I grew up on a dairy farm, where we were immensely proud of the quality of the milk, which we delivered each day. I think the average daily milk consumption in our household was close to a world record. For us, the only thing better than milk, was more milk. Our natural delight.
And on the journey from my childhood home to my position as CMO in one of the world’s largest dairy companies, I have, just as the consumers, witnessed a fantastic development. Today, consumers can open a bottle of cold, fresh milk, which is less than 24 hours old. That is about as pure, fresh and natural as dairy gets. At the same time, the number of dairy variants has exploded, and consumers are demanding totally different things compared to just a few years ago.
At Arla, our firm view is that the future of dairy is created by bringing milk into new formats, compositions and solutions. Our milk protein will be the new calcium, and we will be working with the nutrient composition to meet the individual consumer in our markets. The occasions that milk and dairy will be part of are changing rapidly and the next generation is looking for stories and experiences through our products and brands.
And we also need to understand that food naturalness is much more than pure dairy with ”no additives”. Nowadays, consumers seek companies, which not only embrace sustainability and transparency, but also create products in new, innovative formats that suit their lifestyles. All these consumer trends combined, are shaping what I call the “New Natural”.
Four dimensions shaping the New Natural
The change is driven by Millennials and Generation Z. And they are looking for four things in particular.
Firstly, they are looking for products, which are clean label. In other words: with few ingredients, less processed and fresh.
Secondly, they are looking for companies that are 100% transparent and authentic, and they are using online platforms like Google, Facebook and WeChat to help find them.
Thirdly, they want to be assured that companies act ethically and sustainably. They care about whether our cows have been well looked after and whether we take real responsibility for the future of our planet on their behalf, including reducing emissions and cutting down on the amount of food and packaging, which is wasted on a daily basis.
Fourthly, they are looking for products with new, interesting formats and experiences that suit their lifestyles, where mealtimes are blurring.
How do we respond to this New Natural?
For Arla, it is fundamentally about realizing our vision: to create the future of dairy to bring health and inspiration to the world, naturally. In practice, this is a question of innovation. And when I say innovation, I mean it in the broadest sense of the word, including packaging, distribution, collaboration with customers, engagement with consumers and, of course, also dairy farming as such.
Our new state-of-the-art global innovation centre, which lies in one of the world’s leading food clusters, is the focal point of our innovation. And it is a collaborative exercise. We will create the future of dairy hand-in-hand with chefs, scientists, consumers and customers.
Developing new, relevant dairy products
A large part of our innovation efforts is of course about what we put on the shelves – our core products. Based on consumer insights we launch hundreds of new products each year, which are New Natural by design. Let me give you just a few examples.
Arla is the world’s leading producer of organic dairy, and we expect our organic business to continue to grow with double digits for many years to come. Organic used to be a big city phenomenon, but not anymore. As I mentioned earlier, consumers are looking for more simplicity and transparency, and they are looking for a better way of eating. And when they start thinking about trying organic, dairy is one of the first categories they look to. On a global level, organic dairy is growing twice as fast as conventional dairy.
Another product area, where we are hitting the consumer demand for natural, simple and fresh products is within the yogurt category. The fact that we could build a strong Skyr business, which in just 3 years is worth close to 100 million euros, has proven that clean and pure products, which keep you fuller for longer, are resonating well with consumers.
And through our strategic collaboration with Starbucks we are now expanding our Starbucks Double Shot range, a natural alternative to energy drinks that gives consumers an all-in-one, natural, instant energy boost.
However, our success doesn’t only depend on our ability to create new, exciting products. It also comes down to how we communicate about our products and brands. Perception matters, and we need to be explicit in the way we talk about our naturalness. Our LURPAK butter is a good example. Here’s why.
To make our LURPAK butter, which was recently coined as the best butter in the world, we use cream, culture and salt – and if we want to make it spreadable, we add a bit of rapeseed oil. That is as simple and natural as it gets!
However, two-thirds of our consumers don’t believe that butter is a natural product. So, last year we launched a global campaign to help change this. We used all touch points, on-pack, print, in-store and digital. And the result was positive. Consumers’ perception of naturalness in our brand increased, our online videos received 4.8 million views and the stores that participated in the campaign also saw considerable uplift.
Sustainability and transparency
As one of the world’s largest dairy producers, we recognize our responsibility to develop new solutions that reduce our impact on the climate and environment. In addition to packaging and transportation, our efforts at the farm level are one of the key drivers to reducing our global footprint.
Arla-farmers are, in fact, among the best in the world when it comes to low climate impact per kg of milk. Currently, our farmer-owners have already reduced their carbon footprint with 23%, and their goal is to reach 30% by 2020.
And in support of this goal, we have launched our new data center, Arlagården Plus, which registers real-time farm-data, including data relating to animal welfare. This, we believe, will become the largest animal welfare dataset across Europe, which each farmer can use to optimize his herd management.
We will also make the data available for our consumers, including on-pack and on our digital platforms. Let there be no doubt that our more than 11,000 farmer owners across 7 countries work very hard each day to take care of the wellbeing of 1.3 million cows, making sure that they are happy and healthy!
Creating the future of dairy – with the generation of the future
As I mentioned earlier, New Natural isn’t just about products and formats, their contents, and how we produce them. It’s also about communication, so that consumers can recognize naturalness. And more importantly, it’s about empowering the next generation, so they have better food habits.
According to WHO, there are more than 1.9 billion adults worldwide, who are overweight, and of these more than 600 million are obese. We have more healthy products and information available to us than ever, yet the problem has never been bigger.
As an industry, we also need to rethink the way in which we approach our consumers. At Arla, we started this journey 5 years ago in Denmark, where we opened our first Food Camp. Each year we invite 10-14-year-olds to spend a week learning about food and cooking. And going forward, we are committed to further strengthening our partnerships with parents, children, educators, communities, policy makers and the media, in order to make a change.
To sum up: In the era of New Natural, it is not only about delivering what consumers want. It is also about empowering the next generation.
The future belongs to those who can create the New Natural.