Dairy Supply Chains To Adjust As Consumer Behavior Changes

While food service demands plummeted and grocery sales surged, the dairy supply chains were dramatically affected by COVID-19 consumer habits. And consumers struggling with job losses and economic uncertainty quickly returned to buying basic dairy products like milk, commodity cheese and butter.

A new report from CoBank’s Knowledge Exchange indicates that consumer behavior will be different for the next 12 to 18 months than it was pre-pandemic, and as that behavior takes root, dairy supply chains will need to adjust from farm to fork.

“The dairy industry is coping with some new realities, largely driven by the decrease in food service demand and restaurant sales,” said Tanner Ehmke, manager of CoBank’s Knowledge Exchange. “The challenge for dairy supply chains will be adapting to focus on meeting demand trends based on evolving consumer behavior as we navigate through an uneven reopening.”

As consumers heeded the stay-at-home advisories, they increased purchases of products that in recent years had fallen out of favor, reports CoBank.

Processed cheese sales increased by nearly 20 percent during the eight weeks ending May 31. White milk sales gained more than 10 percent during the same period. Cereal is also doing well, with sales up almost 15 percent.

While restrictions have started to let up, polling has shown widespread reluctance among consumers about quickly returning to normal activities, such as restaurant dining and business travel.

In late April, a Business Insider poll found just 9 percent of Americans believed they would resume their routine exactly as it was before the lockdowns, with only 16 percent saying they would resume “almost all” of their activities.

And in the meantime, Forecasts from Open Table suggest that the U.S. could lose up to 25 percent of its restaurants.