January 3, 2022 By: Durgesh Verma
The COVID-19 pandemic has drastically changed the way people work, shop, eat and live. Every industry was impacted, and the way we conducted business dramatically shifted. The dairy industry was no exception.
Dairy is elemental and it is a global industry with a regional focus and fragmented supply. For consumers, dairy products are an integral part of the staple diet across the globe. Furthermore, the dairy industry creates over 3 million jobs in the US alone and contributes over $628 billion to the US economy.
However, the COVID-19 pandemic, changing consumer and market trends, price volatility, global and regional regulatory compliance, high-quality demand and the drive towards sustainability has given rise to certain challenges, making the need for technology in the dairy ecosystem quite ubiquitous.
Prior to the COVID-19 pandemic, companies who had implemented technology were able to adjust quickly and avoid the challenges others faced. Moving forward, technological advancements will continue to play a vital role in the success of the dairy ecosystem.
The COVID-19 Impact on Dairy Industry
Believe it or not, the US dairy industry experienced a rise in demand for dairy products during this pandemic. This is due to the lockdown imposed and as uncertainties mounted, consumers began to panic buying necessities.
According to the International Dairy Foods Association (IDFA), the average American consumed a full 3 pounds more of dairy foods and beverages in 2020 than in 2019 — for a total of 655 pounds.
On the other hand, the demand for dairy products from both the EU and non-EU countries has decreased. The EU Parliament estimates the European dairy sector lost 120 million euros in revenues by 2020.
In the countries like Germany, which is the largest dairy producer in the EU, the industry is heavily dependent on exports. The fall in prices, difficulties with exporting goods, increased packaging prices, and increased freight prices had made export economically unfeasible.
As a result of the pandemic, dairy production has come to the forefront. It has highlighted the major challenges that must be addressed in the dairy value chain and cope with any future crisis that may arise.
The significant challenges faced by Dairy Industry during the pandemic:
- The COVID-19 pandemic has disrupted the supply chains resulting in the wastage of tonnes of fresh products.
- The farmers struggled to get their products to market due to supply chain disruptions.
- The short shelf life and perishable nature of dairy products have made them more vulnerable to the effects of the pandemic.
Dairy Industry to Bounce Back in 2022
Despite the challenges, experts remain confident that the industry will get back on a growth trajectory soon and the dairy’s outlook for 2022 looks favourable. According to the U.S. Department of Agriculture’s World Ag Supply and Demand, nationwide dairy production is expected to rise by 1.5% in 2022.
According to Tim Trotter, Executive Director of the Dairy Business Association and Edge Dairy Farmer Cooperative, “The industry’s ability to adapt and change with market fluctuations and COVID, so to say that we are doing as well as we are, considering what we just came out of?”
The global trends indicate a steady growth in dairy consumption with worldwide growth raising from 720 billion USD in 2019 to 1032 billion USD by 2024.
The Significant Marketing Shaping Trends as We Move Forward
As we gradually recover from the pandemic, it does not mean the end of pandemic-related impacts to the dairy segment.
Align The Strategy With Consumers’ Shifting Perspectives
The changing consumer preferences, growing trend towards veganism or plant-based foods, and increasing demand for fresh and local produce with a traceable origin have had a huge impact on the dairy industry. But even with the rise of compelling alternatives, about 90 percent of all plant-based dairy consumers still buy conventional dairy.
Consumers are now more driven by factors such as health consciousness and transparency in their dairy purchase, including details such as products’ ingredients and manufacturing process. The factors such as time, hygiene and safety have propelled the consumers to switch to online buying options.
It is, therefore, essential that dairy companies and retailers develop strategies to defend against competition while taking advantage of new market opportunities. They must strive to identify and serve the channel preferences and value-based needs of different consumer segments.
Technology To Lead The Disruption In The Dairy Value Chain
The pandemic has taught us a harsh supply lesson and it is, therefore, imperative to improve operational agility and resilience of the supply chain.
In a time when digital solutions are in increasing demand, the dairy sector seeks to transform, modernize and automate the traditional dairy supply chain while smoothing out processing inefficiencies, quality and safety concerns.
Right from procuring the milk from the farmers to delivering the end product to the customer, it is mandatory to consistently monitor the whole production process.
Digital transformation holds the potential for creating more resilient, efficient and sustainable dairy ecosystem. The adoption of technology and digital transformation in the supply chain industry has allowed for a number of advantages during the COVID-19 pandemic.
By deploying and integrating technology at every stage of the value chain, the visibility and the transparency of the entire operations increases significantly and give the necessary power and tools to take preventive and corrective actions to avoid any delay or disruption in production.
Dairy manufacturers, suppliers and other stakeholders are willing to invest in digital and analytics capabilities for better forecasting and planning. Technologies such as hyperautomation & blockchain can help consumers get transparent provenance of milk, farmers get end product visibility and manufacturers get a complete picture for ensuring quality standards. It also helps in tracking the milk production and seamlessly capturing the milk component details while collecting milk from the farmer or a third-party vendor.
Therefore it is a must to have a ground-breaking dairy solution that bolsters the dairy industry with a holistic approach and new ways to optimize the entire value chain.
With over 15+ of experience in tech-enabled dairy innovations, JK Tech offers a complete solution to address the key business challenges across the Dairy Value Chain, from farmer to Customer and supports some of the core business processes.
JK Tech’s Smart Dairy, a pre-configured templatized solution that embeds 70-75% of the business processes across all types of dairies combined with SAP best practices. The dairy solution encompasses dairy-specific modules across the value chain such as procurement, manufacturing, sales supply chain, finance, asset management, product costing, dairy-specific inventory management, direct store delivery for dairy, material balancing tool, and milk procurement. The solution has been providing immense business value to more than 15 dairies by reducing the time, effort and risks by 40-45%.
To learn more about how your business can benefit, get in touch with one of our dairy experts today.
