HIGHLIGHTS: september 30, 2022
• Tec de Monterrey MOU
• Travelogue of Chile farmer mission
• Chile MOU enhances dairy collaboration
• USDEC Korean bakery workshop
• Register now! Peterson looks to the future
• Market Summary: NZ exports surge, milk output dives
• Global economic concerns rise
• Brazil front-of-pack labeling regs to go into effect
• Concerns rise over global economy
• Oakland, Seattle worker slow downs
• “Reset Yourself with Dairy” earns global honor
• Company news: TGI Fridays, Junlebao, Lakeland Dairies
Featured
Tec de Monterrey MOU creates platform to strengthen dairy ingredient usage in Mexico
USDEC signed a Memorandum of Understanding (MOU) this week formalizing and broadening its four-plus year partnership with Mexico’s Tec de Monterrey university.
“The MOU is a win-win,” says Terri Rexroat, vice president, Global Ingredients Marketing. “Enlightening students about dairy ingredient applications, functionality and other benefits not only enhances their knowledge and better prepares them for careers in the industry, but also increases opportunities for dairy ingredient use when they enter the workforce.”
The MOU, in fact, aligns with USDEC’s overall approach to Mexico, Chile, Indonesia and other markets around the world. USDEC seeks a collaborative approach with local dairy sectors to build consumption and foster knowledge sharing in a manner that provides mutual benefits to the dairy industries in both countries.
Tec de Monterrey and USDEC staff pose after the signing of the MOU. Left to right: Irma Hurtado, director of continuing education; Dr. Ashutosh Sharma, regional director of bioengineering; Ruben Zarraga, professor and head of food science and dairy technical expert at Tec de Monterrey-Queretaro campus; Terri Rexroat, USDEC vice president, Global Ingredients Marketing; Paris Gomez, dean EHE Central South Region of Tec de Monterrey; and Rodrigo Fernandez, head of USDEC’s Mexico office.
Established relationship
USDEC initially came to know Tec de Monterrey in 2018 when it sought to create a nationwide database of key food technology contacts at universities across Mexico. That led to working with the school to develop a series of training workshops for small and medium-sized indigenous Mexican cheese and bakery manufacturers in 2019-2020.
The workshops, which focused on dairy ingredient applications, functionality and formulation benefits, enhanced the existing knowledge of food and beverage processing companies and universities. They were wildly popular, morphing from an initial schedule of 10 to more than 100, with multiple collaborators across Mexico. Over 2,000 cheese and bakery workers have participated so far, and USDEC continues to schedule new workshops.
Earlier this year, Tec de Monterrey took the relationship even further working with the USDEC Mexico office. The information gathered through these workshops was helpful enough to convince the school to make it part of its curriculum, creating a required class teaching students how to use dairy ingredients to manufacture native Mexican cheeses.
A platform for U.S. dairy ingredient learning
This week’s MOU extends the partnership again, with a 2022-23 focus on creating dairy ingredient training workshops for the university students and for their very active alumni association, many of whom are currently working in the Mexican food and beverage industry.
The agreement kicked off even before it was signed with a plan to train Tec de Monterrey food engineering professors. In mid-September, USDEC hosted a delegation of instructors from Tec de Monterrey Queretaro and Monterrey campuses and Instituto de la Carne y de la Leche (INCALEC) in the U.S. to learn more about dairy ingredients used in food and beverage processing—in essence, a train-the-trainer workshop to create a core team with the tools to teach more students at both campuses.
The delegation included Ruben Zarraga, professor and head of food science and dairy technical expert at Tec de Monterrey-Queretaro campus, and Marco Delgado, general director of INCALEC, who were closely involved with launching and presenting the Mexico workshops on using U.S. dairy ingredients in Mexican cheeses.
Representatives from Tec de Monterrey, INCALEC, and the USDEC Arlington and Mexico offices pause during a break in the U.S. Dairy Ingredient Training program at the Center for Dairy Research at the University of Wisconsin-Madison.
On Day One, with a theme of “Why Dairy,” the group visited the Center for Dairy Research at the University of Wisconsin-Madison for the Dairy Ingredient Fundamentals short course. On Day Two, themed “Why U.S. Dairy,” participants attended a training meeting in Chicago that outlined the U.S. dairy ingredient portfolio, explained U.S. dairy sustainability achievements and goals, and delved more deeply into the U.S. dairy ingredient portfolio, with sessions on dairy protein applications, processing, functionality and nutrition.
Day Two speakers included frequent USDEC collaborators at National Dairy Council Matt Pikosky, vice president-nutrition research, and Rohit Kapoor, vice president-product research; Mary Wilcox, founder and owner, Significant Outcomes; and USDEC’s Rexroat and Kara McDonald, vice president-Global Marketing Communications.
The first fruits of the MOU will be on-campus ingredient training workshops run by Tec de Monterrey for the university’s food engineering students and alumni as well as for Mexican distributors of U.S. dairy ingredients.
“We believe that expanded knowledge of U.S. dairy ingredients will lead to more use of those ingredients by the Mexican food industry, leading to greater consumption and demand for U.S. dairy ingredients,” says Rexroat.
Keep up with Chile farmer mission with “travelogue” blog
This week, six U.S. dairy farmers have been getting a first-hand look at how USDEC seeks to build emerging U.S. export markets. The USDEC-led farmer mission to Chile has been meeting with importers, customers, farmers, and dairy and food organizations to exchange information about the dairy sectors in both countries and discuss plans for mutually beneficial growth.
USDEC President and CEO Krysta Harden, COO Martha Scott Poindexter, Executive Vice President for Policy Development and Strategy Jaime Castaneda, USDEC members and other representatives of the USDEC Arlington and South America office are accompanying the mission.
At press time, the trip was still underway, and we will share more details in next week’s Global Dairy eBrief. But you can catch up with the day-to-day activities and developments from this week at the U.S. Dairy Exporter Blog post, “Travelogue: U.S. dairy farmers report how USDEC builds inroads into an emerging market in Chile.”
Left to right: The six U.S. farmers in Chile this week are Marilyn Hershey, chair of Dairy Management Inc. (DMI); Neil Hoff, USDEC founder; Larry Hancock, USDEC chair; Joanna Shipp, DMI board member; Jim Reid, DMI board member; and Alex Peterson, USDEC vice chair.
U.S. and Chilean dairy groups sign cooperation agreement
During this week’s U.S. farmer mission to Chile, USDEC, NMPF and the Chilean Federacion Nacional de Productores de Leche (Fedeleche) finalized a Memorandum of Understanding (MOU) strengthening cooperation between the two nations’ dairy sectors. The deal will facilitate better sharing of information and knowledge and foster collaboration as the three groups advocate for science-based standards and guidelines in agricultural trade policy across the world.
“We are delighted at this opportunity to strengthen our relationship with Chilean agricultural producers,” said Krysta Harden, president and CEO of USDEC. “Through this agreement, we are in a better position to ensure that international trade and regulatory policy is reasonable, fair and based in science.”
The Chile MOU complements an agreement signed in early September with Sociedad Rural Argentina (see Global Dairy eBrief, 9/9/22) and earlier agreements signed with the Inter-American Institute for Cooperation on Agriculture (IICA) and the Pan American Dairy Federation (FEPALE). All aim to foster global dairy consumption and trade.
Events
Bakery workshop looks to boost dairy protein use in Korea
USDEC is increasingly targeting the global bakery sector as fertile ground for U.S. dairy ingredient sales. On the heels of a bakery webinar in China earlier this month (see Global Dairy eBrief, 9/23/22), USDEC held the “Bakery Application with U.S. Whey Protein Workshop” on Sept. 23 at the Korea Institute of Bakery in Seoul.
Eight R&D staff from Korean food and beverage manufacturers and eight bakers from the Korea Master Bakers Association attended the event—the first in-person B2B ingredient workshop in Korea since the pandemic.
Speakers offered information and insights on how U.S. dairy proteins could be used to develop new protein-boosted products that conveniently and seamlessly fit Korean consumers’ daily diets while meeting health and wellness goals. These are products that might fill nutrition gaps, including “better-for-you” snacks or higher protein breakfast options. The day concluded with a product sampling so the audience could taste real-life examples of U.S. dairy ingredients in action.
The event builds on previous outreach on protein use in sweet baked goods in Korea completed earlier this year (see Global Dairy eBrief, 1/14/22).
Peterson to explore how global crises are fundamentally changing business at USDEC fall meeting
Successive waves of tumultuous global challenges have caused financial markets to plummet, triggered oil production wars, dramatically curtailed economic activity, stressed public health systems and more. In his keynote address at USDEC’s upcoming Fall Membership Meeting, Erik Peterson, partner and managing director of A.T. Kearney’s Global Business Policy Council and senior advisor at the Center for Strategic and International Studies (CSIS), will explore how—once the dust settles—the fundamental nature of business will change irrevocably.
Peterson, a sought-after analyst and speaker on global foresight and trends, has lectured in 50+ countries and before a variety of groups ranging from the World Economic Forum to USDA to TED, explaining shifts in the global business operating environment. During his session, “Looking at the Future Today,” Peterson will outline how business leaders endowed with a strategic mindset and the wherewithal to bring their vision to fruition will have a remarkable competitive advantage when the current crisis is finally behind us.
Register now
The Fall Membership Meeting takes place Oct. 10-11 at Chicago’s Swissôtel. Register now to hear Peterson’s presentation, as well as a full slate of expert speakers on dairy exports and trade. To download the preliminary agenda, click here.
As was the case for recent membership meetings, the Oct. 11 general session will offer the option to attend in-person or participate virtually. However, activities taking place Oct. 10—including the Trade Policy Committee Meeting and the special session on Southeast Asia (“Southeast Asia Trends Briefing: Consumer Attitudes and Perceptions on Sustainability”)—are in-person only. If you have any questions about registration, please contact Weston Abels at wabels@usdec.org.
Market Summary
NZ dairy exports surge in August, but milk production continues to lag
Year-over-year New Zealand dairy exports (major products, not including fluid) surged 63% in August fueled by a near-doubling of WMP shipments (+36,275 MT to 73,937 MT, a record for August).
The total dairy export increase in August was only the second year-over-year gain this year, following a 9% rise in July. Year to date through August, New Zealand dairy exports were down 8% (-156,318 MT).
The WMP gain was geographically widespread, led by Southeast Asia (+10,186 MT), the Middle East/North Africa (+8,787 MT) and China (+6,198 MT). New Zealand SMP exports, in contrast, held relatively steady, rising less than 1% (+92 MT) in August. A five-fold increase in sales to Indonesia (+2,494 MT) highlighted SMP activity.
Cheese exports benefited from poor comparables against August 2021. Kiwi cheese shipments rose 61% (+7,853 MT) to 20,727 MT, a more typical August cheese volume for New Zealand. Butterfat gained 50% (+6,855 MT), with increases to nearly all markets, led by China (+2,057 MT) and Mexico (+1,400 MT).
Milk output down again
Whether New Zealand can build on the export growth of the past two months is highly uncertain. August is usually its lowest dairy export month of the year, given the country’s sharp milk production seasonality. And Kiwi milk output is showing few signs of quickly rebounding after almost 12 straight months of year-over-year shortfalls.
New Zealand August milk production dropped 4.9%, compared to the previous year, as the country continued to struggle with poor pasture conditions brought on by wet, cold weather. Despite some weather and pasture improvement over the last couple of weeks, the front shoulder of New Zealand’s season appears bound to fall short heading into the October peak.
Inflation, war undercut global economic growth
Global economic growth is slowing more than expected, according to the Organization for Economic Development (OECD). While OECD still estimates GDP growth will hit 3% this year, it lowered its forecast for 2023 from 2.8% to 2.2%.
Around the world, central banks are raising interest rates to fight inflation, weakening economic activity in many regions. Russia’s invasion of Ukraine is heightening energy and inflation risks. Business confidence, disposable incomes and household spending will all decline, OECD says, with some of the developed economies hardest hit.
Eurozone growth will plummet from 3.1% in 2022 to just 0.3% next year. Further disruptions to energy supplies would drive many European countries into recession. U.S. growth will fall from 1.5% this year to 0.5% in 2023, OECD projects.
While the OECD forecasts some key U.S. dairy export markets to fare better (Chinese GDP growth will rise to 4.7% next year; Japan will hold relatively steady at +1.4%; and Korea will come in at +2.2%), export growth across Asia is weakening and is a factor to watch moving forward.
On the plus side, OECD sees inflation easing in 2023, although remaining at high levels. (OECD; Reuters, 9/26/22; Wall Street Journal, 9/23/22)
Market Access and Regulatory Affairs
Brazil front-of-pack labeling regulation enactment and compliance dates
Brazil will begin enforcing its new front-of-pack nutrition labeling regulation on Oct. 9, 2022 when Normative Instruction No. 75/2020 and Normative Instruction No. 429/2020, which established the new rules, go into effect.
The regulation applies to packaged foods in the absence of the consumer (i.e., before the product reaches the consumer), including beverages, ingredients, food additives and processing aids, as well as those intended exclusively for industrial processing. For bulk products intended exclusively for industrial use, the law reinforces that the nutritional table may be printed on the label or in documents accompanying the product. Please see Volume 3 of the USDEC Export Guide for more details.
Brazil’s National Agency of Sanitary Surveillance (ANVISA) has advised mandated compliance dates based on the following three categories:
- Food in general will have until Oct. 9, 2023.
- Food produced by small farms, such as family farmers and micro businesses, will have until Oct. 9, 2024.
- Non-alcoholic and returnable packaging beverages will have until Oct. 9, 2025.
USDEC will provide further information and updates once they are obtained. In the meantime, if you have any questions, please contact Oscar Ferrera at oferrera@usdec.org.
Trade Policy
Letter urges president to address ag issues with Mexico in future HLED meetings
USDEC and NMPF co-signed a letter to President Joe Biden with 23 other food and agriculture organizations urging the U.S. government to engage Mexico in future “High-Level Dialogues” (HLEDs) on the importance of resilient food and ag supply chains to address food security challenges in North America.
The HLED has already fostered a foundation for progress in advancing the economic and commercial relationship between the U.S. and Mexico. When President Biden met with President Andres Manuel López Obrador recently, they discussed food security and emphasized the importance of facilitating bilateral trade and engaging in cooperative efforts to strengthen food security in North America.
HLEDs can be important venues to “share information on supply chain vulnerabilities, promote transparent and science-based risk assessment processes and other policies, discuss industry trends affecting availability of food, and identify areas of cooperation in times of potential food insecurity,” the letter states. All these issues fall within the HLED Work Plan the president identified last year.
Supply Chain
Oakland, Seattle hit by job slowdowns
Last week, union workers engaging in “job actions” slowed operations at the ports of Oakland and Seattle-Tacoma last week. Seattle-Tacoma workers refused to cross a picket line set up by environmental protesters at Terminal 5 in Seattle, but the deeper issue revolves around a long-running jurisdictional dispute about worker assignments.
Dockworkers returned to work after the protesters were removed, but the jurisdictional dispute is one of the sticking points in ongoing contract talks between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU).
In Oakland, media reports gave no reasons for the job actions that reportedly resulted in a 25% decline in productivity at the port. Dockworkers and equipment operators altered their usual operating procedures, delaying opening of the gates and interrupting cargo handling.
Journal of Commerce characterized the events as ways for the union to flex its muscle to press the PMA for concessions in contract negotiations. The PMA and ILWU did not offer any comments on the job actions or progress in contract talks. (Bloomberg, 9/28/22; Journal of Commerce, 9/26/22)
Checkoff Campaign Earns Recognition
Media campaign reaching Gen Z wins global honor
The dairy checkoff’s “Reset Yourself with Dairy” campaign for Generation Z has won a prestigious international honor.
The campaign earned a best-in-class International Milk Promotions (IMP) Trophy at the recent International Dairy Federation’s World Dairy Summit 2022 in India. It was the first time in 11 years that a U.S. organization was recognized with an award.
“Reset Yourself with Dairy” was launched by Dairy Management Inc. (DMI) in October of 2021 as an evolution of the checkoff’s “Undeniably Dairy” campaign. The goal was to create deeper connections between Gen Z (ages 10 to 24) and dairy and give these consumers new reasons to choose it over other products.
The campaign used a variety of media channels and marketing strategies to grow trust and sales, including gaming, social media influencers and humorous digital content to engage with Gen Z in new and relevant ways. Core to the message is dairy’s contributions related to immunity, calm, energy and digestive health, which are important to this consumer segment.
“In 2021, we set out to show Gen Z that dairy is a solution for modern wellness – good for the body and the mind,” said Barbara O’Brien, CEO and president of DMI. “We knew we needed to push for bold ideas grounded in smart strategy and effective, modern marketing, while remembering a healthy dose of humor goes a long way in connecting with today’s youth culture.”
Company News
Mergers, acquisitions and joint ventures
China’s Junlebao Dairy Group acquired Yinqiao Dairy, a fluid milk and milk powder processor based in Shaanxi Province. … Massachusetts-based private equity firm Advent International purchased a 60% stake in Chinese restaurant firm Wagas Group. Wagas operates about 250 outlets in 13 cities, including Shanghai and Beijing under a variety of names, including Wagas, Baker and Spice, and LOKAL. (USDEC China office)
Company news briefs
TGI Fridays plans to expand into South and Southeast Asia through master franchisor Universal Success Enterprises. The two companies aim to open 75 units over the next 10 years, adding $500 million in additional revenue. … Ireland’s Lakeland Dairies named Colin Kelly as group CEO designate. Kelly will officially take over in January 2023 when current group CEO Michael Hanley retires at the end of December. Kelly has worked in a range of senior finance and management positions at Ornua since 2011. … Unilever CEO Alan Jope announced plans to retire at the end of this year. Jope has been under pressure by activist investors and due to an aborted consumer-healthcare takeover earlier this year. Unilever said it would conduct a formal search for a successor. (USDEC Southeast Asia office; Bloomberg, 9/26/22; Agriland, 9/21/22)
In Case You Missed It...
U.S. Dairy Exporter Blog
Market analysis, research and news subscribe hereUSDEC Twitter feed
Follow us here.