September 5, 2016

Dairy under the Golden Arches

 |  By: cwalljasper

If it weren’t for McDonald’s, milk might not be a staple in almost every fast food chain’s kid’s menu in America today. And if it weren’t Dairy Management, Inc. (DMI), the country’s largest fast food retailer might never have realized milk could be good for its customers, its image and its bottom line.

Since 2009, DMI has worked with national chains such as McDonald’s, Pizza Hut, Taco Bell and Domino’s Pizza to get more dairy on menus.

“McDonald’s is bigger than Subway, Starbucks and Burger King combined,” says Paul Ziemnisky, senior vice president of global partnerships at DMI. McDonald’s is woven into skylines and landscapes across America. Having such an expansive company dedicated to dairy is working—since the partnership began, DMI says McDonald’s is using 14% more dairy in its fare. That’s more than 1.5 billion pounds of milk, cheese and butter.

McDonald’s offers U.S. Dairy a platform recognized across America. In return, DMI advises McDonald’s on nutrition, sustainability and consumer concerns.

Promoting dairy through McDonald’s marketing and on its menu has proved far more effective than any direct marketing campaign by the dairy checkoff, which is why DMI no longer runs milk and cheese ads, like they did through the early 2000s.

It makes sense: Last year, McDonald’s spent nearly $719 million on advertising. That’s nearly nine times DMI’s $80 million annual marketing budget.

DMI opened the door at McDonald’s with the Happy Meal. A 2002 National Dairy Council study found that when schools switched from milk cartons to resealable containers, they decreased waste and students actually drank 35% to 40% more milk.

So DMI brought the study to McDonald’s, and in 2004, the restaurant began serving the new milk containers. McDonald’s has also removed soda from the kids menu, resulting in a 9% jump in milk and juice sales since 2014.

Dairy also shows up at McDonald’s in more subtle ways. In 2008, McDonald’s introduced its McCafé lattes and iced blended coffees. While coffee takes the lead marketing the drinks, each latte has up to a full serving of dairy.

From a chef’s mind to McDonald’s menu. In 2009, DMI expanded its role in McDonald’s’ menu development by embedding a team of food scientists, nutrition advisors and sustainability experts at McDonald’s world headquarters, outside Chicago. Chef Jessica Foust, director of culinary innovation for McDonald’s, says new creations all start with flavor. “Our dairy suppliers provide us with new ingredients— new cheeses, new yogurts, new things to try, and we’ll just start cooking,” she says. Once a new menu item is developed in the kitchen, it goes through a rigorous process of focus groups and testing within the actual restaurants to identify challenges and ensure success. One hurdle DMI works to overcome is helping companies qualify as McDonald’s suppliers. For soft serve ice cream alone, McDonald’s relies on 10 dairy suppliers across the U.S.

A recent example of this was the switch from margarine to real butter. Foust recalls sitting in a liquid-margarine tasting ahead of the launch of all-day breakfast, when she asked, “What did we use before liquid margarine?” The answer was simple—butter.

She says the return to butter was better for the company and consumers, who were asking for a more natural, healthier option. McDonald’s estimates the switch will require close to 500 million pounds of fluid milk annually, much of which is served off the breakfast menu. That’s nearly four times the U.S. butter exports in 2015. Around 90% of the McDonald’s breakfast menu contains dairy, compared to 80% of its daytime menu. McDonald’s and the checkoff focus on building consumer confidence.

“They want to make sure people know that their food is good and real and natural as well, and I think that’s just a reflection of where consumers are going today,” says Amy Wagner, DMI’s executive vice president of global innovation partnerships. “Dairy can play a key role in McDonald’s bringing real food messages to consumers.”

DMI can be a resource for McDonald’s when addressing consumer concerns. When there was a push to lower fat and sugar levels in kid’s milk, it was a DMI food scientist who developed the recipe for non-fat chocolate milk. But just as the partnership can boost the dairy industry, the decisions McDonald’s makes can also have a negative impact.

One example is the decision to remove milk containing rBST from its fluid milk supply chain. While DMI wasn’t in a position to sway McDonald’s from this decision, Laura Mandell, vice president of sustainability and partner communications at DMI, says she hopes DMI can be at the table to offer guidance on future issues that impact dairy producers.

“By being in the right place and helping them make the right choices on sourcing policies,” Mandell explains, “we can be at the table with them and be sure that, when others follow, it’s in the right direction.”

Some milk industry estimates show that an increase in demand for rBST-free milk would mean a significant increase in cows, which in turn would mean increased greenhouse gases and waste. These partnerships will evolve. DMI will continue dreaming up dairy-infused meals for McDonald’s, while also advocating for sustainable changes that make sense for the dairy industry. Wagner says the next evolution in their partnership with McDonald’s is to further the shared messages of nutrition, quality, and freshness.

She says that mission will take the partnership to a whole new level: “One of the best ways to do that is to work with partners who also want to be well trusted by consumers.”