Got Bankruptcy? Not if you Innovate.
Two Milk Companies declared bankruptcy in the last two months…
Forty years ago, a gallon of milk would cost you about $1.70 and a gallon of gas would run you about 63 cents. Comparatively today, a gallon of milk is on sale this week at Wal-Mart for $2.59 and a gallon of gas at that same Wal-Mart will cost you $2.47. Over the past 40 years, retail milk prices have increased approximately 52% while fuel prices have increased 292%. Clearly, fluid milk as a category has not done well in terms of keeping up with the times.
The point here is not only that milk prices are in the tank and the oil industry continues to thrive; but Wal-Mart is an example for vision and innovation. Who would have thought when Wal-Mart was born, they would be in the gas business, and nearly every other business too? Wal-Mart owns real estate, their own dairy processing plant, they have introduced blockchain technology to their supply chain, sell everything a family needs to survive a zombie apocalypse, and directly impacts supply chain pricing.
Without innovation, a company will fail. It’s that simple. Regardless if you are in the oil business, the milk business or the software business, innovation fuels progress. And unfortunately, the gallon of milk business, except in one or two instances, is failing, primarily because they simply have not innovated. The gallon of milk my mom bought at the grocery store in 1978, looks the same on the shelf as it does today. Still the same boring plastic gallon container we all associate with milk, with the same label and packaging it has always come in.
Consequently, the milk industry is witnessing one-time blue-chip dairy brands like Dean Foods and Borden, declaring bankruptcy and struggling to remain relevant. Is it because people do not want milk? I don’t think that is entirely true. Fairlife was recently acquired by Coca-Cola and is knocking the cover off the ball. Even with the bad publicity at Fair Oaks Farms, consumers returned to the store to purchase Fairlife and give them a second chance. In the last forty years, there has not been innovation in the dairy isle like Fairlife. Along that same 40-year timeline, milk consumption has declined while competitive beverages are taking to retail shelves in droves; all of which appear more interesting and modern to the consumer than the gallon of milk in a plastic jug.
Why is it that Fairlife gets a second chance to make things right with their consumers, while Borden’s and Dean’s customers seem no longer interested? Fairlife makes milk exciting, which by definition alone seems nearly impossible to do. But they have found a way to make milk remarkable. They did it by listening to what consumers want in and not in their dairy products, by way of adding protein and eliminating lactose. It tastes delicious, the packaging is inviting, and as it sits next to the plastic gallon of milk on the shelf, it looks and feels like 2020. Not 1978.
Listen first, act fast, and keep moving forward… Innovate.