Monday Marketing Memo

California Dairy Industry's New Buy Local Seal and Marketing Program Will Have Major Impact on "Buy Local" Initiatives

The California Dairy industry is launching a $40 million dollar "buy local" California milk marketing program beginning next month.

The program taps into the growing "buy local" movement. The industry also has created a "Real California Milk" Seal which will appear on all packages of fluid milk, butter, yogurt, ice cream and other dairy products produced in California beginning in October.

The local marketing program was created by the California Milk Advisory board, a non-profit trade association for California dairy farmers and milk producers. The group kicked-off the "buy local" California milk advertising campaign with colorful, full-page ads yesterday in major California newspapers. The seal and campaign is similar to the very successful "buy local" program launched a few years ago for "Real California Cheese." In fact the industry's popular Happy Cows TV ads for California cheese will be expanded to include the new "Real California Milk" message.

California has lead the U.S. in milk production for the last 10 years. The state produced 38.8 billion pounds of milk in 2006 which is 21% of the country's total production. However, about 20% of the milk sold in California comes from out of state. The California dairy industry wants that share of the market in addition to the 80% it already has in the state.

By making consumers aware of the milk and other dairy products sold in stores that are locally produced in California the dairy industry believes shoppers will "buy local" and support one of the state's largest agricultural industries. The state also is the nation's second largest producer of cheese after Wisconsin. However, California expects to become the number one cheese producing state either by the end of this year or in 2008. The industry attributes the "Real California Cheese" seal and campaign to the sales growth which will make the state number-one in cheese production in addition to milk happen soon.

The California milk "buy local" seal and campaign is just another example of the growing movement to promote locally grown foods and beverages throughout the U.S. We are seeing major "buy local" programs and promotions not only from industry associations like the California group but also by food manufacturers, marketers and retailers as well as environmental and "buy locally grown" non-profit groups like Slow Food USA, farmers' market organizations and other groups.

The "buy local" marketing campaigns are most interesting because they are coming from both "top-down" organizations like large supermarket chains as well as "bottom-up" grass roots groups. This makes "buy local" take on a more serious focus from consumers. In other words it's not a mere fad promoted by a few small or fringe groups but rather a full-fledged marketing effort being conducted by businesses, farmers, trade groups and non-profit organizations of all sizes and economic means.

The "buy local" movement also has built up strong consumer support. In the case of the new California dairy industry effort for example the industry encompasses a wide range of players, from small family farms to large milk processing companies, chain retailers and independents.

In fact the California dairy industry formally announced the initiative last week at the O'Brien's Market on Dale Road in Modesto, California, one of three independent supermarkets owned and operated by local grocers the O'Brien family. Modesto is located in the central valley which is California's largest milk producing region. Also at the press conference at the family-owned supermarket were representatives from large California milk processing companies along with family dairy farmers. This group represented the "top-down/bottom-up" grass roots nature of the "buy local" movement and accompanying marketing programs.

We believe that by having large trade associations like the California Milk Advisory Board along with large supermarket chains participating in the "buy local" movement that the environmental and sustainability attributes of growing and buying local will be most realized. The mainstreaming of buying local is going to advance the marketing efforts of consumer advocates much more rapidly than if left to do so on their own. Additionally, professional marketing of locally grown will help farmers to have more markets for their locally-produced goods. This is especially the case as more and more independent and chain retailers make merchandising locally-produced foods and beverages an important part of their retail marketing mix.

For example, Whole Foods Market, Inc. is even going a step further and offering small agricultural producers low-interest loans so they can produce locally-grown food. Whole Foods has committed $10 million annually to the program thus far. You can read more about the supernatural grocer's initiative here. Whole Foods also is making locally-produced foods a priority in its stores nationally. The grocer is buying from local producers and highlighting locally-grown products in its stores with colorful signage as well as promoting it with in-store tastings and in its advertising circulars.

Other retailers large and small are doing similar "buy local" marketing plans as part of their locally-grown initiatives. Wegeman's Supermarkets in New York has created its own local organic research farm a few miles from one of their stores in upstate New York and is selling the produce produced locally on that farm in the nearby store.

In nearby Connecticut Stew Leonard's, a four-store independent retailer, conducts regular "buy local" promotions for fresh produce, meats, dairy products and specialty and natural grocery products--all produced locally. In California, Save Mart Supermarkets, which bills itself as "the hometown grocer" in its Central Valley region home, is putting a focus on buying from local producers in the Central Valley and advertising those local products in its weekly advertising circular and also in local newspapers.

These retailers are only the tip of the iceberg. Independents and chains throughout the country are increasingly seeing that the "buy local" movement is here to stay and they're getting on board with marketing programs and promotions. We think the partnership between producers, marketers and retailers, large and small, is the key to making "buy local" a significant part of the U.S. food marketing model. It isn't a panacea nor will it become the primary model but it can become a major part of the overall food distribution and marketing system in many parts of the U.S.

Further, if other similar food and beverage trade organizations throughout the country were to create "buy local" programs like the California Milk Advisory Board's "Real California Milk" marketing campaign for commodities and farm products in their states we believe the "buy local" movement would be greatly enhanced. Increasing communication and putting marketing dollars behind buying locally produced products like the California advisory board is doing will be a great stimulus to "buying local" initiatives nationally.