiveness of the 

advertising campaigns of the two programs, and an industry-commissioned review of fluid milk 

markets and program operations are included. Unless otherwise noted, this report addresses 

program activities for the fiscal period January 1 – December 31, 2006, 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 $281.2 million in 2006. The 

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

the 15-cent per hundredweight producer assessment was $91.2 million for 2006, and Qualified 

Programs revenue from the producer assessment was $190.0 million for the same year. 

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 to satisfy “unmet demand” – the gap between current and potential 

sales to help create new products, new 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 

2006 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. In 2006, the Fluid Milk Board continued to use the role of 
2

calcium-rich fluid milk products in successful weight management as a central theme and focal 

point for its activities, focusing its efforts on weight loss to American moms in its promotion 

programs such as “Wake Up to Weight Loss” and “Celebrate Success”. For teens, the 2006 

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 3 glasses of low-fat or fat-free glasses of milk instead of 

sugar-sweetened beverages. Assessments generated $107.8 million to the Fluid Board in 2006. 

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

from California processors to the California fluid milk processor promotion program. For 2006, 

the amount returned to California from the 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 program for 2006 are presented 

in the Fluid Milk Board section in Chapter 1 of this report. 

USDA Oversight 

USDA has oversight responsibility for both 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. USDA employees attend all Board and Committee meetings and monitor all Board 

activities. USDA also has 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. The 

Secretary of Agriculture appointed 13 members to the Dairy Board and eight members to the 

Fluid Milk Board. Approximately 600 dairy producers were granted organic exemptions in 

2006. 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, 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. Had there not been 

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

would have been 11.7 percent lower in the programs’ absence. 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 presents the industry-commissioned fluid milk market and program operations 

assessment, representing the 8th year that this assessment has been 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 2006, the unadjusted 

fluid milk volume increased by 1.0 percent to 6.26 billion gallons, the first volume increase for 

milk in 4 years. While milk continued to experience a declining share loss in the competitive set, 

it increased in product innovation by introducing 185 new products compared to 174 in 2005. 

Consumer awareness of the generic milk advertising program remains high, but lack of branded 

advertising kept milk at a competitive disadvantage. BMC believes that while over the last 

5 years milk consumption has been virtually flat, the declines would have been more significant 

without the industry’s weight-loss messaging, 3-A-DayTM of Dairy and got milk?® / milk 

mustache campaigns. 

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

individual highlights of 2006 program successes from the Boards’ perspective in parts II and III 

of Chapter 4. In part II, the Fluid Milk Board presents highlights regarding overall sales impact, 

competitive assessment of the milk industry’s position, success of weight-related benefit 

promotion, results of the teen Body By MilkSM program, and a summary assessment of the 

program’s effectiveness. The Fluid Milk Board concludes that these campaigns were successful 

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

long-term loss of market share. The short-term comparison of retail sales to Board expenditures 

($6.61 for every dollar spent) remains highly favorable, although lower than in 2005. The Fluid 

Milk Board maintains the program is a good example of how Congress can promote and support 

national health and nutrition goals, and the economic strength of a critical industry segment, by 

enabling an industry to fund the programs it needs to sustain itself, with no cost to the taxpayer. 

Fluid Milk Board’s highlights are located in Chapter 4, part II. 

In part III, DMI provides highlights regarding the dairy producer promotion program’s (National 

Program) efforts to leverage farmer-funded promotions to drive increased sales of and demand 

for U.S. dairy products and ingredients, domestically and internationally, and to satisfy unmet 

demand. It accomplished this through leveraging fluid milk sales in the foodservice and school 

channels, satisfying unmet demand by growing cheese through innovation, and satisfying unmet 

demand through ingredients and exports. The National Program concludes that the key to 

continued growth will be milk in single-serve plastic containers, innovation in cheese products 

and innovative uses for cheese, expanding imports, and enhancing the value of dairy ingredients. 

The Dairy Board’s highlights are found in Chapter 4, part III. 

 
4

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5

Chapter 1 

The Dairy and Fluid Milk Promotion Programs 

In 2006, the National Dairy Promotion and Research Board (Dairy Board) and the National Fluid 

Milk Processor Promotion Board (Fluid Milk Board) continued to develop and implement 

programs to expand the human consumption of fluid milk and dairy products. Each promotion 

program has many unique activities. In 2006, the Fluid Milk Board continued to use the role of 

calcium-rich fluid milk products in successful weight management as a central theme and focal 

point for its activities. The Dairy Board focused on partnerships and innovation to satisfy 

“unmet demand” – the gap between current and potential sales to help create new products, new 

positionings with consumers, and new places for dairy product consumption. 

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 Promotion and 

Research Order (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 2006 was $91.2 million (including assessments and 

interest). This amount was more than the Dairy Board Budget of $86.4 million for that period. 

The Dairy Board amended its budget to $88.9 million by incorporating program development 

funds not budgeted previously. The Dairy Board budget for 2007 projects total revenue of 

$91.8 million from domestic assessments and interest. The Dairy Board administrative budget 

continued to be within the 5-percent-of-revenue limitation required by the Dairy Order. A list of 

actual income and expenses for 2005–2006 is provided in Appendix B–1. USDA’s oversight 

and evaluation expenses for 2005–2006 are listed in Appendix B–2. Appendix B–3 displays the 

Dairy Board’s approved budgets and a comparison of program funding by function for 

2006–2007. An independent auditor’s report for 2006 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 57 active 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 

support groups. The marketing and business development group supports retail channel 

development, marketing communications, advertising, research, analyses of domestic and 

foreign marketplaces, program effectiveness, consumption patterns and consumer perceptions for 

effective program planning, implementation, and measurement. The nutrition, public, and 

corporate affairs group supports nutrition education and consumer affairs, board relations, and 

program implementation. The industry relations group provides news about dairy topics through 

media contacts as well as communications regarding the dairy checkoff program to producers 

and the rest of the industry. The strategic operations/finance and administration group handles 

program planning and communications, information services, membership development, and 

finance and accounting activities. The export marketing group serves as a resource for U.S. 

dairy ingredient manufacturers and processors to improve export capabilities of the U.S. dairy 

industry. 

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 October 2005, both boards approved the 2006 

unified dairy promotion plan budget and national implementation programs. Similar to previous 
7

plans, the 2006 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 

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

nationwide. 

During 2006, DMI 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 

State and regional dairy board members to ask questions, raise concerns, and offer their thinking 

on the plan’s direction and development. 

At the 2006 forums, dairy directors across the country reviewed and endorsed a unified 

marketing plan that continued to focus on five areas: (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 to help with menu concepts for cheese; (4) Partnerships 

and Innovation, which include efforts to satisfy “unmet demand” and 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 above-mentioned focus areas continue to build upon previous forum results that emphasized 

programs with less reliance upon television advertising, continuance of successful foodservice 

and retail activities, the need for heavier focus on kids and school milk growth, more focus on 

industry partnerships and innovation, and stronger, more proactive image protection of dairy 

products. Combined industry spending for the unified marketing plan totaled more than 

$250 million in 2006. 

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: Cheese, Communications and Technology, 

Export and Dry Ingredients, and Fluid Milk. 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 2006. During 2006, 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 2006. 
8

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 2006. 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. Today, more than 50 dairy manufacturers and 70 key retail partners feature 

the 3-A-DayTM logo on nearly 3 billion qualified packages of milk, cheese, and yogurt. 

In 2006, DMI sponsored three national promotions 

around 3-A-DayTM. The first promotion commemorated 

the National Football League’s® (NFL®) 40th anniversary 

of the Super Bowl. The 3-A-DayTM teamed up with Ginny 

Barber, mother of two and wife of New York Giants’ 

Running Back Tiki Barber, to help moms across the 

country kick-off game-day entertaining with tips to help guests get their three 

servings a day of dairy on Super Bowl Sunday and beyond. The promotion 

featured a commemorative 40th Anniversary Super Bowl serving dish that was 

available for a small fee by purchasing one each of milk, cheese, and yogurt 

during the same shopping trip January 8 through February 12, 2006. The dish 

featured all 40 Super Bowl logos on the outside and the 3-A-DayTM logo in the 

center of the dip container. Local dairy promotion groups also partnered with individual NFL®

teams to conduct local retail, school, and other consumer marketing efforts. 

The second national promotion with the NFL® included 27 retail marketing programs to help 

educate consumers about the importance of including three servings of dairy in their daily diets. 

The promotions took place in more than 5,000 stores nationwide, including Wal-Mart Super 

Centers®. The retail promotion efforts included special consumer sweepstakes to win tickets to 

NFL® games, regional newspaper coupon offers, and a “Junior Broadcaster” sweepstakes for a 

chance to participate in individual team’s radio broadcasts. Retailers that participated 

experienced double-digit dairy sales increases, compared to year-ago dairy sales. 

To help women take three steps toward a slimmer 

summer, 3-A-DayTM teamed up with Michael Sena, 

fitness expert, personal trainer, and author of “Lean 

Mom, Fit Family” to create a 3-Week Healthy Lifestyle 

Start-Up Plan that includes tips for cutting calories, 

exercising, and getting three servings of dairy a day. 

Each week, the plan featured healthy eating suggestions, calorie cutting tips, strength training, 

and cardiovascular exercises to help women take small steps toward their weight loss goals. The 

promotion also provided a free 3-month trial subscription to Prevention or Women’s Health
9

magazine when consumers purchases one each of milk, cheese, and yogurt during the same 

shopping trip between April 1 and May 7, 2006. Moms also were invited to visit the Web 

site www.3aday.org and sign up to be a 3-A-Day Mom, where they receive a monthly Get 3! 

e-newsletter, recipes, exclusive member-only offers, and great advice from other moms. 

Over 100,000 moms signed up to be a 3-A-Day mom during the promotion period. 

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 renewed their support and 

partnership with DMI and 3-A-DayTM. 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. DMI’s 3-A-DayTM advisory panel, comprised of leaders 

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

overall campaign as well as nutrition philosophy and principles. 

Foodservice/Partnerships 

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

McDonald’s® and Wendy’s®, 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 single-serve milk launches among other 

major restaurant chains including Burger King® (right insert) and Sonic®

Drive-In (below right insert). To date, there are more than 54,000 restaurants 

in the U.S. offering milk in single serve plastic resealable containers. This 

includes other national chains such as Subway®, Ruby Tuesdays®, Jack-inthe-Box®, and Culver’s®. Over the next year, more than one billion units of 

milk will be sold at foodservice. 

Also, DMI helped increase cheese use by partnering with national restaurant 

chains to introduce cheese-friendly items and drive innovation. Pizza Hut®, 

the Nation’s top pizza chain, featured new cheese-friendly items that DMI 

helped to develop and promote. During the promotion period of the new “Cheesy Bites Pizza,” 

Pizza Hut® invested nearly $50 million in a marketing campaign to support the launch, while 

DMI provided funding for culinary and other marketing assistance. 

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 State and regional dairy promotion groups, and dairy cooperative check 
10

stuffers), 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 

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

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 

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 State and regional dairy promotion groups as well as with other dairy and 

agricultural groups. The organization worked with these groups to bring forth sound, sciencebased information to address consumer issues. Dairy Reputation Management, and industrywide 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 

public, DMI launched a new Website, www.dairyfarmingtoday.org. The site educates the public 

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

wholesome milk. 

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 2006, USDEC received $7.5 million from DMI; $4.8 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 $685,000 from membership dues. USDEC began its 11th year of operation in 2006 and its 

total budget was $13 million. 

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 Sao Paulo, Brazil (Figure 1–1). In 2006, strong global demand for dairy protein 

led to another record year for dairy exports. 

Final 2006 export data confirm that U.S. dairy product exports reached $1.89 billion in 2006. 

Figure 1–2 shows that the dairy export volume is also a record high at 2.09 billion pounds of 
11

 

Figure 1–1. USDEC Offices 

Figure 1–2. Composition of U.S. Dairy Trade 

 

Composition of U.S. Dairy Trade

2005 - 2006 (volume – total milk solids) Million Pounds

0

500

1000

1500

2000

2500

2005 2006 2005 2006

SMP

Cheese

Whey

Lactose

Other

Casein/MPC

923

2,092

1,818

961

Imports Exports 4.1% of

U.S. production

9.3% of

U.S. production

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 
12

milk solids and the overall composition of U.S. dairy trade. Skim milk powder exports represent 

nearly 9.3 percent of the U.S. milk production. 

Figure 1–3 illustrates the dramatic changes in percent of assisted dairy exports in 1995 

(56 percent) versus commercial (unassisted) dairy exports (98 percent) in 2006. 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. Ongoing reverse trade mission activities provide opportunities for domestic dairy 

product suppliers to meet potential importers visiting the United States. 

DMI’s 2006 ingredients program was conducted through DMI’s Innovation and Ingredients 

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

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) Kellogg’s® Special K2O Protein 

Waters, a new whey protein-enhanced water that will use an estimated 150,000 pounds of whey 

protein isolate, which represents over 25 million pounds of milk annually; (2) SlimFast®

OptimaTM – a reformulation of SlimFast® drinks that contain more real skim milk, and 

represents an estimated 34 to 68 million pounds of milk annually; (3) PepsiCo’s® Ben & Jerry’s® 

Milk Shakes – three new indulgent dairy drinks that contain more than 65 percent dairy (skim 

milk and cream), slated to use up to 8 million pounds of milk annually; and (4) Next Protein®’s 

DetourTM Line – a new caffeinated whey protein energy bar, a heart-healthy whey protein crisp 

bar, and a whole grain whey protein oat bar, representing up to 7 million pounds of 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 

Figure 1–3. U.S. Dairy Exports 1995-2006 

 

545

864 850

1,262

1,583

1,854

436

201 178 249

82 36

0

250

500

750

1000

1250

1500

1750

2000

1995 2000 2002 2004 2005 2006

Commercial Assisted

U.S. Dairy Exports 1995-2006

Commercial vs. Assisted ($000)

$MIL

Source: USDEC - USDA

56% 81% 83% 84% 95% 98%
13

ingredients to food and beverage manufacturers. Providing consumers with innovative products 

that meet their needs and desires for taste, nutrition, and convenience will help build dairy sales 

for both the short- and long-term. 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 2006 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 more than 135 participants and included industry representatives such as 

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

suppliers, State and regional representatives, and university researchers. This year’s Forum 

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

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 

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. 

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 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 6,000 schools representing nearly 305 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. The Fluid Milk 
14

Board continues to implement a program to educate milk processors about the benefits of 

offering an enhanced milk product in the Nation’s elementary and secondary schools. 

NDC also continued its active support and participation 

in the Action For Healthy Kids (AFHK) initiative. 

AFHK (www.actionforhealthykids.org) was created in 

response 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. 

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 

2006. 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 2006, 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. 
15

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 active qualified 

programs is provided in Appendix F. 

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

the Qualified Programs in 2006 was $190 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. 
16

National Fluid Milk Processor Promotion Board 

The Fluid Milk Board, as authorized in the Fluid Milk Promotion Act of 1990, as amended, 

(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 2006. 

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 $107.8 million in 2006. The Fluid Milk Order requires the 

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

California fluid milk processor promotion program. For 2006, the amount returned to California 

from the 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 2005–2006 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 2005–2006 are 

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

2006 and 2007. Appendix C–2 contains an independent auditor’s reports for the period of 

January 1 through December 31, 2006. 
17

The following summarizes Fluid Milk Board medical and scientific activities for the period of 

January 1 through December 31, 2006. The Fluid Milk Board’s sponsorships, advertising, 

promotions, public relations, strategic thinking, and school marketing activities are incorporated 

in the National Fluid Milk Programs summary. 

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 once in 

2006. 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 weight loss 

plan may help people lose more weight than calorie-restricted diets that did not include milk. 

Numerous studies in recent years have pointed to similar conclusions—that milk and calcium 

may be important when addressing the issue of overweight and obesity. These communications 

and activities continue to highlight milk’s nutritional profile, which includes nine essential 

vitamins and minerals. 

The 2006 “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 2006 research 

may be found in the MilkPEP newsroom’s got news? section of www.milkpep.org.

National Fluid Milk Programs 

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

program in 2006. The fluid milk marketing programs are research based and message focused. 

The purpose of the national fluid milk program is to positively change the attitudes and purchase 

behavior of Americans regarding fluid milk. The 2006 fluid milk marketing plans were designed 

to continue marketing and promotional activities emphasizing milk’s potential weight-loss 

benefits, to increase the consumption of fluid milk, and to identify and support growth 

opportunities for the industry. Many communication media were used to accomplish this 
18

objective, including television and print advertising, press releases, promotions, internet, and 

others. The program’s target audiences included women and moms, teens, and Hispanics. 

In 2006, the got milk?®/Milk Mustache advertising campaign, continued to provide the basis for 

advertising activities and other program delivery methods. A description of the 2006 program 

activities follows. 

Sponsorships

The got milk?®/Milk Mustache campaign continued leveraging a 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 continued in its ninth year sponsoring the Scholar Athlete Milk Mustache 

of the Year (SAMMY) 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 55,000 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–2) 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 consists of television and print advertising as well as 

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

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

advertising campaign. 

Three new television advertisements (“Magic Moments”) were created encouraging women to 

include 24 ounces daily of low-fat or fat-free milk as part of a reduced-calorie diet to promote 

milk’s weight loss benefits. These ads prominently featured women consuming milk. 

 “Magic Moments: Lift” “Magic Moments: Rain” “Magic Moments: Reunion” 
19

Fluid milk print advertisements produced in 2006 included 

celebrity weight loss advertisements targeting moms and women 

(8); celebrity advertisements with the active, bone growth, and 

healthy weight messages targeting teen boys and girls (15); 

contest and sweepstakes announcements and winners (4); 

Hispanic (7); school milk posters (8); and trade advertisements 

(2). The Fluid Milk Board continued leveraging the logo for 

milk’s weight loss message: “24/24 Milk your diet/ Lose 

weight!” Appendix G–2 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”), as well as “24 oz./24 horas” which 

reminds Hispanic moms to include 24 ounces daily of low-fat or fat-free milk as part of a 

reduced-calorie diet to promote milk’s healthy weight benefits. Hispanic print advertising 

featured celebrities Sofia Vergara and the Despierta America cast, along with several Hispanic 

advertorials designed to compliment the general market’s weight loss message with an integrated 

Hispanic overlay. Hispanic consumers were directed to www.2424leche.com for more 

information on Hispanic healthy weight activities. 

Promotions 

 

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

promotions work 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 works 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. Of note, regional producer promotion organizations play an 

important role in the execution of these retail programs. 

The Fluid Milk Board conducted three national promotions in 2006. The first promotion, “Wake 

Up to Weight Loss” was launched in January and reminded consumers to include low-fat or fatfree milk in the most important meal of the day – breakfast – and continue to enjoy milk 

throughout the day to help promote a healthy weight. The promotion offered consumers a free 

trial week membership at a Curves® fitness center with receipts for milk and 

any breakfast item. Additionally, consumers could go to www.2424milk.com

and register for a chance to win one of 24 trips in its “Wake Up in Paradise!” 

online sweepstakes. Promotional materials were available in both English and 

Spanish versions. 

The second promotion, “Celebrate Success,” a 5-week ad incentive program 

launched in May to promote successful weight-loss results for real people, 

featured a milk mustache ad with success story of Robin Seaber who joined in 

the Great American Weight Loss Challenge (a component of the Milk 
20

Mustache Mobile Tour – a public relations effort) and lost more than 25 pounds in 12 months the 

healthy way – by reducing her calories, exercising, and including low-fat and fat-free milk into 

her daily routine. Consumers could pick up a free copy of Robin’s “Celebrate Success” journal 

when they purchased milk and could enter online at www.2424milk.com for a chance to win one 

of 24 shopping sprees worth $2,400 and a 24-month membership at Curves® fitness centers. 

The third 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. This was 

one of the most successful retail promotions to date with October posting the highest gallon sales 

for flavored milk since 2004 and helping to reverse the declining trend in fluid milk sales for the 

year. A record number of stores (36,159) participated. Retailers could choose prizes such as 

DVD systems, MP3 players, or CD 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. 

 

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. For 2006, over 

1.74 billion media impressions were garnered through the integrated public relations program. 

The program provided support for the three national retail promotions by helping to build public 

awareness and increase retailer participation. 

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

States. This year’s program, the “Great American Weight Loss Challenge 2006,” (GAWL) ran 

from April through August, covering 75 cities nationwide, with eight cities conducting Hispanic 

overlays featuring noted Hispanic author and nutritionist Claudia Gonzalez. Events included 

GAWL sign-ups, Curves® workout equipment, fluid milk sampling, and health assessments by a 

nutritional expert. This year marked the second year the tour trucks’ signage was dedicated 

solely to moms and women, featuring celebrity moms and the Milk Your Diet–Lose 

Weight/GAWL themes. 

The 2006 “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 $1000 grants to support fitness and nutrition programs and 

a special got milk?® recognition assembly. The students nominating the winning schools were 

awarded $200 worth of sports gear and apparel from Adidas® and Baby Phat®/Phat Farm®

clothing lines and a year’s subscription to Sports Illustrated and Teen People. 

The February 2006 issue of the International Journal of Sport Nutrition and Exercise 

Metabolism, featured a study which touted low-fat 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 four hours, then bike again until 
21

exhaustion on three separate occasions. During the rest period, 

the cyclists drank low-fat chocolate milk, a carbohydrate 

replacement sports drink, or a traditional fluid replacement 

sports drink. Cyclists who drank the low-fat 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. MilkPEP raised consumer awareness of the study 

through television, radio, print, and online stories. Additionally, MilkPEP visited 25 cities 

nationwide to promote low fat chocolate milk as a recovery drink to athletes in walk/runs and 

other sporting events. 

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

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

www.2424milk.com.

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

include 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; one-page fact sheets explaining the science 

behind milk’s weight-loss claims; vending sales kits containing results from the 2003 MultiChannel 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 

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

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

the milk hotline at 1-800-945-MILK (6455.) 
22

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. This year, the seminar schedule was expanded to include presentations to 

representatives of the School Nutrition Association at various locations across the United States. 

New in 2006 was the introduction of the “Spotlight On” program which 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 

in the second half of 2006 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 www.milkdelivers.org. The program was open to school 

nutrition professionals, school board 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 2006–07 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.” 

The school posters have become very popular. This year’s posters featured tennis star Serena 

Williams, ice skating champion Sasha Cohen, soccer stars David Beckham and Freddy Adu, 

actress Raven-Symoné, and two introductory BBMSM “Reward Yourself” posters. The posters 

are displayed in Appendix G–2. The BBMSM message encouraged teens to “drink three glasses 

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

muscle. Replacing sugary soft drinks with milk, eating right, and being active can help teens 

stay healthy, lean and looking their best.” 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 in an online auction 

at www.bodybymilk.com by bidding on prizes from popular teen brands like Adidas®, Fender®, 

Baby Phat®, and Epic® Records. 
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 Board’s 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 State 

or regional dairy product promotion, research, or nutrition education programs (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 program audits. 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. 

Forty-one nominations were received by USDA for the 12 Dairy Board members whose 

terms expired October 31, 2006. A press release issued on October 4, 2006, announced the 

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

October 31, 2009. Newly appointed were: Lawrence A. Hancock, Muleshoe, Texas (Region 4); 

Paul L. Kent, Mora, Minnesota (Region 5); Peter J. Kappelman, Two Rivers, Wisconsin 

(Region 6); Randy G. Roecker, Loganville, Wisconsin (Region 6); Larry G. Purdom, Purdy, 

Missouri (Region 7); Rita P. Kennedy, Valencia, Pennsylvania (Region 11); and Sanford 

Stauffer, Nicholville, New York (Region 12). Reappointed to serve second terms were: 

Elizabeth I. Anderson, Onalaska, Washington (Region 1); Mary E. Cameron, Hanford, California 

(Region 2); Kimberly K. Clauss, Hilmar, California (Region 2); William C. Stouder, Wendell, 

Idaho (Region 3); and Donald E. Gurtner, Fremont, Indiana (Region 9). 
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). There was one resignation from Region 9 on the Dairy Board in 

2006. In a press release issued on April 19, 2007, the Secretary announced the appointment of 

Paul Broering, St. Henry, Ohio, to fill the vacancy. His term will expire October 31, 2007. 

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 2006, approximately 600 dairy producers 

were granted exemptions. 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 the Dairy Production Stabilization Act of 1983 (7 U.S.C. 4501 et seq.). The 

modification implemented a 1-year allowance (during fiscal year 2006) for the Dairy 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 programs. 

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, whether or not they are 

participating in the Environmental Protection Agency Air Quality Compliance Agreement 

(Consent Agreement), can use to determine whether their air emission levels are in excess of the 

thresholds of the Clean Air Act, and that they are in compliance with the Comprehensive 

Environmental Response, Compensation and Liability Act, and the 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. 
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 2006, 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 2006, Dairy Programs reviewed and 

approved 312 Dairy Board and Dairy Management Inc. (DMI) agreements, amendments, and 

annual plans. Funding approvals were from the 2004, 2005, and 2006 fiscal periods. Appendix 

F–1 lists the contractors and corresponding Board initiatives approved by USDA. 

Contractor Audits 

At the time of publication of the 2006 Report to Congress, DMI had not completed its 2005 

contractor audits. During 2005, DMI retained the certified public accounting firm Ernst & 

Young to audit the records of the following contractors: J. Brown and Associates (media and 

advertising); The Fratelli Group (public relations and nutrition education); Initiative Media 

Worldwide, Inc. (marketing research services); University of Minnesota (dairy product and 

nutrition research); and American–Mexican Marketing (export, through USDEC). 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 2006, the Dairy Board received about 

5.07 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. In 2006, USDA Office of General 

Counsel closed 13 outstanding Dairy Board cases related to bankruptcy and uncollectible 

assessments. 

Qualified Programs 

Dairy Programs reviewed applications for continued qualification from 57 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 2005 and 2006 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 two 

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 6, 2007, the Secretary announced six reappointments and 

two new appointments to the Fluid Milk Board. Reappointed to serve a second term were: 

Michael F. Touhey, Jr., Franklin, Massachusetts (Region 1); Robert B. McCullough, San 

Antonio, Texas (Region 10); Jerry N. Tidwell, Pleasanton, California (Region 13); and Randy 

D. Mooney, Springfield, Missouri (At-Large Processor). Re-appointed to serve first terms after 

filling vacancies lasting less than 18 months were: Charles L. Gaither, Jr., Asheville, North 

Carolina (Region 4) and Teresa E. Webb, Wallington, New Jersey (At-Large Processor). Newly 

appointed to serve a first term was: James B. Green, St. Paul, Minnesota (Region 7). The 

reappointed and newly appointed members were officially seated at the July 12-14, 2007, 

meeting. The terms for these appointees will expire on June 30, 2010. Additionally, filling a 

vacancy with less than 18 months remaining was: Jay B. Simon, Stockton, California 

(Region 14). The term for this position expires June 30, 2008. 

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. There was one resignation 

from Region 12 in 2006. The vacancy has not been filled. 

Program Development 

The Fluid Milk Board contracted with the International Dairy Foods Association (IDFA) to 

manage the program. IDFA contracted with Lowe Worldwide; DRAFTFCB; Weber Shandwick; 

and Siboney, USA, to develop the Fluid Milk Board’s 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 DRAFTFCB, 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, 2005, through December 31, 2005. 
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. Unlike previous reports, this year’s study divides the 

marketing activities 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 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, research, loan and grants, technical support, industry relations, and 

corporate technology. 

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. 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 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 (e.g., 3-A-Day) over product-specific campaigns. As in the first model, marketing 

activities in the second include generic advertising, sales promotions, public relations, nutrition 

education, retail programs, and sponsorships. 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 measure of the economic impact of all 

demand-enhancing, generic marketing activities by processors and farmers. 
30

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 2006, we estimate that a 1.0 percent increase in generic fluid milk 

advertising expenditures resulted in a 0.029 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 

0.053 percent increase in per capita fluid milk consumption when holding all other demand 

factors constant. 

What about the impact on total consumption of fluid milk? From 1997 through 2006, generic 

fluid milk marketing activities increased fluid milk commercial disappearance by 55.8 billion 

pounds in total or 5.9 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 10.7 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 1997, it is estimated that fluid milk consumption would have been 8.1 percent 

lower in the absence of the two programs, while in 2006, milk consumption would have been 

11.7 percent lower in the programs’ absence. 

Regarding the all-dairy product demand analysis, the average generic dairy advertising elasticity 

for the period 1995 through 2006 was 0.021; i.e., a 1.0 percent increase in expenditures for these 

advertising activities would increase per capita dairy demand by 0.021 percent. The average 

generic dairy non-advertising marketing elasticity for the period 1995 through 2006 was 0.031. 

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 1997 

through 2006. 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 cost of the Dairy Program 

was 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 4.88. 

This means that each dollar invested in generic dairy marketing by dairy farmers would return 

$4.88, on average, in net revenue to farmers. These estimates are similar to the 4.33 BCR 

computed for last year’s report. 

To make allowance for the error inherent in any statistical estimation, a 95 percent confidence 

interval was calculated for the average BCR, providing a lower and upper bound for the average 

BCR. One can be 95 percent “confident” that the true average BCR lies within those bounds. 

The estimated lower and upper bound for the average BCR was 3.20 and 6.55, respectively. 
31

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, and aggressive advertising and 

marketing by producers of beverages that compete with fluid milk. As the model described in 

this report uses quarterly data covering the period 1995 through 2006, the following is a brief 

graphical overview of changes in per capita fluid milk consumption and factors hypothesized to 

affect milk consumption over this time period. 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 

1995 through 2006, annual commercial disappearance declined by 11 percent. This translates 

into an average annual rate of decline of a little less than 1.0 percent (0.92 percent) per year. 

However, annual per capita commercial disappearance actually increased slightly from 2005 to 

2006, increasing from 183.8 pounds to 184.3 pounds. 

Figure 3–1. Per Capita Fluid Milk Consumption. 

 

40.0

42.0

44.0

46.0

48.0

50.0

52.0

54.0

1995.1

1995.3

1996.1

1996.3

1997.1

1997.3

1998.1

1998.3

1999.1

1999.3

2000.1

2000.3

2001.1

2001.3

2002.1

2002.3

2003.1

2003.3

2004.1

2004.3

2005.1

2005.3

2006.1

2006.3

Year/Quarter

Pounds Per Person
32

One potential cause of 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 milk product, which causes some people who 

would normally drink milk to consume a different beverage if the preferred 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 2006, the annual average percentage 

of expenditures on food consumed away from home increased by 12.9 percent. While there were 

some ups and downs in the percentage of food consumed away from home over this period, the 

general trend is increasing from 1995 through 2006. It is evident from Figures 3–1 and 3–2 that 

per capita fluid milk consumption and eating away from home are negatively related. Thus, the 

increase in food consumed away from home appears to be responsible for some of the decrease 

in per capita fluid milk consumption. Additionally, the slight decrease in the percentage of food 

consumed away from home from 2005 to 2006 may be part of the reason for the increase in fluid 

milk consumption from 2005 to 2006. 

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 2003). Since young children are one of 

the largest milk-consuming cohorts, any decline in that cohort negatively impacts per capita fluid 

Figure 3–2. Expenditures on Food Consumed Away From Home as a Percentage of Total Food 

Expenditures. 

44.0

46.0

48.0

50.0

52.0

54.0

56.0

1995.1

1995.3

1996.1

1996.3

1997.1

1997.3

1998.1

1998.3

1999.1

1999.3

2000.1

2000.3

2001.1

2001.3

2002.1

2002.3

2003.1

2003.3

2004.1

2004.3

2005.1

2005.3

2006.1

2006.3

Year/Quarter

Percent
33

milk consumption. Figure 3–3 shows the percentage of the population that was under 6 years old 

from 1995 through 2006, a segment of the population that decreased 8.7 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, almost three-out-of-five periods have been 

characterized by rising relative retail prices for fluid milk. From 1995 through 2006, annual 

average fluid milk prices rose 23.6 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. Since the third quarter of 2004, however, the price of milk has declined relative 

to other beverages, which may be an important reason for the slight increase in per capita 

consumption in 2006. 

Fluid milk’s loss of market share to other beverages also may be due to aggressive marketing by 

competing beverage producers. Indeed, both dairy farmers and fluid milk processors started 

generic marketing programs to combat competing marketing from other beverage producers. 

Figure 3–3. Percent of Population Under 6 Years of Age. 

 

7.6

7.8

8.0

8.2

8.4

8.6

8.8

9.0

9.2

1995.1

1995.3

1996.1

1996.3

1997.1

1997.3

1998.1

1998.3

1999.1

1999.3

2000.1

2000.3

2001.1

2001.3

2002.1

2002.3

2003.1

2003.3

2004.1

2004.3

2005.1

2005.3

2006.1

2006.3

Year/Quarter

Percent
34

Figure 3–4. Retail Price of Fluid Milk Relative to Other Beverage Prices. 

 

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1995.1

1995.3

1996.1

1996.3

1997.1

1997.3

1998.1

1998.3

1999.1

1999.3

2000.1

2000.3

2001.1

2001.3

2002.1

2002.3

2003.1

2003.3

2004.1

2004.3

2005.1

2005.3

2006.1

2006.3

Year/Quarter

CPI Milk/CPI Other Beverages

Figure 3–5 displays the combined real advertising expenditures (in 2006 dollars) of nonalcoholic beverages (juice, bottled water, and soy beverages). Since 1995, there has been a 

decrease in annual competing beverage advertising by 24.6 percent, with a significant part of that 

Figure 3–5. Real Total Advertising for Soy–Beverages, Juices, and Bottled Water. 

0

20

40

60

80

100

120

140

160

180

1995.1

1995.3

1996.1

1996.3

1997.1

1997.3

1998.1

1998.3

1999.1

1999.3

2000.1

2000.3

2001.1

2001.3

2002.1

2002.3

2003.1

2003.3

2004.1

2004.3

2005.1

2005.3

2006.1

2006.3

Year/Quarter

Million $
35

Figure 3–6. Real Per Capita Personal Disposable Income. 

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

1995.1

1995.4

1996.3

1997.2

1998.1

1998.4

1999.3

2000.2

2001.1

2001.4

2002.3

2003.2

2004.1

2004.4

2005.3

2006.2

Year/Quarter

$1,000 

decrease occurring from 2005 to 2006. Hence, this decrease in advertising by beverage 

competitors may have had a positive impact on fluid milk consumption, particularly between 

2005 and 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 2006 dollars) from 1995 through 

2006. Since 1995, real per capita income has increased by 18.4 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 2006 dollars) on 

generic fluid milk marketing efforts by these two programs. From 1995 to 1997, there was 

steady growth in real (2006 dollars) annual expenditures for generic fluid milk marketing, from 

$169 million in 1995 to $258 million in 1997. Since 1997, however, such expenditures have 

been declining. Between 1995 and 2006, combined annual average real expenditures declined 
36

Figure 3–7. Real and Nominal Total Fluid Milk Marketing Expenditures. 

0

10

20

30

40

50

60

70

80

90

1995.11995.3

1996.1

1996.3

1997.1

1997.3

1998.1

1998.3

1999.1

1999.3

2000.1

2000.3

2001.1

2001.3

2002.1

2002.3

2003.1

2003.3

2004.1

2004.3

2005.1

2005.3

2006.1

2006.3

Year/Quarter

Million $

Nominal Real

Figure 3–8. Real Generic Fluid Milk Advertising and Non-Advertising Marketing. 

0

10

20

30

40

50

60

70

1995.1

1995.3

1996.1

1996.3

1997.1

1997.3

1998.1

1998.3

1999.1

1999.3

2000.1

2000.3

2001.1

2001.3

2002.1

2002.3

2003.1

2003.3

2004.1

2004.3

2005.1

2005.3

2006.1

2006.3

Thousand $

Year/Quarter

Advertising Non-advertising marketing
37

by 9.5 percent reaching a low of $152.6 million in 2006. 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 44 percent increase in total annual generic milk marketing expenditures since 

1995. In 1995, nominal annual expenditures totaled $106 million for the two programs, while in 

2006 nominal annual expenditures totaled $153 million. Hence, the erosion in real expenditures 

has been entirely due to inflation, primarily media cost inflation, which is substantially higher 

than the overall inflation rate in the economy. 

Figure 3–8 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 advertising expenditures decreased by 

$60.7 million annually since 1995, while real fluid milk non-advertising marketing expenditures 

increased by $58.5 million annually. The shift away from advertising has been primarily done 

by the dairy farmer program. 

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 non-advertising marketing variable. 

The model was estimated with national quarterly data from 1995 through 2006. 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 supplied by DMI. 

Generic fluid milk non-advertising marketing 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 

 

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. 
38

variables using a distributed-lag structure.2

 Similar procedures were used to capture this carryover 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 2006 for model 

variables all of which have a statistically significant effect on consumption.3

 For example, a 

price elasticity of demand for fluid milk equal to –0.112 means that a 1.0 percent increase in the 

real (inflation-adjusted) retail fluid milk price decreases per capita fluid milk quantity demanded 

by 0.112 percent. 

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. 

Table 3–1. Average Elasticity Values (1995–2006) for Factors Affecting the Per Capita Retail 

Demand for Fluid Milk.*

Demand Factor Elasticity

 

Retail fluid milk price –0.112**

Per capita income 0.236**

Percent of food away from home expenditures –0.806**

Percent of population under 6 years of age 1.510**

Bottled-water + soy beverage + juice advertising –0.032**

Generic fluid milk advertising 0.029**

Generic fluid milk non-advertising marketing 0.053**

 

* Example: A 1.0 percent increase in the retail price of fluid milk is estimated to reduce per capita sales of fluid milk 

 by 0.112 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.

 

2

 Specifically, a second-degree polynomial lag structure with both end point restrictions was imposed. The demand 

model included current advertising expenditures and eight 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. 3

 The estimated model fit 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 97 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. 
39

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 1.51, which means that a 

1.0 percent increase in this age cohort measure would result in a 1.51 percent increase in per 

capita fluid milk demand when holding all other demand factors constant. This result is 

consistent with previous studies4

, 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. 

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 –0.806. This means that a 1.0 percent increase in the food consumed away from 

home would measure result in a 0.806 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. 

Not surprising, 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 0.112 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 (23.6 percent) relative to the price of 

other beverages. Consequently, the increase in fluid milk prices has contributed to the decline in 

per capita consumption. 

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 0.236 

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 

milk products as a staple commodity in the United States. With income up by over 18 percent 

since 1995, this has lessoned the decline in per capita fluid milk consumption. 

 

4

 The following mistake appears in last year’s report: the variable labeled “percentage of population younger than 

6 years of age” was actually the percentage of population younger than 5 years of age, so it is not directly 

comparable to this year’s result. This is the main reason why the elasticity for the percentage of young children in 

last year’s report is substantially lower than this year’s estimate. 
40

Combined soy beverage, juice, and bottled-water advertising has also 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 –0.032, and statistically 

significant. There has been a large decline (24.6 percent) in advertising expenditures for these 

three commodities since 1995, and hence, this likely had a positive impact on fluid milk 

consumption over this time period. 

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 0.029 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 0.029 percent holding 

all other demand factors constant. The generic non-advertising marketing elasticity is computed 

to be 0.053 and is statistically significant at the 1.0 percent significance level. In terms of 

relative elasticities, it appears that the combined non-advertising marketing activities by fluid 

milk processors and dairy farmers are more effective at increasing fluid milk consumption than 

their advertising efforts. However, this first time finding should not be interpreted as a 

recommendation to eliminate generic advertising in favor of non-advertising marketing activities 

since there is likely a synergy between the two types of marketing operations. 

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 

1997 through 2006: (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 3–9 displays the simulation results for annual fluid milk consumption for the two 

scenarios. From 1997 through 2006, these marketing activities were responsible for creating 

58.9 billion cumulative pounds of fluid milk commercial disappearance, which averages to 5.9 

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 10.7 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 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 3–9. For instance, in 1997, it is estimated that 

fluid milk consumption would have been 8.1 percent lower in the absence of the two programs, 

while in 2006, milk consumption would have been 11.7 percent lower in the programs’ absence. 
41

Figure 3–9. Simulated Annual Fluid Milk Consumption With and Without the National Program. 

48.0

49.0

50.0

51.0

52.0

53.0

54.0

55.0

56.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

Billion Pounds

Base No Program

Analysis of All-Dairy Product Generic Marketing 

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: total dairy-farmer 

expenditures for fluid generic milk and cheese public relations, sponsorships, retail promotions, 

and nutrition education and total fluid milk-processor expenditures for generic fluid milk public 

relations, and promotions. 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, variables to capture seasonality in dairy product demand, per capita 

expenditures on consumption of food away from home, percent of population under 6 years old, 

and competing advertising. 

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. One problem 

with this approach is exports are included in commercial disappearance, and consequently per 

capita commercial disappearance overstates true domestic per capita consumption. Since exports 
42

on a milk-fat equivalent basis still represent a small share of commercial disappearance, this 

inflation of domestic per capita disappearance is fairly small. 5

Figure 3–10 displays per capita commercial disappearance of fluid milk and dairy products since 

1995. Per capita commercial disappearance of fluid milk and dairy products has increased 

consistently on an annual basis over time, from 580 billion pounds in 1995 to 615 billion pounds 

in 2006, which represents an average annual growth of 0.5 percent. 

The model was estimated with national quarterly data for 1995 through 2006. 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. 

Table 3–2 provides selected elasticities for the all-dairy product demand model. 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 0.385 percent increase in combined per capita all-dairy product 

demand, holding all other variables constant. The average price elasticity for 1995 through 

Figure 3–10. Per Capita Commercial Disappearance of Fluid Milk and Dairy Products. 

125

130

135

140

145

150

155

160

165

1995.1

1995.3

1996.1

1996.3

1997.1

1997.3

1998.1

1998.3

1999.1

1999.3

2000.1

2000.3

2001.1

2001.3

2002.1

2002.3

2003.1

2003.3

2004.1

2004.3

2005.1

2005.3

2006.1

2006.3

Year/Quarter

Pounds

 

5

 Like previous reports, this report measures fluid milk and dairy products on a milk-fat equivalent basis. However, 

this approach ignores the nonfat component of milk, which is growing in importance over time. Preliminary 

research on developing a nonfat milk equivalent model indicates that next year’s report will include an analysis of 

non-fat as well as fat components of milk. Additionally, work is being performed regarding removing exports from 

the commercial disappearance data. 
43

Table 3–2. Average Elasticity Values (1995–2006) for Factors Affecting Per Capita All-dairy 

Products Demand. 

 

Demand Factor Elasticity 

 

CPI for all-dairy products –0.250* 

Per capita income 0.385* 

Per capita food away from home expenditures 0.222* 

Generic dairy advertising 0.021** 

Generic dairy non-advertising marketing 0.031* 

Bottled-water advertising –0.014* 

 

* Statistically significant at the 1.0 percent level or better. 

** Statistically significant at the 10 percent level. 

2006, using the CPI for all-dairy products was –0.25; in other words, a 1.0 percent increase in the 

retail price of dairy products would result in a 0.25 percent decrease in per capita quantity 

demanded for all–dairy products holding all other variables constant. Per capita food away from 

home expenditures had a positive elasticity—a 1.0 percent increase in food away from home 

resulted in a 0.222 percent increase in per capita demand for all-dairy products. This result is the 

opposite of that found for the fluid milk only demand model, which is likely due to the positive 

effect of eating away from home on cheese consumption outweighing the negative effect on fluid 

milk consumption. Competing advertising measured by bottled water advertising expenditures, 

had an elasticity of –0.014, a 1.0 percent increase in bottled water advertising would result in a 

0.014 percent decrease in per capita demand for all-dairy products holding all other demand 

determinants constant. 

The major interest here is the advertising and non-advertising marketing elasticities. The 

average advertising elasticity for this period was 0.021; a 1.0 percent increase in media 

advertising expenditures would increase per capita all-dairy product demand by 0.021 percent. 

The average non-advertising marketing elasticity for this period was 0.031; a 1.0 percent 

increase in media advertising expenditures would increase per capita all-dairy product demand 

by 0.031 percent. Similar to the fluid milk model results, these results indicate that the combined 

generic dairy non-advertising marketing activities by dairy farmers and fluid milk processors are 

more effective at increasing all-dairy product consumption than their advertising marketing 

activities. 

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 revenue6

 due to generic 

 

6

 “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. 
44

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. 

We calculated BCRs7 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 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 1997 through 2006. 

The average all milk price from 1997 through 2006 in the base line scenario was $15.12 per 

hundredweight. In the counter-factual no-national-Dairy-Program scenario, the average all milk 

price was $14.69 per hundredweight, which is 43 cents lower. Thus, had there been no national 

Dairy Program over this period, the price farmers receive for their milk would have been 

2.9 percent lower than it actually was. 

The results show that the average BCR for the Dairy Program was 4.88 from 1997 through 2006. 

This means that each dollar invested in generic dairy marketing by dairy farmers during the 

period would return $4.88, on average, in net revenue to farmers. This is slightly higher than the 

4.33 BCR calculated for last year’s report. The level of the marketing BCR suggests that the 

combined marketing programs supported by dairy farmers have been a successful investment.8

In another interpretation of the BCR, the increase in real (2006 dollars) generic dairy marketing 

expenditures resulting from the Dairy Program costs dairy producers an additional $146 million 

per year on average from 1997 through 2006. The additional generic dairy marketing resulted in 

higher demand, prices, and net revenue for dairy producers nationwide. Based on the 

simulations conducted, we estimate 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 $712.3 million, which divided by the additional Dairy Program cost of 

$146 million results in the estimated BCR of 4.88. 

 

7

 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. 8

 To see how the BCR has varied over time, the models were simulated for an earlier time period (1997–98) and the 

latest time period (2005–06). The results indicate that the estimated BCR for the earlier and later time periods were 

almost identical. 
45

To make allowance for the error inherent in any statistical estimation, a 95 percent confidence 

interval was calculated for the average BCR, providing a lower and upper bound for the average 

BCR. One can be 95 percent “confident” that the true average BCR lies within those bounds. 

The estimated lower and upper bounds for the average BCR were 3.20 and 6.55, 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. 

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 0.63 percent of the recent average annual value of farm milk marketings 

from 1997 through 2006 ($23.2 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. 
46

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. MFE 13.77

(0.32)

RDDPCF Quarterly retail all-dairy product demand per capita on 

a fat basis 

lbs. MFE 146.90

(5.59)

 

Price Indices

RFPCPI Consumer retail price index for fresh milk and cream 

deflated by consumer price index for nonalcoholic 

beverages (1982–84=1) 

# 1.16

(0.09)

RDPCPI Consumer retail price index for all-dairy products 

deflated by consumer retail price index for all items 

(1982–84=1) 

# 0.92

(0.03)

RBEVCPI Consumer retail price index for non-alcoholic 

beverages (1982–84=1) 

# 137.41

(5.39)

Demographic and Income Variables

INCPC Quarterly per capita disposable income, deflated by the 

consumer retail price index for all items (2006=1) 

$ 29,560

(1,690)

AGE5 Percent of the population under age 6 % 8.34

(0.26)

FAFH% Food away from home expenditures as percent of total 

food expenditures 

% 50.2

(2.05)

Marketing Expenditures

GMA Quarterly generic fluid milk advertising expenditures 

deflated by media cost index (2006 $) 

$mil 35.40

(14.03)

GMN Quarterly generic fluid milk non-advertising marketing 

expenditures deflated by consumer price index 

(2006 $) 

$mil 14.89

(7.30)

GDA Quarterly generic milk and dairy advertising 

expenditures, deflated by media cost index (2006 $) 

$mil 60.96

(19.05)

GDN Quarterly generic milk and dairy non-advertising 

marketing expenditures, deflated by media cost index 

(2006 $) 

$mil 29.75

(13.17)

CBA Quarterly soy beverage + juice + bottled-water 

advertising expenditures deflated by media cost index 

(2006 $) 

$bil 112.00

(0.0288)

a Quarterly dummy variables are also included in the model to account for seasonality in demand. 

b Computed over the period 1995–2006. Standard deviation in parentheses. 
47

Chapter 4 

Part I – Fluid Milk Market and Promotion Assessment: 

Beverage Marketing Corporation 

For the eighth consecutive year, Beverage Marketing Corporation (BMC) has been 

commissioned by Dairy Management Inc. (DMI), and the National Fluid Milk Processor 

Promotion Board (MilkPEP) to review the fluid milk advertising, promotion, and other 

programs. This review offers a subjective evaluation of the effectiveness of those programs and 

provides a third-party marketing perspective of these efforts for inclusion in USDA’s Report to 

Congress. BMC evaluates milk’s position relative to milk’s competitive beverage set—its 

respective marketing efforts and market performance. BMC believes milk’s competitive set 

includes most non-alcoholic refreshment beverages, specifically carbonated soft drinks, bottled 

water, fruit beverages, ready-to-drink (RTD) teas, and sports beverages. This year BMC 

examines both the overall milk industry’s performance as well as the effect that targeted 

advertising, promotion, and specific messaging have had on milk’s crucial demographic cohorts. 

The following summarizes BMC’s findings based on the analysis of available data. 

BMC’s Assessment of Current Milk Industry Environment 

In summary, BMC believes that the collective efforts of the producer and processor generic milk 

programs in 2006 continued to effectively use available resources for driving incremental sales 

of fluid milk by focusing on high-opportunity consumer targets, relevant product benefits, and 

powerful messaging. In spite of a competitive disadvantage within its competitive set, milk 

volume increased in 2006 and this is likely because of the generic marketing programs. 

In 2006, unadjusted fluid milk volume increased by 1.0 percent to 6.26 billion gallons, the first 

volume increase for milk in 4 years. Over the last 6 years, fluid milk volume has essentially 

been stable, fluctuating within a narrow band of volume between 6.2 and 6.3 billion gallons. 

Unadjusted milk volume increased by more than 60 million gallons in 2006 compared to a 

decline of 6 million gallons in 2005. The history of volume changes for fluid milk sales over the 

past 6 years is shown in Figure 4–1. Milk’s compound annual growth rate (CAGR) for the 

5-year period from 2001 to 2006 was essentially flat, a reflection of the very small swings in 

year-over-year milk consumption since 2000. 

Within its competitive set, milk is the third largest beverage category by volume (See 

Figure 4–2). In 2006, bottled water, which has been showing dramatic growth for the last 

decade, strengthened its position as the second largest beverage category. Meanwhile, 

carbonated soft drinks remain the largest category in the competitive set, in spite of a 1.1 percent 

decline in 2006. 

While the “new age” type beverages (i.e., sports beverages and RTD tea) experienced solid 

increases over the previous year, fruit beverages, like carbonated soft drinks, suffered a slight 

decline. 
48

Figure 4–1

As a whole, volume of the combined competitive set categories increased by 2.3 percent to 

35.7 billion gallons, up from 34.9 billion gallons in 2005. This increase was primarily driven by 

bottled water, sports beverages and RTD teas. From 2001 to 2006, the competitive set enlarged 

by a CAGR of 2.3 percent (See Figure 4–3). 

Without milk, the performance of the competitive set would have been slightly better – 

increasing at a CAGR of 2.8 percent from 2001 to 2006. Without bottled water, the competitive 

Figure 4–2 

Source: Beverage Marketing Corporation

Fluid Milk Volume and Growth 

2001 – 2006 

Source: Beverage Marketing Corporation, USDA

CAGR 01/06: 

0.0% 

-0.9% +0.3% -0.5% -0.8% -0.1% +1.0%

Milk’s Competitive Set All-Channel Volume Shares 

2006 

CSDs

42.3%

Bottled 

Water

23.1%

Milk

17.5%

Fruit Bevs

11.3%

Sports Bevs

3.7%

RTD Tea

2.1%

6,262 6,281

6,252 6,202 6,196 6,258

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

Millions of Gallons

2001 2002 2003 2004 2005 2006
49

Figure 4–3 

set grew by a CAGR of just 0.5 percent over that same 5-year time span. Bottled water 

accounted for nearly 90 percent of the volume increase of the competitive set in 2006. 

BMC has quantified milk’s share of the volume increase compared to that of the entire 

competitive set annually over the last 19 years in the form of an index. This index reveals 

whether milk has gained or lost competitive share over this time span. This measure of milk’s 

performance is based on its share of competitive volume change, divided by milk’s market share 

of the competitive set at the onset of the year. 

An index greater than 1 indicates milk is improving its share and thus out performing the 

competitive set; an index less than 1 reveals that milk’s share of the competitive set is declining. 

In Figure 4–4, this index for milk is illustrated over a 19-year period. 

Milk has consistently underperformed the competitive set and has thus lost competitive share 

each year since 1987, as the diagram illustrates. However, the trend over the last 5 years 

suggests an ongoing decrease in share loss. Conversely, bottled water and sports drinks have 

consistently out performed the competitive set and have gained competitive share (Figure 4–5). 

Bottled water, in particular, has shown dramatic growth in recent years, driven primarily 

by heightened consumer demand for healthier beverage alternatives, greater convenience, and 

aggressive pricing. 

While there are many factors associated with beverage consumption trends, advertising 

expenditures is one factor that is easily measured. In 2006, every category within the 

competitive set except for bottled water experienced a decline in media spending per 

Competitive Beverage Set Growth 

5 Year CAGR 

2001 – 2006

Milk Competitive

Set

Competitive

Set w/o Milk

0.0%

2.3%

2.8% 2.7%

0.5%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Competitive Set 

w/o Bottled 

Water Source: Beverage Marketing Corporation

Competitive Set 

w/o Fruit 

Beverages 
50

Figure 4–4 

Figure 4–5 

(1)

 Share of competitive turnover divided by share of competitive set 

Source: Beverage Marketing Corporation

3.9

-1.1

4.4

9.3

0.4

-0.5

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

CSD B. Water Milk Fruit

Beverages

Sports RTD Tea

Indexed Share of Competitive Turnover(1)

2006 

Share of Competitive

Turnover -21.1% 89.9% 7.8% -12.4% 16.5% 19.4% 

Share of Competitive 42.3% 23.1% 17.5% 11.3% 3.7% 2.1% 

Set 

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 

-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

(1)

 Share of competitive turnover divided by share of competitive set 

Source: Beverage Marketing Corporation Indexed Share of Competitive Turnover

Milk Indexed Share of Competitive Turnover(1)

1987 – 2006 
51

Figure 4–6 

Competitive Set Media Spending per Gallon 

2006 

gallon (See Figure 4–6). Just as in previous years, milk is one of the lowest categories in 

media spending per gallon. The milk category spent about 2 cents on advertising for every 

gallon of milk sold, whereas carbonated soft drinks spent about 5 cents for every gallon sold. 

Only RTD tea spent less per gallon than milk in 2006, and bottled water spent about the same. 

In comparison to other categories of the competitive set, bottled water’s success has been 

primarily distribution and consumer driven and has continued without major marketing dollar 

expenditures. 

In 2006, carbonated soft drinks accounted for nearly half of all advertising dollars spent within 

the competitive set, at $706 million. At $301 million in spending, fruit beverages accounted for 

approximately 20 percent. At $131 million in 2006, milk ranked fourth within the competitive 

set, accounting for 8.7 percent of spending (See Figure 4–7). Milk advertising spending is 

comprised primarily of the national generic campaign, regional generic spending and limited 

branded product spending. While such spending is significant, milk accounts for about 18 

percent of the competitive set volume and, thus, remains significantly underrepresented in share 

of voice. 

Clearly, simple measurement of media spending does not take into account the effectiveness of 

the campaigns, nor does it measure the impact of millions of dollars spent on promotions and 

other non-media programs. Promotional expenditures can not be measured in an objective 

manner because promotions are not tracked by syndicated methods and companies tend not to 

divulge this data. Nevertheless, many millions of dollars are spent on promotional programs 

within the competitive set, including for milk. BMC believes that milk, despite past year 

increases in non-media programs, continues to be outspent on promotional programs and that 

this is a contributing factor to milk’s flat volume performance. 

$0.047

$0.025 $0.021 $0.014

$0.173

$0.075

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14

$0.16

$0.18

$0.20

Sports Drinks Fruit

Beverages

Soft Drinks PET Bottled

Water

Milk RTD Tea

Dollars per Gallon

’05-’06 Change -18.2% -34.9% -11.8% +18.1% -13.0% -82.3% 

Source: Beverage Marketing Corp.; Lowe; Ad Views 
52

Figure 4–7 

Source: Beverage Marketing Corporation; Lowe 

Furthermore, the milk category is disadvantaged relative to the other competitive set categories 

for other reasons, outlined below. While the milk category has begun to make progress in many 

of these areas, for the most part it continues to trail the other categories in all of them. 

Consumer Attention 

Consumer awareness of the generic milk advertising program is high, but because the category 

lacks branded advertising, it’s still at a competitive disadvantage. 

The consumer-relevant new science that links milk to weight loss had been effectively 

communicated through advertising, public relations (PR), and other tools. However, in 2006, 

milk once again lagged the competitive set in its share of advertising expenditures in contrast to 

its volume share. Milk’s low share of voice, declining over a number of years, is likely to have 

both immediate as well as cumulative negative impact on milk consumption, despite the 

category’s highly relevant and differentiated messaging. 

Beverage product innovation has accelerated in recent years for all categories within the 

competitive set. Innovation adds news and excitement to categories, bringing more focus 

and attention to them compared to less innovative categories. Limited innovation in the milk 

category has caused milk to lag other competitive set categories in number of new product 

introductions. Additionally, milk new products have largely been limited to package changes, 

with little creativity around flavors and/or added functionality. The net result is that consumers 

have more choices than ever outside of milk. The news related to innovation has the added 

effect of increasing the impact of advertising. Many of these new products, such as soy 

beverages and calcium-fortified fruit beverages, have innovated their way into milk’s territory, 

co-opting milk’s healthy positioning. 

Milk

$130.6

8.7%

Bottled Water

$116.9

7.8%

RTD Tea

$10.8

0.7%

Sports Drinks

$229.6

15.4% Fruit Beverages

$300.8

20.1%

 Carbonated Soft

Drinks

$706.4

47.2%

Media Spending by Category

2006 

(Millions of Dollars)
53

Product Attributes and Innovation 

Recent innovation in the milk category has centered on flavored milk – primarily variations of 

chocolate – and single-serve packaging. There has been additional growth in specific milk 

segments, including organic, reduced lactose, recombinant bovine somatotropin-free (rbST–free) 

and fortified milk products. While this represents an improvement after years of very little 

innovation, other competitive set categories have been more aggressive with a wider variety of 

product innovation and a greater assortment of packaging formats and sizes. Among other 

innovations, beverage fortification with vitamins, minerals, herbs and other ingredients have 

added functional benefits in many categories. 

In 2006, milk new product introductions increased to 185 from 174 in 2005, while other 

categories within the competitive set experienced modest declines in new product launches. 

Milk ranked in the middle of the competitive set for new product introductions in 2006, but has 

generally been out innovated by the other categories. The milk category is in need of more 

innovation, both evolutionary (e.g., packages, flavors) and revolutionary (e.g., functionality, 

technology) in the coming years. A new product is only an innovation for a short time – until 

consumers become accustomed to it or competitors meet or beat the innovation. Thus, continued 

innovation is a requirement for competitive advantage. 

Branding 

One of the more significant differences between milk and its competitive set is the distinct lack 

of major milk brands and the impact of brand-building support on the total category. In 

comparison, the competitive set is dominated by mega-brands that have been built and nurtured 

by world-class marketing organizations. 

The milk category is dominated by private label. In 2006, only about a third of milk volume in 

the grocery channel was accounted for by branded products. No other category in the 

competitive set has less than half its volume accounted for by branded products. 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, private label products, particularly milk products, are generally sold in lesspremium, 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. 

Distribution 

Milk is widely available; nevertheless, its availability does continue to have some significant 

limitations. Milk availability is concentrated in take-home retail channels, especially 

supermarkets. In other outlets where milk is available, it often does not have the range of 

packaging and flavor options that consumers seek and that are offered by other competitive set 

products. This places milk at a competitive disadvantage. 
54

As consumer lifestyles become more and more on-the-go, beverage manufacturers respond by 

developing products in convenient single-serve packaging distributed in immediate consumption 

channels such as convenience stores, foodservice and vending. In 2006, only about 20 percent of 

milk volume was sold for immediate consumption, whereas about half the volume of carbonated 

soft drinks, sports drinks and RTD tea was purchased for immediate consumption. Milk has 

experienced improved growth in non-traditional channels, such as convenience stores, club 

stores and discount stores. 

Pricing 

Price promotion is a key tool beverage marketers have used to spur sales, and this is true of all 

categories in the competitive set except for milk. The industry is limited structurally and legally 

in its use of price promotion. Because milk is responsive to price changes – flavored even more 

than white milk – price increases impact volume sales significantly. 

In 2006, milk experienced a 1.2 percent decline in its consumer price index. In 2006, milk along 

with bottled water were the only competitive set categories to experience pricing declines. 

However, milk prices in 2006 remained historically high (See Figure 4–8). 

BMC’s Assessment of Current Milk Marketing Programs 

In 2006, fluid milk experienced its first unadjusted volume gain in 4 years, and BMC believes 

that the marketing campaigns developed under the Dairy Production Stabilization Act of 1983 

and the Fluid Milk Promotion Act of 1990, as amended, have played a key role in this growth. 

Figure 4–8

2.3%

1.7%

2.8%

-4.1%

3.2%

-1.2%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Change in Consumer Price Index (CPI) 

2005 – 2006 

* Estimated 

Source: Beverage Marketing Corp.; Bureau of Labor Statistics 

All Items Milk, All 

Types 

NonAlcoholic 

Beverages 

Carbonated

Drinks 

Non-Frozen 

Juice & 

Drinks 

Retail PET 

Water* 
55

While over the last 5 years milk consumption has been virtually flat, BMC believes these 

declines would have been more significant without the industry’s weight-loss messaging, 

3-A-DayTM of Dairy and got milk?®/milk mustache campaigns. The Marketing Mix Analytics 

(MMA) analysis conducted for MilkPEP also supports this belief. This analysis, based on 

10 months of 2006 data, suggests that the advertising and promotional campaigns of MilkPEP 

continue to be effective in generating incremental milk volume. Additionally, base volume 

increased as a result of the long-term support for weight loss. The incremental volume impact, 

however, has diminished somewhat compared with the MMA findings for 2005. 

Supported by dairy farmers’ investment in the weight loss and dairy science, in 2006, milk 

advertising continued to build on the emergence of scientific evidence that milk consumption 

may be linked to weight loss. This allowed for differentiated opportunities to drive milk sales. 

With the generic program shifting and realigning the advertising budget and other program 

efforts (e.g., PR, promotions, and research) behind weight loss communications, there was 

measurable success in achieving consumer acceptance of the weight loss-milk link. In addition, 

dairy processors welcomed the weight loss programming and integrated it into their own 

business and brand-building initiatives. In 2006, there was full-integration and coordination 

among the advertising, PR, promotions, and processor participations in the National Programs 

resulting in a more efficient and impactful spending program. 

In accordance with the weight-loss efforts, there was a shift in target and product focus that 

began in 2005. Generic media spending allocations moved from teens to moms, but a new teenfocused program to promote healthy weight, called BodyByMilkSM, also began. The 

continuation of the milk mustache campaign driven by new teen-appealing celebrities was also 

tied-in with healthy weight. Through the BodyByMilkSM program, schools became a key 

marketing channel for milk with posters, print ads, promotions, and an internet component. The 

MMA report found that the new media being used for teens (school marketing, on-line, and 

word-of-mouth) resulted in incremental sales in 2006. 

Programs from DMI and MilkPEP continued to focus on milk vending, foodservice, and school 

milk improvements in 2006 with ongoing positive results. The milk vending initiative continues 

to produce positive results, with significant increases in school placements and vending operator 

activity. The 2006 vend tracking survey has demonstrated an increase in the important school 

channel with an estimated 10,000 schools now reporting at least some milk vending activity. 

DMI’s efforts to recruit new quick-service restaurant (QSR) chains in 2006 culminated with the 

addition of Burger King® and Sonic®, while other chains are considering the addition of milk. 

There are now more than 35,000 QSR outlets offering milk in single-serve packaging as a 

permanent part of their menus. This is an increase of more than 25 percent in the number of 

outlets. Estimated volume for single-serve milk in QSR outlets in 2006 climbed to nearly 30 

million gallons. 

DMI’s continuing implementation of the New Look of School Milk Program has doubled the 

number of participating schools and increased student coverage by nearly 60 percent in the 

2006/07 school year, compared with 2005/06 levels. This program is likely to result in higher 

levels of milk per capita consumption for the school-age cohort as it ages. The impact of this 
56

program in the longer term is yet to be felt, but will probably increase milk’s consumption base 

significantly as the school milk experience improves. 

The generic milk programs recognize that there are increasing limitations to traditional media 

advertising, particularly for some target consumers such as kids and teens, in part due to 

increasing media costs. Thus, the generic programs have been increasingly and successfully 

utilizing alternative communications and marketing vehicles to drive milk sales. The advertising 

budget has been strategically reallocated to increase promotions, events/sponsorships, on-line 

and other programs, which are focused largely on expanding milk availability and consumer 

appeal through innovation. 

The recent emphasis on weight-loss benefits had also invited new challenges for milk. The set of 

direct competitors could have included other weight-loss products such as meal replacement 

beverages and bars as well as programs such as Weight Watchers® and Jenny Craig®. 

Additionally, with competitors’ aggressive advertising, promotion, as well as focus on 

convenience and innovation, BMC believes that milk is perceived by consumers as being less 

contemporary compared to the alternatives. 

With a continued focus against strategic consumer targets and market opportunities, and 

improving integration of generic programs into processor and retailer marketing tactics in 2007, 

the outlook seems positive. BMC predicts a slight increase or no decline in volume for the 

upcoming year. 
57

Part II – National Fluid Milk Processor Promotion Program: Highlights by 

the National Fluid Milk Processor Promotion Board 

Each year, in addition to the econometric analysis performed for the USDA by Cornell 

University, a more marketing-oriented and technical assessment is made of the effectiveness of 

the Milk Processor Education Program (MilkPEP) fluid milk generic promotion program using a 

combination of the best available measurement tools from outside and within the program. 

Among the resources used for this assessment over the last 5 years has been the “Beverage 

Marketing Corporation Report.” The report, jointly funded by DMI and MilkPEP, provides an 

in-depth analysis of the competitive position of the milk industry in comparison to a selected 

group of appropriate competitors such as carbonated soft drinks, juices, bottled water, sports 

drinks, and ready-to-drink teas. 

In addition, the MilkPEP program itself commissions a wide range of measurement efforts, both 

internal and external. Chief among these are: 

• Marketing Mix Analysis: MMA Corporation; 

• Attitude, Awareness, and Usage Tracking Study: Data Development Worldwide; 

• Product sales and household sales data: Information Resources, Inc.; 

• School Sales Impact Analysis: Prime Consulting, Inc. 

This chapter goes beyond the third party report developed by BMC in Part I and integrates all 

additional and appropriate research of these sources for an assessment of the program’s 

effectiveness. It will be shown that the MilkPEP program in 2006 was effective in driving 

incremental volume and mitigating the long-term loss of market share in a highly competitive 

beverage marketplace. It also will be shown that a new aspect of the marketing mix analysis 

shows a consistent 3-year trend, through 2006, of strong growth of the base volume. This 

demonstrates the program's ability to create long-term behavior change. The program continues 

to meet the needs of the fluid milk industry that funds the program. 

More specifically this section will examine the overall impact of the MilkPEP program in terms 

of its impact on the core measures of sales and consumption, its “retail sales return-oninvestment9

” (RROI) and the competitive situation in which the fluid milk industry competes. It 

also will detail two of the main program areas, promoting weight loss benefits of milk 

consumption to women, and for the first time an overall impact assessment of the teen focused 

Body by MilkSM program. 

Overall Sales Impact 

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 an RROI estimate for its 

__________________________________ 

9

The term RROI for “retail sales return-on-investment” compares the incremental retail value for its return and the 

direct spending on consumer activities as its investment. 
58

marketing investment, and in achieving the national nutritional goals specified in its 

congressional mandate. 

MilkPEP’s Marketing Mix Analysis showed that the share of total milk volume attributable to 

the short term MilkPEP activities was down from 4.7 percent in 2005 to 3.6 percent in 2006. In 

actual volume, that 2006 contribution represents approximately 147 million gallons, or an 

estimated $468 million in retail sales revenue nationwide. This represents a retail impact of 

$6.61 for every dollar spent by fluid milk processors in 2006. While incremental volume is 

defined as volume directly attributable to specific marketing activity in the current year, we are 

also in year three of a growth trend in the base volume. Base volume is defined as “intrinsic 

demand” or volume that would have been sold regardless of any branded or generic marketing 

activities such as advertising. This trend is most likely the function of the long-term behavior 

change advocated by the campaign, as adopted by consumers for what is a very “habitual 

consumption” product (Figure 4–9). 

Competitive Assessment of Milk Industry’s Position 

Largely driven by its commodity status and its high degree of regulation, the fluid milk industry 

operates at a disadvantage to competitive beverages. 

In 2006, the competitive position improved on several fronts. While milk is the number three 

beverage in its competitive set, it continues to lose ground to key competitors, primarily bottled 

water, while carbonated soft drinks remain the dominant beverage of choice for Americans 

(Figure 4–2 in Part I). Fluid milk suffered in the market due to relative pricing, although 2006 

saw some improvement (Figure 4–10), a lack of brand marketing infrastructure, poor 

Figure 4–9 

Source: 2007 Marketing Mix Analytics Corporation Study 

210,000,000

220,000,000

230,000,000

240,000,000

10/24/0411/24/0412/24/04

1/24/052/24/053/24/054/24/055/24/056/24/057/24/058/24/059/24/05

10/24/0511/24/0512/24/05

1/24/062/24/063/24/064/24/065/24/066/24/067/24/068/24/069/24/06

5000000

10000000

15000000

20000000

Projected Base Volume Incremental Volume

Growth of Base during Modeled Time Period Incremental 

Volume 

(Gallons)

Base Volume 

(Gallons)
59

Figure 4–10 

Relative Pricing of Milk, Soft Drinks and "Food Basket CPI"

Figure 4–11 

Immediate Consumption vs. Take Home Distribution 

2006 

Source: Beverage Marketing Corp.; Information Resources, Inc.

54.2

45.2 51.8

28.5 28.5

19.8

45.8

54.8 48.2

71.5 71.5

80.1

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

129

126

112

80

90

100

110

120

130

140

150

Jan99

Apr

Jul

Oct

Jan00

Apr

Jul

Oct

Jan01

Apr

Jul

Oct

Jan02

Apr

Jul

Oct

Jan03

Apr

Jul

Oct

Jan04

Apr

Jul

Oct

Jan05

Apr

Jul

Oct

Jan06

Apr

Jul

Oct

 Price Index

Whole Milk

Food at Home

Carbonated Soft-drinks

Source: Bureau of Labor Statistics 
60

“out-of-home”/immediate consumption availability (Figure 4–11), and lower spending 

(Figure 4–6 in Part I). In this context, the need for the MilkPEP program remains as strong 

as or stronger than at its inception in 1995.

Success of Weight-Related Benefit Promotion 

A wide range of studies, more than 50 over the last 6 years, suggest that consuming the 

recommended three servings of low-fat and fat-free milk and dairy products as part of a 

balanced, reduced-calorie diet can be a healthy and effective way to lose weight. Promoting the 

weight-loss benefits of milk consumption represented over 72 percent of all program resources in 

2006 and was the primary program objective. The MilkPEP program successfully informed 

American women and they responded with positive changes in their consumption of milk. 

Among the key indicators of how this marketing communication program changed consumer 

behavior are: 

• Recall of the link between drinking milk and losing weight is at 71 percent (Figure 4–12). 

 

• “Trying to lose weight” is the number two reason women cited for “drinking more milk” 

 (Figure 4–13). 

• Additionally, based on MilkPEP’s MMA marketing mix analysis, the program’s three main 

marketing activities – public relations, television advertising to moms, and print advertising 

to moms – were focused almost exclusively on this message in 2006. These activities 

appear to have driven the highest levels of incremental volume at greatest efficiency. 

Figure 4–12 

68 68

75 78

70 71 71

59

68

41

70

60

48

72 70

59

36

56

71 73

62 62

0%

20%

40%

60%

80%

100%

Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06

Total Adult Females

Moms

Total Recall of Milk and Weight-Loss Link 

________

Q.4f1/4f4 Have you heard, read or seen anything about a connection between drinking milk and losing weight? 

Source: Data Development Worldwide, 12/06 report. 
61

Total Moms

Less More 

Q4 2006 

Q3 2006 

Q2 2006 

Q1 2006 

Q4 2005 

Q3 2005 

Q2 2005 

Q1 2005 

Q4 2004 

Q3 2004 

Q2 2004 

Q1 2004 

Q4 2003 

26%

26%

21%

26%

25%

36%

29%

21%

26%

25%

21%

13%

17%

6%

11%

11%

12%

13%

9%

9%

8%

11%

5%

11%

13%

15%

Reasons For Drinking More Milk

2005 2006 

Q4 Q1 Q2 Q3 Q4 

Among Those Drinking More (39)* (40)* (29)* (36*) (45)* 

 % % % % % 

Healthier For Me/Child 22 8 26 13 32 

Trying To Cut Back On Fats/Trying To 

Lose Weight 13 12 12 11 24 

Just Like It 16 15 3 12 14 

Pregnant/Nursing My Baby 3 7 6 4 12 

Good for bones 8 - 6 5 7 

Figure 4–13 

Question: “Do you feel that you are drinking more, less or the same amount of white milk as six months ago?” 

 

 

Results of the Teen Body by Milk SM Program 

In 2006, the new Body by MilkSM program targeting teens was launched. This program, that 

includes print advertising, online components and in-school marketing efforts, educates teens on 

the importance of choosing milk over less nutritious beverages to make them leaner and help 

build muscle. Research findings show that Body by MilkSM has successfully brought milk’s 

nutritional message to teens and generated sales growth, not only in schools but at retail as well. 

Impact on Claimed Consumption 

Source: Data Development Worldwide, 12/06 report. 
62

Based on MilkPEP’s MMA marketing mix analysis, Body By MilkSM marketing activities 

generated more than 14 million incremental gallons and $13.70 in retail revenue for every dollar 

spent in 2006. Additional key indicators of success include: 

• Milk sales (weekly servings per week per student) increased 1.9 percent in middle 

schools and 4.7 percent in Senior high schools from Spring to Fall 2006 (Figure 4–14). 

• “Healthier for me” is the top reason that teens cite for drinking more milk, and 26 percent 

of teens said they were drinking more vs. 6 percent drinking less in Q4 2006 (Figure 4–15). 

• Self-reported consumption of single-serve milk among teens is showing a long-term 

upward trend (Figure 4–16). 

• Students’ awareness of school posters is around 40 percent (Figure 4–17). 

• In just two quarters (Q3 and Q4), Body by MilkSM slogan recall was already at 19 percent. 

Summary Assessment of Program Effectiveness 

Overall, in this highly competitive beverage marketplace, the MilkPEP program in 2006 was 

effective in driving incremental volume and mitigating 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 by promoting a 

"healthy weight" benefit to teens with the new “Body by MilkSM” campaign in media, and in 

schools. 

Figure 4–14 

BBM School Sales Results

Weekly Milk

Servings per

Student

Cumulative

Growth

+0.4

+1.9

Senior +4.7

Middle

Elementary

1.109 1.162

2.253 2.297

3.883 3.899

Spring 

‘06

Fall ‘06

Source: Body By Milk Sales Impact Analysis, Prime Consulting 
63

Figure 4–15 

Figure 4–16 

Drinking More/Less White Milk Compared to Six 

Months Ago (Teens) 

________ 

Total Teens

Less More 

Q4 2006 

Q3 2006 

Q2 2006 

Q1 2006 

Q4 2005 

Q3 2005 

Q2 2005 

Q1 2005 

Q4 2004 

Q3 2004 

Q2 2004 

Q1 2004 

Q4 2003 

6%

7%

7%

10%

6%

8%

10%

9%

12%

18%

16%

18%

20%

26%

36%

30%

33%

29%

33%

31%

31%

31%

38%

35%

38%

20%

Reasons for Drinking More Milk 

2005 2006 

Q4 Q1 Q2 Q3 Q4 

Among Those Drinking More (88) (102) (97) (109) (89)* 

 % % % % % 

Healthier For Me 33 22 34 8 31 

Just Like It 15 7 14 6 19 

Trying To Cut Back On Fats/Trying To 

Lose Weight 3 10 7 6 13 

Like The Taste 5 11 7 11 8 

Trying To Become More Active/More 

Active In Sports 7 4 5 3 7 

21

25

52

41

19

26

34

22

12

25

31

26 24

16

38

25

47

41

27

45

31 34

28

24

45

25 28

42 45

19

30

48

0%

20%

40%

60%

80%

100%

Q4'02 Q1'03 Q2'03 Q3'03 Q4'03

(DDW)

Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06

Teen Girls

Teen Boys

Linear (Teen Boys)

________ Source: Data Development Worldwide 

Q16A. (TEENS ONLY) Have you purchased single serve milk in the past week? 

Consumption of Single Serve Milk Containers in Past Week 

Source: Data Development Worldwide, 12/06 report. 

“Do you feel that you are drinking more, less or the same amount of white milk as six months ago?" 
64

Figure 4–17 

The program remains a good example of how Congress can promote and support national health 

and nutrition goals, and the economic strength of a critical industry segment, by enabling an 

industry to fund the programs it needs to sustain itself, with no cost to the taxpayer. 

The short term RROI to the fluid milk industry, measured in terms of total retail sales ($6.61 for 

every dollar spent) remains highly favorable, although lower than in 2005. 

As in the past, the program has demonstrated its ability to change consumer behavior. The 

increase to base volume, as demonstrated by MMA, suggests that the weight loss benefit, tied to 

recent scientific and medical research, proved an effective message for the MilkPEP program in 

persuading moms to reconsider, and increase, their consumption of milk. 

The MilkPEP program continues to promote the 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 milk 

industry, to the benefit of the Nation’s health. 

________ Q4d. Have you seen any posters in your school featuring a milk mustache celebrity? 

Source: Data Development Worldwide ...

42%

39%

45% 44%

48%

44%

37% 37%

43%

47% 45%

37%

41%

41%

35%

43%

44%

47%

37%

38%

48% 48%

54%

47% 44%

40%

0%

20%

40%

60%

80%

100%

Q4'03

(DDW)

Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06

Teen Girls

Teen Boys

Aided Awareness of School Poster Program (Teens) 
65

Part III – National Dairy Promotion and Research Program: Highlights by 

Dairy Management Inc. 

Dairy Producer Promotion Program Drives Dairy Sales and Consumption 

In order to grow sales and dairy consumption, the National Dairy Promotion and Research 

Program (National Program) is focused on helping the dairy industry meet unmet demand, which 

is the gap between current sales and potential sales – the result of giving consumers the products 

they want, when and where they want them. To satisfy unmet demand, it becomes necessary to 

move from providing a production-driven program to a consumer-driven one that is based on 

research, co-investment partnerships, and meeting consumer preferences. 

The goal of the National Program is to leverage farmer-funded promotions to drive increased 

sales of and demand for U.S. dairy products and ingredients, domestically and internationally, 

and meet unmet demand. Since its inception in the early 1980s, the per capita consumption of 

dairy has climbed to 593 pounds in 2005 compared to 522 in 1983, according to the USDA. 

 

For dairy farmers to produce – and Americans to have available – safe, plentiful, and affordable 

dairy products and ingredients - it is critical that markets for dairy continue to expand, sales 

increase, and producers continue to invest in the National Program. 

This goal is accomplished through: 

 Dedicated teams that are funded and directed by dairy farmers who partner with dairy and 

food industry leaders and innovators on nutrition, research, and marketing efforts to drive 

sales. 

 Outreach programs to kids to reverse the long-term downward trend of fluid milk 

consumption with this age group – including innovative solutions, such as the adoption of 

single-serve plastic milk bottles in the Nation’s schools and national restaurant chains. 

 Discovering new uses for cheese, fluid milk, dairy proteins, and other ingredients and 

opportunities to serve the growing Hispanic market. 

In 2006, the National Program launched a number of efforts tied to meeting the billions of 

pounds of unmet demand that exists for dairy products. These efforts range from launching five 

strategic platform teams (fluid milk, cheese, Hispanic, ingredients and exports) that will examine 

specific growth opportunities in these areas; to developing strategic partnerships with 

manufacturers and food and beverage companies to launch new, and enhance existing, dairybased products; to creating a long-range nutrition plan aimed to educate consumers and health 

professionals about the need for three daily servings of dairy as part of a healthy diet. 

This past year, the National Program worked proactively and in partnership with leaders and 

innovators to increase and apply knowledge that leveraged opportunities to expand dairy 

markets. The Board’s Chief Executive Officer and other staff leaders participated 

in over 35 top-to-top industry meetings, gave keynote addresses at numerous cooperative and 

other industry meetings, and held several one-on-one conversations to help establish the National 
66

Program as a leader in identifying unmet demand opportunities to grow dairy sales. 

Additionally, the Global Dairy Platform (GDP) was created with the help of the National 

Program, which provides management services to GDP through DMI. GDP’s role is to direct 

the development and dissemination of research and information to protect and promote dairy’s 

image, worldwide. Finally, through partnerships with ingredient and food companies, the 

National Program has affected over $200 million of industry investment. This means that by 

working strategically with various food and ingredient companies, the industry invested over 

$200 million dollars on advertising, promotion and marketing to help drive dairy sales. For 

example, the National Program invested $500,000 with Burger King®, while Burger King®

invested tens of millions of dollars on advertising, featuring milk. The National Program 

invested $45,000 with Pizza Hut®, while Pizza Hut® invested tens of millions of dollars 

advertising Cheesy Bites Pizza. 

These efforts contributed to stronger fluid milk sales (Figure 4–18). Fluid milk sales in 2006 

were up, increasing 1.2 percent over 2005, climbing to 642 million incremental pounds, which 

represents the largest growth rate that fluid milk has encountered and the largest absolute volume 

increase in over two decades. 

Leveraging Dietary Guidelines for Three Servings of Dairy a Day 

The National Program developed a science-based nutrition road map reflective of the changing 

nutrition environment. The 2005 U.S. Dietary Guidelines for Americans recommendation of 

three servings of dairy a day was affirmed by Government agencies at all levels, supported by 

the health and nutrition community and leveraged by manufacturers and marketers to protect the 

business climate and promote increased demand and sales for dairy. The goal of the nutrition 

Figure 4–18 

2006: Strongest Growth 

in Fluid Milk Sales in 20 Years

Source: USDA; 2006 adjusted for calendar year

0.5%

-0.6%

0.8%1.0%

-0.2%

0.5%

-0.1%

-1.2%

0.6%

-0.2%

0.8%

-0.4%-0.5%

0.7%

-0.8%-0.9%

0.4%

-0.6%-0.5%

-0.2%

1.2%

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Fluid Milk Sales % Change versus Year Ago (represents fluid milk sold through all channels)

+1.2% Growth

= 642 MM LBS

Incremental
67

road map is to maintain and increase the substantial support and to encourage the industry to 

focus on how it can further leverage the nutritional attributes of dairy products as a way to drive 

sales. The program is focused on three areas: 

 Health Professional Organization Support: Through successful relationships with the 

four core health professional organizations (the American Dietetic Association, the 

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

National Medical Association), the National Program has developed visible and vocal 

calls to action to consume three servings of dairy a day for various health benefits/claims. 

 Food Groups to Encourage: In partnership with Action for Healthy Kids (AFHK), this 

effort positions dairy as a food to “get more of” as it provides the key “shortfall” nutrients 

to kids/adults by garnering support from public health and nutrition advocates to follow 

the U.S. Dietary Guidelines. 

 Nutrient Rich Foods: Using science, the National Program is developing a new 

foundation for food guidance based on the whole/intrinsic nutrient package of foods. 

Growing Fluid Milk Through School and Foodservice Channels 

Recapturing Milk as Kids’ “Beverage of Choice” 

Efforts to build lifelong dairy consumers start with children. Offering kids a different milk 

experience at school can influence them throughout their lifetimes. The National Program is 

making aggressive efforts to address the high percentage of children ages 9-19 who do not meet 

the recommended daily intake of three servings of dairy a day. School-aged children consumed 

120 million gallons less milk per year than 10 years ago and most of this volume was lost at 

school. Producer-funded research shows that children will drink milk if it’s offered in plastic 

bottles, in flavors, and at a colder temperature. 

To help identify and build opportunities in the school channel, the National Program utilized a 

School Account Development Process, which strategically targets the top school districts. 

Approximately 70 promotion program staff members are in place throughout the country and 

serve as “consultants” to school districts and their school nutrition directors, educating them 

about the nutritional and financial benefits of school milk programs. 

Through the New Look of School Milk (NLSM), the National Program is working to reverse the 

trend of low milk consumption and provide children with positive milk experiences day after 

day, year after year, creating lifelong dairy consumers. Today, more than 50 individual milk 

processors provide the new milk offerings to more than 6,000 schools, reaching more than 3.5 

million students with a nutritional product in more flavors and at colder temperatures. In 2006 

alone, the National Program worked with more than 3,000 schools to successfully convert them 

from paperboard cartons to milk in single-serve plastic bottles (Figure 4–19). 

The NLSM is based on the highly successful School Milk Pilot Test, funded through the 

National Program investment, which was conducted in 2002 by the National Dairy Council® and 

the School Nutrition Association. The NLSM program could result in approximately 55 million 

incremental pounds of milk according to projections made by the National Program. 
68

Figure 4–19 

 1

New Look of School Milk

Source: Reporting by schools

0 97

310

1,500

3,000

6,000

0 78

280

1,000

2,200

3,500

’01- ’02- ’03- ’04- ’05- ’06-

’02 ’03 ’04 ’05 ’06 ‘07

Schools Students (000)

’01- ’02- ’03- ’04- ’05- ’06-

’02 ’03 ’04 ’05 ’06 ‘07

The National Program staff is working proactively with schools in the education of how dairy 

producer-funded efforts and nutrition research may play a role in school wellness policies. 

These wellness policies help to ensure that children learn practical, lifelong lessons about the 

balance of good nutrition and physical activity. Each school district was required by law to have 

a Wellness Policy in place by July 2006. Because low-fat and fat-free dairy foods are one of 

three food groups that Americans are encouraged to consumer more, the inclusion of these foods 

in the school environment and school wellness policies will help drive better nutrition for 

children. In an informal Web-based survey at www.3aday.org among 4,000 moms, 92 percent 

said they are comfortable with their child drinking flavored milk at school. 

In addition, the National Program offers these programs that schools can use to fulfill their 

wellness policy needs: 

• Recharge! Energizing After-schoolTM, a partnership with AFHK, is geared for athlete and 

non-athlete students in grades 3-8. Launched in September 2005, this program reinforces 

the valuable life skills of healthy eating, physical activity, teamwork and goal-setting 

through hands-on activities. 

• Nutrition Expedition programs are standards-based, teacher-tested nutrition education for 

second- and fourth-grade students that include student activities, a teacher’s guide, and 

fun interactive games that are based on health, nutrition, and language arts curricula. 

• The Expanding Breakfast Program is an alternative breakfast service that helps students 

start their day with a nutritious breakfast. 
69

Milk Sales Soar in Foodservice 

In the Foodservice arena, the National Program has forged strong, innovative partnerships with 

fast-food restaurant giants such as Burger King®, McDonalds®, Wendy’s® and Sonic® Drive-Ins 

to test and serve milk in plastic single-serve containers as a viable beverage option for their 

customers. By partnering with national restaurant chains to make milk available in plastic 

bottles, the dairy checkoff program has helped increase milk sales by more than 200 million 

pounds of incremental milk sold in 2006, with more than 35,000 restaurants offering single-serve 

flavored milk (Figure 4–20). 

Through dairy checkoff, a combined $600,000 investment in test-marketing, merchandising, 

training, and public relations was made to support single-serve milk at Burger King® and Sonic®. 

As a result, both chains currently offer a more contemporary, kids-friendly package, better 

merchandised milk at colder temperatures and in different flavors as part of their package, better 

merchandised milk at colder temperatures and in different flavors as part of their kids/value meals 

– in a combined total of slightly more than 10,000 outlets, and the two chains have spent several 

million dollars in advertising and promotion efforts related to the availability of milk at these 

restaurants, according to store data. The chart below shows the continued strong growth of milk in 

foodservice, which has recorded year-over-year increases in servings ranging from 3-14 percent 

for each of the past 3 years. 

The companies who are committed to growing the business see that, at a minimum, the plastic 

and flavor conversion could add 1 billion pounds of consumption at school and foodservice 

annually if offered universally across the United States (based on foodservice, retail and school 

estimates from the National Program). Over time, this will impact long-term consumption if 

these generations remain milk drinkers as adults. 

Figure 4–20 

 

Continued Growth in Restaurant 

Fluid Milk Servings

+3%

+3%

2006

+0%

-4%

2003

+5%

+5%

2004

Total Foodservice +14%

- Quick Serve +18%

% Change in Milk 2005

Servings vs Year Ago

Source: NPD CREST
70

Satisfying Unmet Demand by Growing Cheese Through Innovation 

Overall cheese sales for the past 5 years at retail and foodservice have been relatively strong, 

according to Information Resources Inc. (IRI). The processed cheese category continues to 

struggle, yet natural cheeses continue to grow. In 2006, retail cheese sales increased 1.6 percent 

– up from 0.2 percent the prior year (Figure 4–21). In order to grow the overall cheese category, 

the National Program is working with industry leaders to drive innovation at retail and other 

venues. Working with manufacturers to look at new ways to offer low-fat cheese for the weightconscious consumer and offer these cheeses in portable packages for the person on-the-go are 

just two examples of the work being done in the cheese arena. 

In Foodservice, cheese-friendly menu items continue to drive sales. The National Program 

works closely with manufacturers, retailers and foodservice chains to create new menu items. 

For example, in 2006, the National Program partnered with several of the leading quick-serve 

restaurant chains to offer innovative new pizzas and cheeseburgers that not only make cheese the 

focal point, but that showcase new cheese varieties as well. As a result of these menu 

development efforts, Pizza Hut® introduced Cheesy Bites pizza, a concept that features string 

cheese baked into the pizza crust. Wendy’s® launched a dual Double Melt sandwich concept – 

cheeseburgers that use Cheddar and Jalapeno Cheddar cheeses. Burger King® introduced 

Cheesy Angus Bacon cheeseburger and its signature, Tendercrisp chicken sandwich. Both 

featured two slices of American cheese, a slice of Pepper Jack and a cheesy sauce. Dairy 

checkoff assisted in bringing these cheese-friendly concepts to market in 2006. These efforts 

channel-wide contributed to an overall incremental cheese sales growth of nearly 30 million 

pounds – a 5 percent increase over the prior year. 

Figure 4–21 

Retail Cheese Sales Percent 

Change Vs Prior Year

7.1%

3.7%

0.2%

1.6%

2003 2004 2005 2006

Source: IRI Scanner Data: Grocery, Drug Mass Including Wal-Mart
71

Satisfying Unmet Demand Through Ingredients and Exports 

Another area with high growth potential is the use of dairy ingredients, such as milk protein 

concentrate, nonfat dry milk, and whey. The National Program is working with exporters and 

manufacturers to provide solutions for increased consumption of dairy products through 

innovative application of dairy ingredients. According to the National Panel Dairy, ingredients 

allow dairy to be part of an additional 82.3 percent of total eating occasions (Figure 4–22). 

Customizing whey proteins for unique applications and targeting market segments with growth 

such as beverages, yogurt, and sports/nutrition products was a successful strategy in 2006. The 

introduction of a new whey protein energy and health bar using whey protein concentrate could 

result in use of an additional 50,000–100,000 pounds of whey protein, according to manufacturer 

projections. 

The National Program’s work with manufacturers on other dairy ingredients has created a similar 

effect. By leveraging scientific research and expertise, a major weight-loss drink has been 

reformulated with more real skim milk which has an estimated impact of 34 to 68 million pounds 

of milk used annually, according to manufacturer projections. Another flavored dairy-based 

drink was introduced to the market based on the National Program providing technical education, 

lab support, regulatory and supplier insights to the beverage manufacturer which could result in 

4.3 million incremental pounds of milk used annually according to manufacturer projections. 

Overall, the promise of dairy ingredients continues to be strong as manufacturers leverage the 

science and information that supports the reformulation and development of new snack foods, 

nutritional beverages and new food and drink products. 

Figure 4–22 

 4

The Promise of Ingredients

Core Dairy

8.7%

Other Food and 

Beverage 

Categories

82.3%

Dairy in ingredient

and commercial use

9.0%

Source: NPD 2003

Share of Stomach

Growing Dairy Ingredient 

usage to 10-15% of other 

food categories represents 

sales volume that rivals 

today’s dairy category 

sales.
72

Exports continue to provide profitable outlets for U.S. dairy production. In 2006, U.S. dairy 

exports were valued at $1.89 billion, up 13 percent from the prior year (Figure 4–23). The 

success of 2006 continues a strong 3-year growth trend – since 2003, total U.S. dairy exports are 

up 77 percent in value. In addition, 98 percent of U.S. dairy exports in 2006 were commercial 

sales (unassisted). 

Conclusion 

The National Program’s many accomplishments paved the road to increased dairy consumption. 

Successful outreach programs such as the development of nutrition and science research, the 

NLSM, single-serve milk at food service, and new uses of dairy as an ingredient were possible 

because of strong dedication by the producer-funded National Program. 

The best way to understand the potential opportunities is to acknowledge that the growth of dairy 

in traditional forms – white milk in gallons, American-style and mozzarella cheese sold 

domestically – will increase, but not at historic levels. Therefore, focusing on production-driven 

demand, as in the past, is not the way to drive growth. 

To increase dairy sales, there is a need to focus on the huge amount of unmet consumer-driven 

demand. Consumer-driven demand is characterized by products not currently offered but that 

consumers want. The key to continued growth will be milk in single-serve plastic containers, 

innovation in cheese products and innovative uses for cheese, expanding exports, and enhancing 

the value of dairy ingredients. 

Figure 4–23 

 

1

Record-High Value
73

Appendix A–1

National Dairy Promotion and Research Board 

Current Member Listing 

Region 1 (Oregon and Washington) 

Elizabeth L. (Liz) Anderson Marlin J. Rasmussen 

Onalaska, Washington St. Paul, Oregon 

Term expires 10/31/2009 Term expires 10/31/2007 

________________________________________________________________________

Region 2 (California) 

Mary E. Cameron Kimberly K. Clauss 

Hanford, California Hilmar, California 

Term expires 10/31/2009 Term expires 10/31/2009 

Deborah Dykstra Margaret A. Gambonini 

Caruthas, California Petaluma, California 

Term expires 10/31/2007 Term expires 10/31/2007 

Ronald L. Koetsier Harvey S. Moranda 

Visalia, California Orland, California 

Term expires 10/31/2007 Term expires 10/31/2007 

 (One Vacant Position)

Term expires 10/31/2008 

________________________________________________________________________

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 10/31/2007 

William C. Stouder 

Wendell, Idaho 

Term expires 10/31/2009 

APPENDIX A
74 

Appendix A–1, continued

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 10/31/2007 

Lawrence A. Hancock 

Muleshoe, Texas 

Term expires 10/31/2009 

________________________________________________________________________ 

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) 

Carl F. Van Den Avond Rosalie M. Geiger 

Green Bay, Wisconsin Reedsville, Wisconsin 

Term expires 10/31/2008 Term expires 10/31/2007 

Peter J. Kappelman Bradford A. McCauley 

Two Rivers, Wisconsin Viola, Wisconsin 

Term expires 10/31/2009 Term expires 10/31/2008 

Randy G. Roecker 

Loganville, Wisconsin 

Term expires 10/31/2009 

________________________________________________________________________ 

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 

 
75

Appendix A–1, continued

Region 8 (Alabama, Kentucky, Louisiana, Mississippi, and Tennessee) 

Michael M. Ferguson 

Coldwater, 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 10/31/2007 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 10/31/2007 

________________________________________________________________________

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 V. Meabon 

Wattsburg, Pennsylvania 

Term expires 10/31/2007 

________________________________________________________________________

Region 12 (New York) 

David E. Hardie Ronald R. McCormick 

Lansing, NewYork Java Center, New York 

Term expires 10/31/2007 Term expires 10/31/2008 

APPENDIX A
76 

Appendix A–1, continued

Region 12 (New York) 

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 
77

Appendix A–2

National Fluid Milk Processor Promotion Board 

Current Member Listing

Region 1 (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont) 

Michael Francis Touhey, Jr. 

Dean Foods Company 

Franklin, Massachusetts 

Term expires 06/30/2010 

_____________________________________________________________________________

Region 2 (New Jersey and New York) 

Joseph Cervantes 

Crowley Foods, L.L.C. 

Binghamton, New York 

Term expires 06/30/2008 

______________________________________________________________________________

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) 

James S. Jaskiewicz 

Publix Super Markets, Inc. 

Lakeland, Florida 

Term expires 06/30/2008 

APPENDIX A
78 

Appendix A–2, continued 

Region 6 (Ohio and West Virginia) 

William R. McCabe 

Smith Dairy Products Company 

Orrville, Ohio 

Term expires 06/30/2009 

______________________________________________________________________________ 

Region 7 (Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin) 

James B. Green 

Kemps, 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 06/30/2008 

____________________________________________________________________________ 

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 
79

Appendix A–2, continued 

Region 11 (Arkansas, Iowa, Kansas, Missouri, Nebraska, and Oklahoma) 

Gary L. Aggus 

Hiland Dairy Foods Company, L.L.C. 

Springfield, Missouri 

Term expires 06/30/2008 

______________________________________________________________________________

Region 12 (Arizona, Colorado, Nevada, New Mexico, and Utah) 

Vacant

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 

______________________________________________________________________________

Region 14 (Northern California) 

Jay B. Simon 

Super Store Industries 

Stockton, California 

Term expires 06/30/2008 

______________________________________________________________________________

Region 15 (Southern California) 

Paul W. Bikowitz 

Heartland Farms 

City of Industry, California 

Term expires 06/30/2009 

APPENDIX A
80 

Appendix A–2, continued 

Members-At-Large 

Lisa M. Hillenbrand Susan D. Meadows 

Public Member Dean Foods Company 

Geneva, Switzerland Dallas, Texas 

Term expires 06/30/2009 Term expires 06/30/2009 

Randy Dean Mooney Michael A. Krueger 

Hiland Dairy Foods Company, L.L.C. Shamrock Foods Company 

Springfield, Missouri Phoenix, Arizona 

Term expires 06/30/2010 Term expires 06/30/2008 

Teresa E. Webb 

Farmland Dairies, L.L.C. 

Wallington, New Jersey 

Term expires 06/30/2010 
81

Appendix B–1

National Dairy Promotion and Research Board 

Actual Income and Expenses 

 (Thousands)

 2005 2006 

Income

Assessments $88,621 90,320 

Interest 201 965

Total Income $88,882 $91,285 

General Expenditures 

General and Administrative $3,627 $3,759 

USDA Oversight 588 757

Total General Expenditures $4,215 $4,516 

Program Expenditures 

Communications and Member Relations $11,005 $15,474 

Domestic Marketing 55,901 40,143 

Export Enhancement 5,443 5,199 

Disbursement for NAEMS Study - 6,000 

 Investment in NAEMS Study - (5,833) 

Hurricane Fund 500 - 

Planning and Research 2,386 3,078

Total Program Expenditures $75,235 $64,061 

Excess of Revenue (Under) Over Expenditures $9,432 $22,708 

Fund Balance, Beginning of Year $5,889 $15,321 

Fund Balance, End of Year $15,321 $38,029 

Source: Independent Auditor’s Report of the National Dairy Board and USDA records. 

APPENDIX B
82 

Appendix B–2 

USDA Oversight Costs for the 

National Dairy Promotion and Research Board 

 (Thousands) 

 2005 2006 

Salaries and Benefits $319,403 $382,865 

Travel 36,405 46,394 

Miscellaneous1 55,202 51,688 

Equipment 1,651 5,131 

Printing 4,744 5,269 

USDA Oversight Total $417,405 $491,347 

Independent Evaluation $92,888 $95,154 

Total2 $510,293 $586,528 

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.
83

Appendix B–3

National Dairy Promotion and Research Board 

Approved Budgets 

 (Thousands) 

2006 2007 

Revenues

Assessments $86,600 $91,400 

Program Development Fund Draw 5,900 7,447 

Carryover from Prior Year - 15,182 

Interest 100 360

Total Income $92,600 $114,389 

Expenses

General and Administrative $3,853 $3,874 

Amortization of NAEMS Study - 2,000 

USDA Oversight 600 700

Subtotal $4,453 $6,574 

Program Budget 

Communications and Member Relations $13,472 $25,633 

Domestic Marketing 41,779 49,381 

Air Emissions Research 6,000 - 

Export Enhancement 4,890 6,335 

Research and Evaluation 3,256 3,631 

Business Plan Development Fund 13,050 17,200 

Emerging Opportunities 5,700 5,635

Subtotal $88,147 $107,815 

Total Budget $92,600 $114,389 

Source: Budgets from the National Dairy Board received and approved by USDA. 

APPENDIX B
84 

Appendix B–4 

National Fluid Milk Processor Promotion Board 

Actual Income and Expenses 

 (Thousands) 

 2005 2006 

Income 

Assessments $107,061 $107,850 

Late-Payment Charges 99 91 

Interest 276 990 

Other 510 1 

Total Income $107,946 108,932 

General Expenditures 

California Refund $10,199 $10,308 

Administrative 2,001 2,140 

USDA Oversight 256 508 

USDA Assessment Verification 95 107

Total General Expenditures $12,551 $13,063 

Program Expenditures 

Media $59,949 66,335 

Public Relations 9,979 11,566 

Promotions 9,425 10,372 

Strategic Thinking 2,092 1,303 

Medical Advisory Panel 210 271 

American Heart Association 16 120 

Medical Research - 71 

Research, Local Markets, and Program Measurement 1,711 1,991 

Program Management 145 -

Total Program Expenditures $83,527 $92,029 

Excess of Revenue (Under) Over Expenditures $11,867 $3,840 

Fund Balance, Beginning of Year $12,560 $24,427 

Fund Balance, End of Year $24,427 $28,268 

Source: Independent Auditor’s Report of the Fluid Milk Board and USDA Records 
85

Appendix B–5

USDA Oversight Costs for the 

National Fluid Milk Processor Promotion Board 

 (Thousands) 

 2005 2006 

Salaries and Benefits $312,353 $340,185 

Travel 19,648 24,441 

Miscellaneous1

 48,705 49,737 

Equipment 1,651 3,164 

Printing 5,913 2,306

USDA Oversight Total $388,270 $419,833 

Independent Evaluation $30,963 $31,718 

Total2 $419,233 $451,551 

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. 

APPENDIX B
86 

Appendix B–6 

National Fluid Milk Processor Promotion Board 

Approved Budgets 

 (Thousands) 

2006 2007 

Revenues 

Assessments $106,600 106,000 

Interest - -

Total Income $106,600 $106,600 

Reserve Fund - - 

Carryover from Previous Fiscal Year $5,535 $1,040

Total Available Funds $112,135 $107,640

Expenses 

General and Administrative $2,213 $2,214 

USDA Oversight 380 380 

Independent Evaluation -1 -

1

Processor Compliance -2 -

2

California Refund 10,300 10,200

Subtotal $12,893 $12,894 

Program Budget 

Advertising $69,010 66,166 

Public Relations 11,810 10,893 

Promotions 11,570 10,650 

Strategic Thinking 2,305 1,700 

Medical Advisory Panel 330 200 

Research 2,095 1,600 

Medical Research 205 200 

Program Management - 2,637 

Program Measurement 215 200 

Subtotal $97,540 $94,246 

Unallocated 1,702 -

Total Budget $112,135 $107,040

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.
87

Appendix B–7

Aggregate Income and Expenditure Data Reported to USDA 

by the 57 Active Qualified Programs 

(Thousands)

 2005 2006

Income

Carryover from Previous Years 47,9471 53,8101

Producer Remittances 187,457 181,262 

Transfers from Other Qualified Programs2 55,439 55,818 

Transfers to Other Qualified Programs2 í67,222 í52,009

Other3 3,657 7,941

Total Adjusted Annual Income 227,278 246,822 

Expenditures

General and Administrative 7,919 8,056 

Advertising and Sales Promotion 75,799 72,403 

Unified Marketing Plan4 50,124 63,534 

Dairy Foods and Nutrition Research 4,091 5,122 

Public and Industry Communications 14,958 14,019 

Nutrition Education 16,590 15,130 

Market and Economic Research 1,872 2,641 

Other5 2,081 1,538

Total Annual Expenditures 173,434 182,443 

Total Available for Future Year Programs 53,8441 64,379 

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 and contributions to universities and other organizations.

Source: Aggregate income and expenditure data reported by the 57 active Qualified Programs. 

APPENDIX B
88 

Appendix B–8 

Aggregate Advertising Expenditure Data Reported to USDA 

by the 57 Active Qualified Programs 

(Thousands) 

 2005 2006

 

Advertising Programs

Fluid Milk 16,100 [21.2%] 12,658 [17.5%] 

Cheese 48,170 [63.6%] 46,343 [64.0%] 

Butter 2,835 [3.7%] 2,717 [3.7%] 

Frozen Dairy Products 71 [0.1%] 411 [0.6%] 

Other1 8,623 [11.4%] 10,274 [14.2%] 

Total 75,799 [100%] 72,403 [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 57 active Qualified Programs. 

 
APPENDIX C

APPENDIX C
C-l

National Dairy Promotion and Research Board

Balance Sheets

December 31

2006 2005

Assets

Cash and cash equivalents

Assessments receivable, net of allowance for doubtful

accounts of $300,000 in 2006 and 2005

Accrued interest receivable

Investment in NAEMS study, net of accumulated

amortization of $166,667 in 2006

Fixed assets, net of accumulated depreciation of

$161,889 and $139,026 in 2006 and 2005, respectively

Total assets

$ 25,577,570 $ 11,596,487

8,553,930

47,400

8,813,977

984

5,833,333

32,152 46,740

$ 40,044,385 $ 20,458,188

Liabilties and net assets

Liabilities:

Due to related part -DMI

Accounts payable

Accrued expenses and other liabilities

Total liabilities

$ 1,690,607

250,232

137,217

2,078,056

$ 4,776,017

162,787

260,096

5,198,900

Net assets - unrestricted

Total liabilities and net assets

37,966,329 15,259,288

$ 40,044,385 $ 20,458,188

See accompanying notes.

92

0701-0799152 2
APPENDIX C
C-l

National Dairy Promotion and Research Board

Statements of Cash Flows

Year Ended December 31

2006 2005

Operating activities

Change in net assets

Adjustments to reconcile increase in net assets to

net cash provided by operating activities:

Amortization ofNAEMS study

Depreciation

Changes in assets and liabilities:

Assessments receivable

Accrued interest receivable

Accounts payable

Accrued expenses and other liabilities

Net cash provided by operating activities

$ 22,707,041 $ 9,369,836

166,667

22,863

260,047

(46,416)

(2,997,965)

(122,879)

19,989,358

Investing activities

Investment in NAEMS study

Purchases of fixed assets

Cash used in investing activities

(6,000,000)

(8,275)

(6,008,275)

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

12,296

(1,225,501)

(800)

(1,181,498)

125,759

7,100,092

(47,850)

(47,850)

13,981,083 7,052,242

11,596,487 4,544,245

$ 25,577,570 $ 11,596,487

See accompanying notes.

94

0701-0799152 4
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128

[This page is intentionally blank.] 
129

Appendix D-1 

National Dairy Promotion and Research Board

and Dairy Management Inc.

Contracts Reviewed by USDA, 2006

Advertising and Marketing Services

American Academy of Pediatrics–Sponsorship; 3-A-DayTM of Dairy Activities 

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 Worldwide Communications Group–Media Planning Services; 3–A–DayTM of Dairy

 Creative Advertising

Dairy Farmers, Inc.–Professional Services

Flair Communications Agency–Marketing and Program Management Services 

Global Dairy Platform–Management Services

Initiative Media Worldwide–Advertising Commissions Review 

J. Brown and Associates–DMI Cheese Co-Marketing Program

Media Management Services–School Marketing Program Support 

Media Vest Worldwide–3-A-DayTM Advertising Services

Midwest Dairy Association–National Retail Account Services; Chicago School Marketing 

NFL Properties, LLC–Promotional Activities; Logo Usage Rights 

National School Board Association–Marketing Partnership; Conference Exhibits 

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 

Richter Bros., Inc.–2006 www.Dairyfarming.org Strategy 

RTC–Dairy Aisle Reinvention 

School Foodservice and Nutrition–Nutrition Magazine Inserts 

Shook Kelley–Cheese Case Design 

Siboney USA–3-A-DayTM Hispanic 

Slack Barshinger and Partners–Integrated Marketing Communications 

Stagnito Communications–LISN Awards Program

Team Services, LLC–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

APPENDIX D
130

Appendix D-1, continued 

Public Relations and Nutrition Education

Action for Healthy Kids, Inc.–Sponsorship

Child Nutrition Foundation–School Foodservice Program Activities 

Cleveland Dovington Partners, Inc.–Information Technology Services and Consulting; Web 

 site development (Intranet) www.TeamDairy.com; www.3aday.org Web site activities

Dairy Farmers, Inc.–Communication Activities

Destination Imagination, Inc.–Destination Imagination Sponsorship 

Edelman Public Relations Worldwide–DMI Health Professional Public Relations Program; 

 Dairy Spokesperson Network, Nutrition Communications Program; Dairy Image Media 

 Relations; 3-A-Day Public Relations-Retail/Foodservice; DMI Dairy Image Program 

Fleishman Hillard–Reputation Management Program 

Food, Research, and Action Center–Food Breakfast Expansion 

The Fratelli Group–Dairy Image Protection 

Health and Nutrition Network–Media Training and Consulting Services 

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 

Media Management Services–Pyramid Café/Pyramid Explorations Newsletter 

National Cattleman’s Beef Association–Naturally Nutrient Rich Score Project 

National Dairy Shrine–Dairy Scholarship Program 

Nutrition Impact LLC–Nutrient Density Index

Osborn and Barr–Communications; Industry Relations Consulting Project

Results Direct–DMI Website Activities 

Weber Shandwick, Inc.–Issues Monitoring and Response; Crisis Communications Program 

Export

 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 

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 

Contacts International Consulting, Ltd.–South American Market Representation and Program 

 Activities 

Data Development Worldwide–Evaluation Study 

GVI Productions–Development and Production of Promotional Video 
131

Appendix D-1, continued

Export, continued

Garrison Group, LLC–Consulting, Editorial, and Promotional Services 

Global Trade Information Services–Purchase of World Trade Atlas

Grassland Media–Production of Deli Training Video 

International Dairy Foods Association–Export Manual Updates 

International Trade Services–International Manuals Updates 

IntNet–Korean Market Representation and Program Activities 

JDG Consulting–USDEC Domestic Communications Plan 

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 

Levitt Communication–International Consulting Services 

Market Makers–Japanese Market Representative and Program Activities 

Mistral Group, Ltd.–European Market Representation and Program Activities 

National Milk Producers Federation–Global and Domestic Research Activities; Farm to 

 Consumer Program Activities 

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–Study Dairy Products in Russia

Results Direct–USDEC Web site Activities www.usdec.org

Schonrock Consulting–Export Guide Analysis

Stanton, Emms, and Sia–Asian Market Study-Consumer Packaged Dry Formulas 

Story Consulting–Consulting Services

TCE Consulting Group–Food and Nutrition Conference Activities, Tunis

Uniflex Marketing–Japanese Market Representation and Program Activities; Japanese Dry 

 Ingredients Program

Market and Economic Research

Academic Network–Food Guide Pyramid Strategic Counseling 

ARS Group–Print Advertising Evaluation 

BBDO–Pizza Qualitative Research

Beverage Marketing Corporation of New York–Evaluation of the Effectiveness of Generic 

 Milk Programs; U.S. Shelf Stable Study; DSD Services-Yogurt 

Borden’s Dairy–Milk in Single-Serve Plastic Containers for Schools 

Burelle’s Newsclip Analysis Service–Media Monitoring and Analysis 

CFE Solutions, Inc.–Consulting Services 

C & R Research–Educational Materials Research Evaluation

APPENDIX D
132

Appendix D-1, continued 

Market and Economic Research, continued

CY Research, Inc.–Milk and Cheese Creative Testing; Dairy Weight Loss Research Awareness 

Caxy Consulting–Evaluation of DMI Web Sites 

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

Doyle Research Associates–Web Site Usability Qualitative Research; Business to Business 

 Qualitative Research; Chocolate/White Milk Qualitative Research 

Environ–Flavored Milk Research Project 

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 

KRC Research–3-A-DayTM Tracking Survey 

MSW–3-A-DayTM/Osteoporosis Test; Advertising Focus Group Analysis; 3-A-DayTM Bone Health 

 Test 

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–Reduced-Calorie Flavored Milk Study 

Mintel International Group–New Products Database and Market Intelligence Reports

National Medical Association–Role of Dairy in the African American Diet 

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–Whey Protein Survey; Organic Milk Survey; Milk Allergen Labeling Study; 

 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 

Pravail!–Hispanic Consumer Research
133

Appendix D-1, continued 

Market and Economic Research, continued

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 

QFacts Marketing Research–Cheese Shreds Test

RSC-The Quality Measurement Co.–3-A-DayTM Testing Activities

Results Direct–Database Development; Multi-Lingual Activity Support 

Shainwright Consulting–Consulting and Research Services 

Smith Dairy Products–Milk in Single-Serve Plastic Containers for Schools

Southern Foods–Milk in Single-Serve Plastic Containers for Schools

Spectra Marketing Systems–Marketing Research Activities 

Summit Research, Inc.–Milk Pilot Satisfaction Survey 

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; Value-Added

 Cheese Study 

Trion Group LP–Value-Added Milk; Consulting Services

Turover Straus Group–Strategic Blueprint Development; Concept Development: Dairy-Based 

 Salad Dressing and Spreads

Upshot Corporation–Sales Force Outreach and Data Delivery System

Upstate Farms Cooperative–School Milk Research Activities 

Video Monitoring Services–Broadcast Monitoring 

Wirthlin Worldwide–Producer Communications Survey; Pyramid Education Program Research 

APPENDIX D
134

Appendix D-2 

National Fluid Milk Processor Promotion Board 

and International Dairy Foods Association 

Contracts Reviewed by USDA, 2006

Medical Advisory Board

Christine Economos, Ph. D.–Medical Advisory Board Member Services 

Steve Abrams, M.D.-Baylor College of Medicine–Medical Advisory Board Member Services 

Advertising, Promotion, and Public Relations

CMGRP, Inc., d.b.a. Weber Shandwick–Public Relations Services and Website Activities 

American Dietetic Association–Body by Milk and Think About Your Drink Campaigns

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

Beverage Marketing Corporation–Consulting/Competitive Strategy Development 

C&R Research Services–Market Research 

Data Development Corporation–Market Research

Environ International Corporation–Research Analysis 

Harris Interactive–Market Research 

Information Resources, Inc.–Market Analysis

Marketing Management Analytics–Marketing Mix Analysis 

Outloud–Marketing Communications/Strategic Planning 

Phoenix Cultural Access Group-Hispanic Market Research 

P.O.V. Marketing–Consulting Services; Temporary Staff Support

Prime Consulting Group–Consulting Services, Survey Analyses; and Strategic Planning 

RealMediaValue Company–Media Evaluation Services 

Scherer Cybrarian Services–Temporary Staff Support 

Teenage Research Unlimited–Qualitative Teenage Market Research/Focus Groups 

Willard Bishop–Consulting Services 

Widener-Burrows–Analyses of Media Advertising 

Other Agreements

Inland Printing–Customer Service Activities

Snyder, Cohn, Collyer, Hamilton & Associates, P.C.–Audit Services 
135

Appendix E-1 

Nutrition and Health Research Institute

and Dairy Foods Research Centers, 2006

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. 

Minnesota/South Dakota Dairy Food Research Center

(University of Minnesota–St. Paul 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–Corvalis, 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. 

APPENDIX E
136

Appendix E-2 

Dairy Foods Competitive Research Activities, 2006

Principal Investigator, Institution, and Project Title

Joseph E. Marcy, Ph.D. (Virginia Polytechnic Institute): Ensuring Stability of Natamycin on 

Shredded Cheese to Prevent Mold Growth [completed in 2006] 

NIZO Food Research (Private Company): Milk Protein Concentrate Functional Study [began 

in 2006] and Permeate Funtionality and Utilization [completed in 2006] 

Shan-Tian Yang (Ohio State University Research Foundation): Production of GalactoOligosaccharides from Whey Lactose [began in 2006] 
137

Appendix E-3 

Nutrition Competitive Research Activities, 2006

Principal Investigator, Institution, and Project Title

David J. Baer, Ph.D. (USDA-Agricultural Research Service): Effects of Trans-Fatty Acids from

Ruminant Sources on Risk Factor for Cardiovascular Disease [began in 2006] 

Leann L. Birch, Ph.D. (Pennsylvania State University): Parental Influence on Girls’ Calcium

Intake and Bone Mineral Content and Weight Status–Phase III [began in 2006] 

Michael D. Brot, Ph.D. (MDS Pharma Services): The Effectiveness of Dairy-Based High 

Calcium Diets in Accelerating Weight and Fat Loss Secondary to Energy Restriction in a 

Transgenic Mouse Model of Obesity [terminated in 2006] 

Joseph Donnelly, Ph.D. (University of Kansas Center for Research, Inc.): The Effects of Dairy 

Intake on Weight Maintenance and Metabolic Profile [continued in 2006]; Substrate Oxidation 

in Children in Response to Exercise with High and Low Intake [completed in 2006] 

Michael Holick, Ph.D., M.D. (Boston University School of Medicine): The Effect of Dietary 

Calcium and Vitamin D on Prostate Cancer [began in 2006] 

Michael Huncharek, Ph.D. (Meta-Analysis Research Group and Marshfield Clinic): Effects of 

Dairy Products on Total Dietary Calcium Intake on Bone Health in Children and Young Adults: 

A Meta-Analytic Evaluation of Existing Scientific Data [completed in 2006]; Impact of Dairy 

Foods and Dairy Associated Nutrients on Risk of Colorectal Cancer [began in 2006]; and Impact 

of Dairy Foods and Dairy Associated Nutrients on Risk of Prostate Cancer [began in 2006] 

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 2006] 

Donald K. Layman, Ph.D. (University of Illinois): Meal Responses to Whey Proteins Enhance 

Adult Health [began in 2006] 

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 2006] 

Edward Melanson, Ph.D. (University of Colorado): Effects of High and Low Calcium Diets on 

Fat Metabolism During and After Exercise [completed in 2006] 

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 [continued in 2006]; Dairy Intake: Its 

Determinants and Relation to a Healthy Diet [continued in 2006]; Dietary Intake Patterns and 

APPENDIX E
138

 Appendix E-3, continued

Metabolic Syndrome Among Children and Adolescents [completed in 2006]; Effects of Early 

Dairy Intake on Adolescent Bone Density and Content [began in 2006]; and The Effects of Dairy 

Intake in Girls Over Ten Years Old [began in 2006] 

Ratna Mukherjea, Ph.D. (Children’s Hospital Oakland Research Institute): Effect of Moderate 

Dairy Intake on Insulin Resistance, Glucose Tolerance, and Body Fat in Overweight Young 

Adolescent Girls [terminated in 2006] 

Mary Murphy, M.S., R.D. (ENVIRON): Flavored Milk Study [began in 2006] 

Theresa Nicklas, Ph.D. (Baylor College of Medicine): Dietary Calcium Intake and Dairy 

Product Consumption by Minority Mothers [began in 2006] 

Stuart Phillips, Ph.D. (McMaster University): Impact of Whey, Casein, and Soy 

Supplementation on Human Muscle Protein Turnover after Resistance Training [continued in 

2006]; Whey Protein Beverage Study Supporting Muscle Protein Synthesis [completed in 2006] 

Victor Shen, Ph.D. (MDS Pharma Services): The Effect of Calcium, Milk Mineral, and Nonfat 

Dry Milk on Bone Quality and Strength in Estrogen Deficient Rats [completed in 2006] 

Debra Sullivan, Ph.D. (University of Kansas Medical Center): Synergistic Effect of Dairy 

Foods on Metabolism–A Mechanistic Study [completed in 2006] 

Dorothy Teegarden, Ph.D. (Purdue University): Effect of Calcium Education Intervention on 

Body Fat Mass in Adolescents [completed in 2006] 

Martha 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 2006] 

Connie Weaver, Ph.D. (Purdue University): Dairy versus Calcium Carbonate in Promoting and 

Retaining Peak Bone Mass [completed in 2006]; Calcium, Dairy, and Body Fat in Adolescents 

[continued in 2006] 

Robert Wolfe, Ph.D. (University of Texas Medical Branch): Dose-Dependent Effects of Whey 

Protein on Muscle Protein Synthesis [completed in 2006] 

Michael B. Zemel, Ph.D. (University of Tennessee Research Foundation): Role of Dairy 

Components in Weight Control and Fat Loss [completed in 2006]; Role of Dairy Products in 

Weight Maintenance: Prevention of Weight Regain Following Weight Loss [completed in 

2006]; Dietary Calcium and Dairy Modulation of Oxidative and Inflammatory Stress in Mice 

[began in 2006]; and Dietary Modulation of Oxidative and Inflammatory Stress in Overweight 

and Obese Subject [began in 2006] 
139

Appendix F 

Qualified State or Regional Dairy Product Promotion, 

Research, or Nutrition Education Programs, 2006 

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 Mississippi 

5340 West Fayetteville Road 

Atlanta, GA 30349–5416

American Dairy Association of Michigan 

2163 Jolly Road 

Okemos, MI 48864 

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
140

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 

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 

Minnesota Dairy Research and Promotion 

 Council

2015 Rice Street 

St. Paul, MN 55113 
141

Appendix F, continued 

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 Dept. of Agriculture 

2301 North Cameron Street 

Harrisburg, Pennsylvania 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

Vermont Dairy Promotion Council 

116 State Street, Drawer 20 

Montpelier, VT 05620–2901

United Dairymen of Arizona 

2008 S. Hardy Drive 

Tempe, AZ 85282 

APPENDIX F
142

Appendix F, continued 

Utah Dairy Commission 

1213 East 2100 South 

Salt Lake City, UT 84106 

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
143

Appendix G-1 

National Dairy Promotion and Research Board

3-A-Day of DairyTM and New Look of School Milk Advertising 

Target Audience: Moms, Teens, and Kids 

Source: Dairy Management Inc. 

3-A-DayTM Superbowl 

 

3-A-Day TM Osteoporosis 

Consumer Advertorial

 

 3-A-DayTM Best 

 Measure 

3-A-DayTM Osteoporosis 

Physicians Advertorial 

 

 3-A-DayTM Logo 3-A-DayTM 

 Osteoporosis 

 Dieticians Advertorial

NLSM Wellness Full 

 

 NLSM Wellness 

 Horizontal 1/2 

 

 NLSM Wellness 

 Vertical 1/2 
144

Appendix G-1, continued

School Marketing and Multi-Program Advertising 

Target Audience: Elementary and Secondary Faculty/School Administrators 

Source: DMI/National Dairy Council 

NLSM Marketing 1 

 

 NLSM Advertorial 

 

 NLSM Marketing 2 

 NLSM Marketing 3

 

 

 NLSM Logo 

 NLSM Marketing 4 

 

NLSM Multi-Program Full 

 

 NLSM Multi-Program 

 Horizontal 1/2 

 

 NLSM Multi-Program 

 Vertical 1/2 
145

Appendix G-2 

National Fluid Milk Processor Promotion Board 

Active and Weight Loss Messages 

Target Audience: Moms/Women 

Source: MilkPEP/Lowe Worldwide 

Beyoncé and Tina Knowles The View Cast Sheryl Crow 

 

Robin Seaber 

 

Elizabeth Hurley 

Erik Chopin Serena Williams Elizabeth Hurley 
146

Appendix G-2, continued

Active, Bone Growth, and Healthy Weight Messages 

Target Audience: Teen Girls and Teen Boys 

Source: MilkPEP/Lowe Worldwide 

Kelly Clarkson Beyoncé and Solange 

Knowles Ben Roethlisberger and 

Matt Hasselbeck 

Superman Freddy Adu 

Ben Roethlisberger

Donovan McNabb 

Mischa Barton 

 Lindsay Davenport
147

Appendix G-2, continued 

Active, Bone Growth, and Healthy Weight Messages 

Target Audience: Teen Girls and Teen Boys 

Source: MilkPEP/Lowe Worldwide 

Sasha Cohen Alex Rodriguez 

 

 David Beckham 

Carrie Underwood Kimora Lee Simmons 

 

 Kimora Lee Simmons 

BBMSM Rewards - School Milk Poster 1 

 BBMSM Rewards - School Milk 

 Poster 2
148

Appendix G-2, continued 

School Milk Posters 

Source: MilkPEP/Lowe Worldwide 

Elementary Schools: 

 Freddy Adu Raven-Symone 

Middle and High Schools: 

 Serena Williams David Beckham 

 Sasha Cohen Freddy Adu 

 
149

Appendix G-2, continued

Contest/Trade Advertisements/Web Banners 

Source: MilkPEP/Lowe Worldwide, Weber Shandwick, and DRAFTFCB 

Healthiest Student Bodies 

 BBMSM Ad Front BBMSM Ad Back 

 Milk Your Diet and Wake 

Up to Weight Loss 

Paula Buser - Spotlight On 

Winner 

 Celebrate Success 

Advertorial 

 

2006 SAMMY Kickoff 

Laurel and Moti Almakias - 

Spotlight On Winners 

2006 SAMMY Winners 
150

Appendix G-2, continued

Contest/Trade Advertisements/Web Banners 

Source: MilkPEP/Lowe Worldwide, Weber Shandwick, and DRAFTFCB 

 BBMSM Cling Pink BBMSM Cling Beckham BBMSM

Webpage 

 BBMSM Webpage 

 Beckham Web Banner Biggest Loser Web Banner 

BBMSM Web Banner 

 Beckham Web Banner 

 BBMSM Online Auction Home and Bid Pages 

BBMSM Rewards Cling 

 
151

Appendix G-2, continued

Hispanic Materials 

Source: MilkPEP/Siboney, U.S.A. 

 

Despierta Advertorial 

 Sofia Vergara 

 Despierta America Cast 

 Recipe Booklet En 

 Español 

 

Wake Up to Weight Loss 

Static Cling En Español 

Celebrate Success Static Cling 

 En Español 

 

 Wobbler En Español 

 People En Español Sofia Vergara Advertorials 

 

 Despierta Milk Mobile 

 

 

 

 Wake Up to Weight 

 Loss and Nuestra Gente 

 Advertorials 
152

Appendix G-2, continued

Public Relations Materials 

Source: MilkPEP/Weber Shandwick 

 Got news? Screen Grab 

 

Body By MilkSM Logo 

 SAMMY BBMSM

 Webpage 

Mother-Daughter Brochure 

 

2006 SAMMY Logo 

 

 HSB Winners on 

 BBMSM Webpage 

HSB Webpage 

 

 Healthiest Student Bodies 

 

 BBMSM Webpage 

2006 MMM Truck 

 Healthiest Student 

 Bodies Email 

Chocolate Milk Recovery 

Beverage 
153

Appendix G-2, continued

Promotions Materials 

Source: MilkPEP/DRAFTFCB 

Curves Wobbler 

Curves Cling 

Wake Up to Weight Loss Cling 

Hispanic Sustaining Cling 

Hispanic Sustaining Banner 

Hispanic Wobbler 

Tear Pad Front 

 

 Tear Pad Back 

Wake Up in Paradise 

Sweepstakes Cling 

Hispanic Sweepstakes Cling 

 Sweepstakes 

 Wobbler 

 
154

Appendix G-2, continued

Promotions Materials 

Source: MilkPEP/DRAFTFCB 

Wake Up In Paradise Online 

Sweepstakes 

Online Sweepstakes Entry 

Online Sweepstakes Tell A Friend Online Sweepstakes Bottle Graphic 

Online Sweepstakes Enter UPC 

Code 

Online Sweepstakes Passport 

Graphic
155

Appendix G-2, continued

Promotions Materials 

Source: MilkPEP/DRAFTFCB 

Celebrate Success Counter 

Card 

Celebrate Success Cling 

Hispanic Cling 

 

 Tear Pad Cling 

 

 Celebrate Success Wobbler 

Celebrate Success 

Sweepstakes Cling 

Hispanic Sweepstakes Cling 

Tear Pad Front and Back

 

 Hispanic Wobbler Celebrate Success 

Journal Cover 

 

Celebrate Success Shipper 

 
156

Appendix G-2, continued

Promotions Materials 

Source: MilkPEP/DRAFTFCB 

 Official Drink of Halloween Gallon Channel Strip 

 

 Official Drink of Halloween Bottle Channel Strip 

 

 

 Official Drink of Halloween Chocolate Milk Banner 

 

 

Official Drink of Halloween 

Vertical Cling 

Official Drink of Halloween Horizontal Cling

 
157

 Appendix G-2, continued

Television Advertisements 

Source: MilkPEP/Lowe Worldwide 

“Magic Moments: Pool” (:30 TV spot)

 

“Magic Moments: New Day” (:30 TV spot) 

“Magic Moments: New Dress” (:30 TV 

spot) “Magic Moment: Beach” (:30 TV spot) 

 “Magic Moments: Escalator” (:30 TV spot)
Appendix H-1

158

 Regions of the National Dairy Promotion and Research Board

Region 1

[2]

Region 2

[7]

Region 3

[3]

Region 4

[3]

Region 5

[2]

Region 7

[2]

Region 6

[5]

Region 9

[3]

Region 11

[3]

Region 12

[3]

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.
159

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