Dairy Farms Shuttering as America Sours on Milk—Can the Trend Be Salvaged?

number of dairy farms since 2004 reduced by half, report says

By Jonny Lupsha, Wondrium Staff Writer

Wisconsin dairy farms are disappearing off the map, Milwaukee Journal Sentinel reported recently. With the industry moving to larger farms and milk prices falling, dairy is dying in the Midwest. How can farmers put their best foot forward?

Man with tablet in dairy farm
The number of small dairy farms in Wisconsin have reduced by half since 2004 as milk drinkers turn to milk alternatives. Photo by Syda Productions / Shutterstock

According to the Milwaukee Journal Sentinel article, several statistics speak volumes about the dairy industry in Wisconsin. For example, the average number of cows on a dairy farm has doubled since 2004, despite the number of dairy farms in that same time span being cut in half. Smaller farms are on their way out. “Wisconsin lost almost 700 dairy farms in 2018, an unprecedented rate of nearly two a day,” the article said. “Most were small operations unable to survive farm milk prices that, adjusted for inflation, were among the lowest in a half-century.”

With an endless parade of family farms closing down after being run successfully for multiple generations, it’s likely little can be done to turn the independent dairy industry around in Wisconsin. Falling prices and milk substitutes have taken their toll. However, a bit of effective marketing can always help.

Identifying and Solving a Marketing Problem

“In the late ’80s and early ’90s, per capita consumption of milk declined by about two gallons per year,” said Dr. Ryan Hamilton, Associate Professor of Marketing at Emory University’s Goizueta Business School. “That’s a pretty significant drop, and it translated to about $50 million in lost profit for the industry in California.”

The trouble was, nobody could understand why. Dr. Hamilton said that focus groups and research both determined that everyone knew milk was healthy and overwhelmingly they liked it, but sales continued to fall.

“The [California Milk Processors’ Board] did some good market research and they determined that although there were many possible reasons for the decline in milk consumption—including increased competition from other types of beverages and changes in the way people were consuming drinks at this time—they zeroed in on one problem that they thought they could actually address through advertising: rationing,” Dr. Hamilton said.

In other words, milk is consumed differently around the house since it’s packaged differently than, for example, juice boxes, cans of soda, or water. Dr. Hamilton explained that when there’s a lot of milk in the fridge, people drink more of it. When the carton runs low, they drink it more sparingly.

The Board decided the best way to combat rationing was to remind people to always have milk, and so they launched one of the simplest and most successful ad campaigns in memory: “Got Milk?”

Creating News

The “Got Milk?” ad campaign made humorous situations warning customers what could happen if they ran out of milk at an inopportune moment, but this isn’t always an effective campaign—especially with people consciously turning away from milk. Sometimes, a brand needs to have some news about itself to stay relevant in the advertising business.

“One way to ensure that you always have new information to share is to employ a strategy of what I call trivial innovation,” Dr. Hamilton said. “There are several beer brands that have perfected this strategy. They don’t actually change the recipe of the beer, but they’ll change almost anything else about the product in order to have some bit of news to crow about in their ads.”

Dr. Hamilton specifically cited the MillerCoors Company as a chief example of trivial innovation. Miller Lite once boasted a new invention in beer bottling called rifling, which referred to grooves carved on the inside of the bottle to “ensure a smooth pour.”

Similarly, he said, Coors Light once debuted a can that changed color when it dipped below a certain temperature. The purpose was that a beer drinker could look at the can and make sure it was cold without touching it. That may seem like a trivial matter to most people, but it did give the MillerCoors Company a reason to advertise their beer in a new way.

Bringing the public back to the dairy industry will be a complicated and difficult endeavor, if it’s possible at all. However, identifying and solving the problem of why customers are turning to milk alternatives at home and abroad could be a helpful first step in solving the problem of the disappearing dairy farms.

Dr. Ryan Hamilton contributed to this article. Dr. Hamilton is an Associate Professor of Marketing at Emory University's Goizueta Business School

Dr. Ryan Hamilton contributed to this article. Dr. Hamilton is an Associate Professor of Marketing at Emory University’s Goizueta Business School, where he has taught since 2008. He received his Ph.D. in Marketing from Northwestern University’s Kellogg School of Management.