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The Ozempic and GLP-1 shockwave hitting U.S. dairy
GLP-1s like Ozempic and Wegovy are changing how Americans eat, and that has big implications for the dairy industry.
In this episode of The Milk Check, host Ted Jacoby III welcomes Paul Ziemnisky, leader of nutrition and industry growth platforms at Dairy Management Inc., and Dr. Chris Cifelli, vice president of nutrition research for the National Dairy Council.
Together with the Jacoby team, they unpack what GLP-1 appetite-suppressing drugs mean for dairy demand, and how our industry can win. We cover:
From gut health to GLP-1 support, this episode dives deep into one of the most important trends shaping dairy today. Join us for The Milk Check episode 81: The Ozempic and GLP-1 shockwave hitting U.S. dairy.
Intro with music:
Welcome to the Milk Check, a podcast from T.C. Jacoby & Co, where we share market insights and analysis with dairy farmers in mind.
Ted Jacoby III:
Hello, everybody, and welcome to the Milk Check. Excited to be here today. In addition to our usual suspects, Josh White, Mike Brown, and my brother guest, Jacoby. We’ve got two special guests today. We have Paul Ziemnisky, leader for nutrition and product science, technology, innovation and industry growth platforms at Dairy Management Inc. Again, we have Dr. Chris Cifelli, vice president of nutrition research for the National Dairy Council. Guys, thank you so much for joining us today. Thank you for taking time out of your busy days to talk about GLP-1s and how it’s affecting the dairy industry. We really appreciate it. What are GLP-1s and why are they good for dairy?
Dr. Chris Cifelli:
I’ll start with what they are and then Paul can talk about the consumer point of view. One of the key things whenever we eat food is that feeling of satiety, the feeling of fullness we get during a meal and then the satiation that occurs between meals until we get those body cues again that we’re hungry and we want to eat. Unfortunately, in the environment we’re in with stress and different factors, our body is a lot off schedule, so we tend to eat a lot more than we may need to on a daily basis.
What GLP’s are, glucagon like peptide is the official name, it’s an appetite suppressant. So, when you eat and especially when you eat fat and protein, the body will release GLP-1 naturally, and that’s what starts making you feel full. What these pharmaceuticals are, are ways to keep the levels of GLP-1 up in your body so you feel less hungry throughout the day more naturally. And what that’s going to do is you’re not going to snack quite as much. You’re not going to have those cravings maybe for sweet salty snacks during the day. But with that appetite suppressant, it means that every calorie really then matters when you’re eating throughout the day, and that’s really where dairy can win.
Paul Ziemnisky:
To build on that, what it means for dairy is, I think Chris used two magic words, fat and protein. I think fat’s been vilified since this early ’70s, late ’60s, and we’ve put a lot of effort in investment in proving the value of fat, especially dairy fats. I think you’re going to see in the next six months, the acceleration of an acceptance of fat into things like the dietary guidelines and other uses. And the protein side of the equation, we’ve got the highest quality protein by far. We’ve got science behind the highest quality proteins and the efficacy of that.
And then by the way, consumers, when they purchase anything, taste is number one factor. So, when you look at taste, price, value, health and wellness, we deliver on all those three sweet spots for that consumer. And so, you see things like yogurt on fire because of that, because they can have yogurt and they enjoy the taste and it’s got all those signs behind it with gut health and immunity. You see things emerging like cottage cheese. Cottage cheese is fermented, cheese is fermented, and I think we under market and under leverage that.
Chris and I have been on the road working with our cheese peers talking about let’s play up the protein and the fermentation, and some of the health benefits of that to drive new occasions. Then you see other things popping too in the space like creamers, which are adjacent to the GLP piece, but that fat in the keto and that satiety. And so, we’ve been working to dust off the decades of science to actually build a health and wellness playbook for the industry to use how to talk about these in a modern way with consumers. The great thing in the playbook is we actually tie the messaging and claims to science evidence, and so this is all the way approved through the USDA. So, we’re packaging out if you want to talk about weight management, you want to talk about performance, you want to talk about gut health, we’ve done quad studies with consumers at the different age cohorts. So, if you are a parent with a two-year-old, we’ve done studies with them.
If you’re talking to a boomer, here’s how you talk about dairy at these different needs states and moments. And so, worth this fulcrum where it all adds up to where about 60 plus purchase decisions at the home, is a health and wellness decision. And just to dollarize that for our farmers, that’s $350 billion being spent in these high priority areas. And our share in those $350 billion are small today. But if we get three share points of these spaces, that’s the size of the yogurt category today. So, we can double the yogurt category. And the great example of that is look at the probiotic sodas. They launched. They don’t have any science like we do on yogurt. But they’re the $2 billion category in five years, yet kefir’s only $250 million. Yogurt’s sitting around $6.5 billion. So, there’s a lot of significant upside us playing in some of these spaces and GLP’s one of those spaces. There’s even a bigger macro in the health and wellness space opportunity.
Ted Jacoby III:
Is protein really the biggest driver behind some of those health and wellness spaces that we want dairy to become a bigger part of? And why protein? You mentioned, Paul, when you were talking, he goes, “We’ve got the best protein.” Why is dairy the best protein?
Paul Ziemnisky:
I’ll let Chris answer the why and I’ll talk to the spaces if that’s okay, Ted. These spaces, when you start to carve out that $350 billion, you’ve got physical, athletic performance, sustained energy, childhood growth and nutrition, then you start to keep going around these areas of weight management. Those are $50 billion segments right there, and protein is the key driver. When you look at muscle growth, performance, protein is essential to fueling the growth. Then you get into the gen Y and millennials are recognizing they need that protein for that sustained energy. So, that’s where you’re seeing the growth of creamers and all this. They’re pounding it. They’re not drinking coffee, they’re drinking dairy with coffee.
And so, we’re seeing these other spaces of how do they stay satiety, energized, healthy. And then as you start to even age out, the boomers are recognizing they’ve got the most disposable income. You’ve got this big group of 80 million people, they’re trying to stay healthy. And so, you’ve got pre-aging occurring from the millennials and gen X, who don’t want to get to the point where they’re fracture risk and all that, so they’re consuming more protein because they’re seeing what’s happening to their parents. And then you’ve got the parents who are seeing what’s happening to their friends. And so, you look across all these age cohorts, proteins is this key driver for different needs states of each of these age cohorts. And Chris can talk through the science now.
Dr. Chris Cifelli:
From a nutrition point of view, I grew up building with Legos, so yeah, all these different pieces. For protein, there’s 20 amino acids, nine of which are essential, and dairy has all those. So, whey and casein are both complete proteins, so they have all the essential amino acids we need and they have them in the right proportions to support muscle growth and development, and all the other functions that protein do in the body. When it’s packaged, whether you’re talking milk, cheese, yogurt, cottage cheese or just isolates, it’s very bioavailable, so you’re not worried about any digestibility issues. You’re not worried about it being outcompeted by other nutrients. Our body takes it in.
What makes dairy really unique is you have the whey and the casein. So, whey being very fast acting, it’s absorbed very quickly. It’s great for muscle recovery after exercise. Whereas casein, a little higher in tryptophan, a little slower digestion, so you’ll feel a little fuller, but then at the same time a great protein before bed because of the tryptophan may help you sleep and recover overnight. There’s all this unique layering to it that really sets it apart from other sources of protein, even ones like egg that also have a lot of amino acids in them as well.
Ted Jacoby III:
How many different proteins are in milk?
Dr. Chris Cifelli:
Just the two main classes of whey and casein, and then a lot of different peptides and other things in there. But generally speaking, those are the two main protein classes.
Ted Jacoby III:
With whey proteins being a lot smaller, more easily digestible, and the casein being a lot bigger and therefore a lot slower to be digested.
Dr. Chris Cifelli:
Generally speaking, yeah, that’s a good way of thinking about it. Laddering it back or taking it back to the GLP-1 discussion, when you lose weight, especially weight rapidly, your body doesn’t care if you’re losing fat or muscle, so you’ll start losing both. And that’s why protein’s so important. So, as you’re eating meals or you’re needing that snack, all these dairy foods, whether they’re casein, whether it’s a glass of chocolate milk, whether it’s a yogurt, it’s going to provide that high quality protein you need to maintain your muscle as the body’s shedding the fat to help yourself on your weight journey. That’s one of the key attributes where dairy can win in this space.
Paul Ziemnisky:
What we’re doing on the R&D front is really focusing on investment to the isolates and things like that for functionality and products. And so, you see this heavy growth in nutritional beverage. You start to see these things like the Nurri at Costco, well on its way to a $100 million in its first year, and you see all the different, the Fairlife nutrition plans, the Orgains, the Premiers, that’s where you see this investment in R&D to make it function because otherwise the old used to settle in the products. And now they’re even adding it to water and other types of beverage.
Chris was over at IFT this week doing concepts in these protein-based mocktails. There’s investment on the nutrition science front, but there’s also heavy investment in the protein space for functionality, and bars and things like that. There’s a lot of things happening that is going to enable that protein of dairy to be placed in other growth sectors. I would expect you’re going to see the pizza crust. We’re looking at things to breads at Taco Bell. We’re looking to replace the shells with cheese as an examples of that, to meet some of these GLP consumers who are trying to cut back on those processed carbs and use dairy as the hero there.
Josh White:
What are the largest risks of GLP-1 consumption or GLP’s consumption for individuals? And is the demographic largely skewed to boomer or are you seeing equally as many millennials? Sorry to add multiple questions on here, but then the final question is I haven’t heard a whole lot about gen Z yet. From a healthy eating standpoint, as a parent of that demographic, I’m pretty blown away at how much they care about protein and what they eat. How does that demographic fit into this consumption profile for GLP?
Paul Ziemnisky:
The first thing we’re seeing is high sugar desserts, ice cream and things like that. So, we’re aggressively looking at high protein dairy. We actually took the IDFA forward this year. Cottage cheese, ice cream concepts is an example of ways to go in that low 22 grams, 25 grams of protein, 50% less sugar. So, you’re seeing a lot of players look at the ice cream space. How do they keep playing in that 7% of our sales in food service? So, how do we win there? I think that’s the biggest by far risk area. And the other one is just as we know, this $4 or $5 billion that’s being put out there in the cheese space, 750 million pounds of cheese coming online, cheese is going in some of these areas that’s carb driven. Whether it’s pizza, burger in that space. And so, working with the players, how do you bring thoughtful solutions to the food service players, a ways to use cheese and dairy. For us, we’re looking at ways to help them cut the carb side of that.
Consumers love the food. If you were to look at food service today, what’s slowing anything in food service down? It hasn’t been a GLP. It’s been primarily the inflation and that’s affected people who are living paycheck to paycheck. Taco Bell will tell you at the end of the month, people are coming in with change. And that’s not GLP driven, that’s economics driven. There’s winners though. Taco Bell, they’ve played that out because they’ve invested in innovation, keeping the consumer engaged and giving them solutions. Where McDonald’s, their traffic’s down, they walked away from innovation for a couple of years. There’s winners taking place and there’s losers in the food service world. But I would just say in the food service world right now, 90% was hitting food services is that inflationary piece hurting the consumer.
So, back to gen Z, you look at gen Z and the consumer segments. What’s interesting is really there is like five multiple segments who are going on GLP. There’s significantly overweight consumers. But there’s also people that are just looking to be fit to do it quickly to get back into shape faster. I think it’s like 25% to 35%. It’s an interesting fact. It is balanced across age groups, to your question. And there are a lot of younger people that hey, they’ve tried the diet. 80% of the US are always saying they’re on some sort of diet, but they’re finding this is a quick diet solution. When you look at the people who go on GLP drugs, the average is nine months, but you have some people that are going on for a month to two, that’s these younger generations who may need to lose 10 to 15 pounds. I’m like, hey, that’s an easy way for me to control it.
Because Chris will tell you on the science front, these side effects, the number one side effect is nausea. You’re just not feeling good. You can handle that for a month, but that’s where dairy plays in. That yogurt and the high protein helps offset that nausea feeling. That by far, if you start to segment it out, it isn’t really an age thing. It’s across all age cohorts. The risk though to GLP also favors dairy because the people who are obese going on it, you do lose that rapid weight, but guess what? You’re losing muscle and bone mass. When you go to any of the doctors today, especially people that are 50 plus, they’re hammering. You got to take dairy.
Chris and I were supposed to have a meeting tomorrow with two of the leaders of the industry on the GLP front and they actually postponed us. I was hoping we would’ve had some intel from them because the drug companies are going to feed in what they’re seeing and learning so far. So, maybe we have another regroup with you guys in three months. To answer your question, I think dairy across cohorts are going to have a significant solution, meeting these consumer needs. As you get older, it’s the bone mass. When you get younger, it’s the satiety and the nausea and maintaining fitness as well.
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Dr. Chris Cifelli:
We have to remind ourselves that these are still relatively new pharmaceuticals and these companies are working, as Paul’s mentioned, IFT, and there was a nice session on this. They’re all working to release now drugs that won’t have the same side effects. Maybe you won’t feel that same nausea and digestive issues. They suggest that one company’s working on a once a month injection so you’re not having to take it daily. So, it’s going to become even more prevalent. And I think they said in the session, it’s 5% or 6% of the populations on them right now, which doesn’t sound like a lot until you realize that’s about 20 million people who are currently on the drug with something like 10% to 15% who have at least taken it at some point. So, you’re talking significant numbers of people.
When we think about dairy’s opportunity space, as Paul said, some people are going on it because they’re not happy where their weight is and they want to lose weight, but then they transition off. And this is where the protein fat combination of dairy can really then fit in. You want your appetite to remain that you’re not going back to snacking or overeating again. The satiety factor of the high quality protein and the fat that comes with four fat dairy products like cheese, can maybe help you keep the weight off that you maintain while maintaining muscle mass. There’s that opportunity to introduce dairy not just a nutrition solution while you’re on the pharmaceutical, but also that you be part of the management plan [inaudible 00:14:46].
Ted Jacoby III:
But a lot more than just those people who are on Ozempic and Wegovy are hearing that message, and they’re realizing that for all of us we need to increase our protein intake. It’s getting beyond just that segment of the population that is hearing how important protein is, especially for the baby boomers in the aging population.
Paul Ziemnisky:
Especially when you start to look at youth. I think something around 87% of youth aren’t getting all the essential nutrients. And so, protein’s the first. All those other 13 essential nutrients that dairy provides, we know especially with people of color, they’re way underserved in that space. They’ve been following a lot of the regulation of, Hey, you have to stay away from fat, stay away from some of this. So, I’m hoping we see some improved messaging to help educate because we’ve been on it with our nutrition affairs, educating the doctors. Chris’s team is working with the Mayo Clinic doing science right now around whole fat. And Mayo Clinic’s already started to publish, given the look of the evidence we’ve given them to start to talk about not whole fats are the same. I think the understanding of what dairy’s fat is different, how it acts in this perfect combination will not just help us accelerate protein. We offer this broader nutrient density combination that no one has.
Josh White:
Where do most people get their nutritional advice from, particularly when they all of a sudden become medicated? Where are most people going for this advice? And who’s giving the people on the GLP drugs the advice as to what to eat?
Dr. Chris Cifelli:
That’s a great question. I think we all have to recognize their knowledge that medical doctors, general practitioners, family practitioners, insert doctor there, nutrition education is just not something that they get, and just like the rest of us, they’re getting it from sources that may or may not be reliable. In an ideal world, their practices would have a registered dietitian nutritionist partnered with them that after the doctor leaves the office, the nutritionist comes in. But we don’t live in the ideal world.
As Paul mentioned, we have this collaboration with Mayo. One of the things we’ve been talking about with them is how do you over time, increase the nutrition knowledge of the primary care physician so that they are understanding of what are the current recommendations? What is the latest science? Acknowledging that NDC has done a great job. Katie Brown, our colleague, working with them to ensure that, at least at the Mayo Clinic, we’re providing them that information, because it is a frustration. There is a lot of education that has to go on. And unfortunately then you go to social media, which gets like only 2% of what’s on TikTok nutritionally is accurate. That is an opportunity space for all of us, the education especially around dairy foods of their health and wellness benefits and dispelling some of these myths that you only have to have low fat, or you got to cut it out or it’s not improving your health because it’s categorically false.
Paul Ziemnisky:
I think the way to think of it, medicine to date is reactive medicine. It’s shifting though, Josh, to preventative medicine and we win, because that’s where food is. Medicine comes in. That’s where we’re at the forefront. If you guys have the ability and the privilege to go through the Mayo Executive Program, anybody has $20,000 to play with, you go in there and they look at your blood, they look at all these other tests, they do to EKG.
But the great thing is Mayo, they’re developing algorithms and they can say she’s predisposed of these three or four things. They can tell you that now based upon the executive program. But their goal is with telehealth and technology because they’re passionate about the rural consumer. They recognize whether it’s farmers or the inner cities. They don’t have the access like the Suburbans do to all the high-end doctors and stuff like that. So, Mayo is aggressively saying, how do we develop modern systems and technologies? The great thing is that will get to the youth fast. They’re telling you that three to five years you’re going to start to see these things roll out. And then when they recognize they’re going to put you on a food diet versus a pharma diet. Like Chris said, it’s always been pharma and the doctors because it’s reactive. When it comes to preventative medicine, food is going to be the solution. That’s where we’re really investing in that space.
Mike Brown:
Those of you who’ve known me a long time know I’m a lot smaller person than I used to be and GLP-1s played a big role. My house much better. My diabetes is fully in control. My cholesterol is actually below average, below for the first time in my life. But the other thing I want to comment on is my partner, who is eating the way I eat now. And frankly my diet, even though I’ve been on Ozempic for two years, was not prescribed by doctors. I did the work myself, because they don’t provide information. Part of that I think is because health insurance doesn’t really cover it, so they don’t worry about it too much. But he’s lost weight, too. He’s healthier, he’s more fit. So, my question is, this role of dairy protein and fats in our diets goes far beyond whether or not you’re on an expensive pharmaceutical from Eli Lilly or Novo. And what do we see as far as that broader impact?
These benefits go beyond just the shot. A big part of my success has frankly been the diet change. And yes, Ozempic makes it easier. We just eat differently. And I think we don’t need to tie the success just with an injection. The point was made earlier. A lot of it’s just diet decisions and it’s how we educate our physicians and our health community to help people make the right decisions. Chris, what do you see as the best things that are effective in helping with that education? Because it’s more than just giving someone a shot. It’s got to do with changing the way you manage your diet.
Dr. Chris Cifelli:
Great question and point, Mike. There’s a lot of nutrition size out there. We’re pretty confident in what protein does, fat does, the different diets. One of the joys of being on Paul’s team and the innovation team is when I’ve thought about these things differently. Now, I think these things are wearables and these things are phones, are going to be our best educator. Because as we get better at reliably tracking what we eat through the day like they do your sleep and your blood pressure, that kind of data motivates you to make change. The biggest gap right now in technology is that we have no easy way of capturing what you eat. I’ll say to you, “Hey, what did you have for breakfast today?” Or the thing will ask you, but it needs to be more real time.
Imagine merging your real time nutrition data with what your primary care physician and your insurance company takes from a healthcare. Now suddenly, you can enact change. You can start manipulating the two things and marrying to drive holistic change. In the next five, 10 years, you’re going to see this technology and the ability of AI to scan through some of that and say, “Hey, you ate this. Your blood pressure’s this. Tweak this a little.” Maybe for you, yogurt and cheese is the best option. Maybe for you it’s whole milk. Maybe for you you need to go lactose free. And then you see those real time changes almost like a video game and suddenly you’ll see those health improvements. It’s a really exciting, innovative time right now. I think nutrition field is poised to take a leadership in health.
Mike Brown:
Yeah, speaking of wearables, because I have a long-term serious type two diabetic, thankfully now completely in control. But the thing that’s helped me as much as Ozempic has been a CGM. I know what my blood sugars are. I can tell you right now what it is if I looked at my phone, and when they get to the point where they can do that through the skin and not having an attachment, I change every 14 days, it’ll be better. But that to your point is a tool and I’ve learned what I can eat and what I can’t eat. And if I eat six servings of whole grains a day, I’d be back above an A1C 6.0. I’ll guarantee you.
So, those tools are going to help me as they become more accessible and affordable, it’s going to benefit everyone because cost of healthcare goes down if we’re healthier. As I’ve gone through this journey, the thing that’s been most exciting to me of all, what a big role dairy personally is paid for me in solving my health issues because of the proteins and the satiety of the fats. I haven’t changed my fat consumption. I tell people, if you’re a cheese maker, you still love me. If you grow wheat, potatoes or rice, you don’t like me so much. You do make changes in your diet.
Dr. Chris Cifelli:
For sure. And I think the exciting thing about personalized nutrition is… I’m Italian descent. I can’t give up pasta. I mean, I think my grandmother might come down from heaven and beat me. But how do I manage eating a portion of that or mixing it with Parmesan cheese or mixing in some ricotta so that I’m getting a little bit more protein and not overeating on the carbohydrate part? The more information, the more power then the consumer has and the more empowered they are to make these healthy choices. Like you said, continuous glucose monitoring is a great way. You do that because you have to link it to your foods. You want to know what’s spiking. Now the average person, they can make better and more informed choices and maybe stay away like I did right before this call because I was stressed and I grabbed a handful of Doritos. Maybe I’ll reach for the yogurt next time.
Josh White:
What are the next five years of this GLP innovation? What are the possibilities?
Paul Ziemnisky:
You’re seeing things in direct foods, high protein beverages, customs-focused products to help nutrition like PROTALITY from Abbott. Nestle is going big with Vitality. So, to give you food solutions that are higher protein, nutrient dense, low-processed carb, low sugars, you’re seeing food solutions. You think about the old meal kits that were hot a decade ago or during COVID, these custom boosters were GLP where they’ve got patented fiber blends. You got these online meal programs, high in fiber, low in fat, free of cholesterol, no added sugars. And this is where the dairy proteins, whether it’s dairy protein as a powder and different functional delivery vehicles are going to be put in. So, there’s going to be direct dairy as an ingredient on the pizza that Vital Pursuit has. There’s going to be direct milk as an ingredient in these beverages. But in these other meal pieces, these milk kits, these powder kits that you can be on the go take to the office, take it to work with you and do it yourself.
And then how do we attack supplements? We haven’t played deep in the supplement space, but we’re developing technologies like encapsulation so we can encapsulate and deliver things. So, right now, we’re in the ability to do encapsulated lactoferrin because it loses a lot of its efficacy when it hits either the liquid processing or even like a colostrum, holding that efficacy and bioavailability, by taking that next level down of dairy components and putting it back into dairy even, and adding functional things to it. Looking at different ways we attack the supplement aisle and bring added value. Because the one thing, Mike, to your point earlier, when people go on those diets, the households spend more on groceries. They’re spending more on food. And we know why. Consumer’s number one discretionary spending is health and wellness. We don’t often think about it, but that discretionary spending of, “I’m going to a health club. I’m ordering X and Y,” that adds up.
I remember when we helped launch Fairlife eight, 10 years ago, people said no one would pay $9.50 a gallon of milk and they’re paying 30 bucks a gallon of water that has no functional benefit. They will pay for high functional beverages for dairy and high functional foods for dairy, or just in an industry that’s been run by operations people. I come from the marketing side. You have companies like Procter & Gamble who make tons of money on margin on products on razors. They move people off a 10 cent Bic, into a $10 Fusion, $12 razor. I think the same thing’s going to happen in dairies. We’ve got to think value on top of the volume in these spaces because it’s a huge opportunity for us to look at the whole production line. It’s not just a cheese line, it’s not just a whey line, but we’ve got some great value added products that we’re going to be able to deliver.
GLP just as carve out piece, when I was talking to you guys about health and wellness, they’re spending as much money in these other spaces in health and wellness as their physical performance. Mental emotional health is going to be 10 billion this year. Chris talked about dairy, and tryptophan and casein helps sleep, There’s $5 billion. So, you start to go to these places, you’re going to see a combination, Josh, of innovation, very specific GLP, but broader dairy is a functional piece to deliver all those health benefits and high margin areas that we haven’t thought about playing before. And so, the question is do we want to be a supplier as an industry of ingredients? Or do we want to get down the vertical chain? I keep encouraging the industry closer to the consumers where you make the money.
Mike Brown:
You’re right, you spend more for groceries. We eat out less because I can’t get the foods I want to eat if I go to a restaurant. We’d bring Chinese carry out home so I can make my way of making a California rice edibles so I can have that with my cashew chicken. Do you see innovation on the restaurant trade side to accommodate some of the people that are trying to eat the higher protein, lower carb diets?
Paul Ziemnisky:
Right now, you’re seeing it happening like chicken.
Mike Brown:
How do we make sure that that chicken still has a little dairy on top of it?
Paul Ziemnisky:
Yeah, we actually do a lot of concepting in that space and then we share with the dairy processors, “Hey, here’s ways to pitch.” I’d say it’s probably one of the biggest complaints we hear from the food service side, is we focus a lot as an industry on retail, but food service has got a huge opportunity for dairy. You’ll look at chicken channel, you’ll look at some of these different players and as a side as an ingredient, I think you’re going to see, Mike, a shift. Cheese is a part of that, but you’ve got sour cream and other components going in there and different ways to deliver it. If you look at Taco Bell’s menu 10 years ago, the most expensive item was Doritos. Now we’ve got a $7.99 grilled cheese burrito, but we’re also testing cheese shells. And we’ve got dairy whips and freezes for us in food service, beverage is a big venue to attack the carbonate soft drinks. You’ve got smoothies, protein, coffee at Dutch Bros is a great example of that. We’re just starting to scratch the surface.
But in health and wellness, Mike, the top 10, QSRs control 45% of the sales and food service. Crazy. McDonald’s and Starbucks, all those guys. About 86% of food service sales go through the top 100 quick serve and fast casual places. And the rest are just the dine-in fine dining and stuff like that. It’s the emergence of these fast casual players that you’ll see move up that didn’t exist a decade ago. Chipotle is one, Panera is one. But it’s that next generation of player. Like Raising Cane’s is coming in and they don’t have a lot of dairy. It’s in their batter. How do you make it more prominent? So, there’s a huge opportunity just outside of GLP in the food service space.
Josh White:
I think we’ve covered the full circle in the conversation. Everything from infant to elderly, from athlete and sports nutrition, to overweight and pharmaceutically, and in all cases, it sounds like our products are superior.
Dr. Chris Cifelli:
And then a great point is dairy foods in particular, yogurt, kefir, cheese, are augmented end have tremendous health benefits. There’s strong science on its ability to help with gut health and lower inflammation as well. There was one area we didn’t hit on yet for GLPs that I think is important and maybe, I don’t know, Mike, if you’ve experienced this. But not only do you not want to eat, but you tend not to want to drink as much as well. So, hydration is such an important part of GLPs. And we know from studies that milk is more hydrating the water based on the beverage hydration index and other studies. So, it is the protein and all that stuff, but as you’re even trying to stay hydrated during the day and with older adults, this is already a problem. You can see where milk and the lower lactose ones for those who are lactose intolerant could be an awesome solution to get the protein, the vitamins, the minerals, and the hydration they need as they’re on these pharmaceuticals.
Mike Brown:
Well, the sports benefits of a drinking dairy are the same if you’re on a GLP diet. You’re absolutely right. The other thing is, lactose is digested differently. I’m not intolerant, a little bit slower. And now in our local grocery store, I have a choice of three high protein milks. I have Kroger’s brand, I’ve got Fairlife, and I’ve got Darigold FIT. They’re all lactose-free, too. I mean, they’ve all been treated with lactase. So, the options for that consumer are a lot greater. I think you got to get away from the amount of calories in milk to the amount of nutrition there is in milk for the calories you drink. And I think a lot of consumers struggle with that.
One thing I’m learned through my wellness journey is that if you eat high-quality protein and good quality fat, you will eat less because you won’t be hungry all the time. I can’t tell you the last time we bought a bag of chips. It’s been at least two years. It’s just is what we do. I’m from a family of large people and this is what you do if you don’t want to be large anymore. The whole balance of calorie versus nutrition, I think, is something that dairy has the most wonderful story to tell. Always has. And we’re doing a much better job telling it frankly, thanks to folks like you. Well, it seems like plant protein beverages have had their day, at least for now. Of course, the amount of protein in some of them is also suspect.
Paul Ziemnisky:
I think the industry’s gotten together and done a good job informing whatever farmers do every day for a living. I think that education’s gotten out there. And what’s shifted is the consumer, this younger generation, gen Z and Y, they’re more diligent. If you look at where we had headwinds the last decade where we had all the famous celebrities, private equity, the billionaires chasing alternatives, plant-based and cellular, that private equity and that money’s drying up. I mean, they’re still out there. You’ve got Europe doing their crazy things. But domestically and internationally, we’re set up long-term. So, instead of having headwinds the last decade, we have tailwinds, investment back into dairy, not just the 10 billion of assets our own industry is doing, but you see the private equity guys are looking, the brands are coming back, all the different health spaces, they’re putting more assets and more investment in it.
So, you’re seeing companies act. You’re seeing consumers act in the space and the tailwinds behind us now, the high quality protein, all these different growth spaces that the consumers are spending against. And that brain cognition. We’ve got research emerging there. We haven’t even talked about the future milk fat globule membrane, WPPC. Historically, they will waste products right. Now those are going to be the next value areas you’ll hear about in dairy in the next couple of years outside of lactoferrin because they’re meeting these functional needs. If you look at the macro at retail and at home, this area of food is medicine or precision nutrition. As you start to understand what affects each person personally, there’s going to be that component. But we also forget if you shift over to food service, it’s mental health. When you think about mental health also, it’s a relief. And so, that’s why still 60 plus percent of the decisions at food service, I’m going to go and just get something great.
I want to cook. I want to have something that keeps everybody happy. My friend grew happy, my family happy, whatever. And guess what? When you look at that list of products and you ask them, it’s mac and cheese, and pizza, it’s ice cream, and dairy by far is the number one ingredient product in the food service space for meeting that mental health space. I say we’re set up to win because the two areas of growth is going to be this health and wellness space in this space of taste enjoyment that drives our society forward. If you look at exports, you’re seeing we’re penetrating markets. Pizza’s still underdeveloped and burgers’ underdeveloped, and all these other dairy carriers are across growing economies. The tailwinds are pushing us in all these spaces, in the US the way we’re set up is really to win.
Ted Jacoby III:
Awesome. Paul, thank you, Chris. Fantastic conversation today, guys. Paul, Chris, really appreciate you guys joining us. This was just a great conversation about all the different ways that dairy’s got a really bright future. So, thank you.
Dr. Chris Cifelli:
Thank you.
Paul Ziemnisky:
Thanks for the opportunity to talk to our farmers. We represent all the US dairy farmers. And we’re the voice for nutrition, science and product science on behalf of them. And our job is to drive dairy growth incrementally, so we’re trying to find ways to do that. That’s our team’s role, so thanks for the opportunity.
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We welcome your participation in the Milk Check. If you have comments to share or questions you want answered, send an email to [email protected]. Theme music is composed and performed by Phil Keggy. The Milk Check is a production of TC Jacoby & Company.
Dr. Chris Cifelli:
Rock and Roll.
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By T.C. Jacoby & Co. - Dairy Traders
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GLP-1s like Ozempic and Wegovy are changing how Americans eat, and that has big implications for the dairy industry.
In this episode of The Milk Check, host Ted Jacoby III welcomes Paul Ziemnisky, leader of nutrition and industry growth platforms at Dairy Management Inc., and Dr. Chris Cifelli, vice president of nutrition research for the National Dairy Council.
Together with the Jacoby team, they unpack what GLP-1 appetite-suppressing drugs mean for dairy demand, and how our industry can win. We cover:
From gut health to GLP-1 support, this episode dives deep into one of the most important trends shaping dairy today. Join us for The Milk Check episode 81: The Ozempic and GLP-1 shockwave hitting U.S. dairy.
Intro with music:
Welcome to the Milk Check, a podcast from T.C. Jacoby & Co, where we share market insights and analysis with dairy farmers in mind.
Ted Jacoby III:
Hello, everybody, and welcome to the Milk Check. Excited to be here today. In addition to our usual suspects, Josh White, Mike Brown, and my brother guest, Jacoby. We’ve got two special guests today. We have Paul Ziemnisky, leader for nutrition and product science, technology, innovation and industry growth platforms at Dairy Management Inc. Again, we have Dr. Chris Cifelli, vice president of nutrition research for the National Dairy Council. Guys, thank you so much for joining us today. Thank you for taking time out of your busy days to talk about GLP-1s and how it’s affecting the dairy industry. We really appreciate it. What are GLP-1s and why are they good for dairy?
Dr. Chris Cifelli:
I’ll start with what they are and then Paul can talk about the consumer point of view. One of the key things whenever we eat food is that feeling of satiety, the feeling of fullness we get during a meal and then the satiation that occurs between meals until we get those body cues again that we’re hungry and we want to eat. Unfortunately, in the environment we’re in with stress and different factors, our body is a lot off schedule, so we tend to eat a lot more than we may need to on a daily basis.
What GLP’s are, glucagon like peptide is the official name, it’s an appetite suppressant. So, when you eat and especially when you eat fat and protein, the body will release GLP-1 naturally, and that’s what starts making you feel full. What these pharmaceuticals are, are ways to keep the levels of GLP-1 up in your body so you feel less hungry throughout the day more naturally. And what that’s going to do is you’re not going to snack quite as much. You’re not going to have those cravings maybe for sweet salty snacks during the day. But with that appetite suppressant, it means that every calorie really then matters when you’re eating throughout the day, and that’s really where dairy can win.
Paul Ziemnisky:
To build on that, what it means for dairy is, I think Chris used two magic words, fat and protein. I think fat’s been vilified since this early ’70s, late ’60s, and we’ve put a lot of effort in investment in proving the value of fat, especially dairy fats. I think you’re going to see in the next six months, the acceleration of an acceptance of fat into things like the dietary guidelines and other uses. And the protein side of the equation, we’ve got the highest quality protein by far. We’ve got science behind the highest quality proteins and the efficacy of that.
And then by the way, consumers, when they purchase anything, taste is number one factor. So, when you look at taste, price, value, health and wellness, we deliver on all those three sweet spots for that consumer. And so, you see things like yogurt on fire because of that, because they can have yogurt and they enjoy the taste and it’s got all those signs behind it with gut health and immunity. You see things emerging like cottage cheese. Cottage cheese is fermented, cheese is fermented, and I think we under market and under leverage that.
Chris and I have been on the road working with our cheese peers talking about let’s play up the protein and the fermentation, and some of the health benefits of that to drive new occasions. Then you see other things popping too in the space like creamers, which are adjacent to the GLP piece, but that fat in the keto and that satiety. And so, we’ve been working to dust off the decades of science to actually build a health and wellness playbook for the industry to use how to talk about these in a modern way with consumers. The great thing in the playbook is we actually tie the messaging and claims to science evidence, and so this is all the way approved through the USDA. So, we’re packaging out if you want to talk about weight management, you want to talk about performance, you want to talk about gut health, we’ve done quad studies with consumers at the different age cohorts. So, if you are a parent with a two-year-old, we’ve done studies with them.
If you’re talking to a boomer, here’s how you talk about dairy at these different needs states and moments. And so, worth this fulcrum where it all adds up to where about 60 plus purchase decisions at the home, is a health and wellness decision. And just to dollarize that for our farmers, that’s $350 billion being spent in these high priority areas. And our share in those $350 billion are small today. But if we get three share points of these spaces, that’s the size of the yogurt category today. So, we can double the yogurt category. And the great example of that is look at the probiotic sodas. They launched. They don’t have any science like we do on yogurt. But they’re the $2 billion category in five years, yet kefir’s only $250 million. Yogurt’s sitting around $6.5 billion. So, there’s a lot of significant upside us playing in some of these spaces and GLP’s one of those spaces. There’s even a bigger macro in the health and wellness space opportunity.
Ted Jacoby III:
Is protein really the biggest driver behind some of those health and wellness spaces that we want dairy to become a bigger part of? And why protein? You mentioned, Paul, when you were talking, he goes, “We’ve got the best protein.” Why is dairy the best protein?
Paul Ziemnisky:
I’ll let Chris answer the why and I’ll talk to the spaces if that’s okay, Ted. These spaces, when you start to carve out that $350 billion, you’ve got physical, athletic performance, sustained energy, childhood growth and nutrition, then you start to keep going around these areas of weight management. Those are $50 billion segments right there, and protein is the key driver. When you look at muscle growth, performance, protein is essential to fueling the growth. Then you get into the gen Y and millennials are recognizing they need that protein for that sustained energy. So, that’s where you’re seeing the growth of creamers and all this. They’re pounding it. They’re not drinking coffee, they’re drinking dairy with coffee.
And so, we’re seeing these other spaces of how do they stay satiety, energized, healthy. And then as you start to even age out, the boomers are recognizing they’ve got the most disposable income. You’ve got this big group of 80 million people, they’re trying to stay healthy. And so, you’ve got pre-aging occurring from the millennials and gen X, who don’t want to get to the point where they’re fracture risk and all that, so they’re consuming more protein because they’re seeing what’s happening to their parents. And then you’ve got the parents who are seeing what’s happening to their friends. And so, you look across all these age cohorts, proteins is this key driver for different needs states of each of these age cohorts. And Chris can talk through the science now.
Dr. Chris Cifelli:
From a nutrition point of view, I grew up building with Legos, so yeah, all these different pieces. For protein, there’s 20 amino acids, nine of which are essential, and dairy has all those. So, whey and casein are both complete proteins, so they have all the essential amino acids we need and they have them in the right proportions to support muscle growth and development, and all the other functions that protein do in the body. When it’s packaged, whether you’re talking milk, cheese, yogurt, cottage cheese or just isolates, it’s very bioavailable, so you’re not worried about any digestibility issues. You’re not worried about it being outcompeted by other nutrients. Our body takes it in.
What makes dairy really unique is you have the whey and the casein. So, whey being very fast acting, it’s absorbed very quickly. It’s great for muscle recovery after exercise. Whereas casein, a little higher in tryptophan, a little slower digestion, so you’ll feel a little fuller, but then at the same time a great protein before bed because of the tryptophan may help you sleep and recover overnight. There’s all this unique layering to it that really sets it apart from other sources of protein, even ones like egg that also have a lot of amino acids in them as well.
Ted Jacoby III:
How many different proteins are in milk?
Dr. Chris Cifelli:
Just the two main classes of whey and casein, and then a lot of different peptides and other things in there. But generally speaking, those are the two main protein classes.
Ted Jacoby III:
With whey proteins being a lot smaller, more easily digestible, and the casein being a lot bigger and therefore a lot slower to be digested.
Dr. Chris Cifelli:
Generally speaking, yeah, that’s a good way of thinking about it. Laddering it back or taking it back to the GLP-1 discussion, when you lose weight, especially weight rapidly, your body doesn’t care if you’re losing fat or muscle, so you’ll start losing both. And that’s why protein’s so important. So, as you’re eating meals or you’re needing that snack, all these dairy foods, whether they’re casein, whether it’s a glass of chocolate milk, whether it’s a yogurt, it’s going to provide that high quality protein you need to maintain your muscle as the body’s shedding the fat to help yourself on your weight journey. That’s one of the key attributes where dairy can win in this space.
Paul Ziemnisky:
What we’re doing on the R&D front is really focusing on investment to the isolates and things like that for functionality and products. And so, you see this heavy growth in nutritional beverage. You start to see these things like the Nurri at Costco, well on its way to a $100 million in its first year, and you see all the different, the Fairlife nutrition plans, the Orgains, the Premiers, that’s where you see this investment in R&D to make it function because otherwise the old used to settle in the products. And now they’re even adding it to water and other types of beverage.
Chris was over at IFT this week doing concepts in these protein-based mocktails. There’s investment on the nutrition science front, but there’s also heavy investment in the protein space for functionality, and bars and things like that. There’s a lot of things happening that is going to enable that protein of dairy to be placed in other growth sectors. I would expect you’re going to see the pizza crust. We’re looking at things to breads at Taco Bell. We’re looking to replace the shells with cheese as an examples of that, to meet some of these GLP consumers who are trying to cut back on those processed carbs and use dairy as the hero there.
Josh White:
What are the largest risks of GLP-1 consumption or GLP’s consumption for individuals? And is the demographic largely skewed to boomer or are you seeing equally as many millennials? Sorry to add multiple questions on here, but then the final question is I haven’t heard a whole lot about gen Z yet. From a healthy eating standpoint, as a parent of that demographic, I’m pretty blown away at how much they care about protein and what they eat. How does that demographic fit into this consumption profile for GLP?
Paul Ziemnisky:
The first thing we’re seeing is high sugar desserts, ice cream and things like that. So, we’re aggressively looking at high protein dairy. We actually took the IDFA forward this year. Cottage cheese, ice cream concepts is an example of ways to go in that low 22 grams, 25 grams of protein, 50% less sugar. So, you’re seeing a lot of players look at the ice cream space. How do they keep playing in that 7% of our sales in food service? So, how do we win there? I think that’s the biggest by far risk area. And the other one is just as we know, this $4 or $5 billion that’s being put out there in the cheese space, 750 million pounds of cheese coming online, cheese is going in some of these areas that’s carb driven. Whether it’s pizza, burger in that space. And so, working with the players, how do you bring thoughtful solutions to the food service players, a ways to use cheese and dairy. For us, we’re looking at ways to help them cut the carb side of that.
Consumers love the food. If you were to look at food service today, what’s slowing anything in food service down? It hasn’t been a GLP. It’s been primarily the inflation and that’s affected people who are living paycheck to paycheck. Taco Bell will tell you at the end of the month, people are coming in with change. And that’s not GLP driven, that’s economics driven. There’s winners though. Taco Bell, they’ve played that out because they’ve invested in innovation, keeping the consumer engaged and giving them solutions. Where McDonald’s, their traffic’s down, they walked away from innovation for a couple of years. There’s winners taking place and there’s losers in the food service world. But I would just say in the food service world right now, 90% was hitting food services is that inflationary piece hurting the consumer.
So, back to gen Z, you look at gen Z and the consumer segments. What’s interesting is really there is like five multiple segments who are going on GLP. There’s significantly overweight consumers. But there’s also people that are just looking to be fit to do it quickly to get back into shape faster. I think it’s like 25% to 35%. It’s an interesting fact. It is balanced across age groups, to your question. And there are a lot of younger people that hey, they’ve tried the diet. 80% of the US are always saying they’re on some sort of diet, but they’re finding this is a quick diet solution. When you look at the people who go on GLP drugs, the average is nine months, but you have some people that are going on for a month to two, that’s these younger generations who may need to lose 10 to 15 pounds. I’m like, hey, that’s an easy way for me to control it.
Because Chris will tell you on the science front, these side effects, the number one side effect is nausea. You’re just not feeling good. You can handle that for a month, but that’s where dairy plays in. That yogurt and the high protein helps offset that nausea feeling. That by far, if you start to segment it out, it isn’t really an age thing. It’s across all age cohorts. The risk though to GLP also favors dairy because the people who are obese going on it, you do lose that rapid weight, but guess what? You’re losing muscle and bone mass. When you go to any of the doctors today, especially people that are 50 plus, they’re hammering. You got to take dairy.
Chris and I were supposed to have a meeting tomorrow with two of the leaders of the industry on the GLP front and they actually postponed us. I was hoping we would’ve had some intel from them because the drug companies are going to feed in what they’re seeing and learning so far. So, maybe we have another regroup with you guys in three months. To answer your question, I think dairy across cohorts are going to have a significant solution, meeting these consumer needs. As you get older, it’s the bone mass. When you get younger, it’s the satiety and the nausea and maintaining fitness as well.
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Dr. Chris Cifelli:
We have to remind ourselves that these are still relatively new pharmaceuticals and these companies are working, as Paul’s mentioned, IFT, and there was a nice session on this. They’re all working to release now drugs that won’t have the same side effects. Maybe you won’t feel that same nausea and digestive issues. They suggest that one company’s working on a once a month injection so you’re not having to take it daily. So, it’s going to become even more prevalent. And I think they said in the session, it’s 5% or 6% of the populations on them right now, which doesn’t sound like a lot until you realize that’s about 20 million people who are currently on the drug with something like 10% to 15% who have at least taken it at some point. So, you’re talking significant numbers of people.
When we think about dairy’s opportunity space, as Paul said, some people are going on it because they’re not happy where their weight is and they want to lose weight, but then they transition off. And this is where the protein fat combination of dairy can really then fit in. You want your appetite to remain that you’re not going back to snacking or overeating again. The satiety factor of the high quality protein and the fat that comes with four fat dairy products like cheese, can maybe help you keep the weight off that you maintain while maintaining muscle mass. There’s that opportunity to introduce dairy not just a nutrition solution while you’re on the pharmaceutical, but also that you be part of the management plan [inaudible 00:14:46].
Ted Jacoby III:
But a lot more than just those people who are on Ozempic and Wegovy are hearing that message, and they’re realizing that for all of us we need to increase our protein intake. It’s getting beyond just that segment of the population that is hearing how important protein is, especially for the baby boomers in the aging population.
Paul Ziemnisky:
Especially when you start to look at youth. I think something around 87% of youth aren’t getting all the essential nutrients. And so, protein’s the first. All those other 13 essential nutrients that dairy provides, we know especially with people of color, they’re way underserved in that space. They’ve been following a lot of the regulation of, Hey, you have to stay away from fat, stay away from some of this. So, I’m hoping we see some improved messaging to help educate because we’ve been on it with our nutrition affairs, educating the doctors. Chris’s team is working with the Mayo Clinic doing science right now around whole fat. And Mayo Clinic’s already started to publish, given the look of the evidence we’ve given them to start to talk about not whole fats are the same. I think the understanding of what dairy’s fat is different, how it acts in this perfect combination will not just help us accelerate protein. We offer this broader nutrient density combination that no one has.
Josh White:
Where do most people get their nutritional advice from, particularly when they all of a sudden become medicated? Where are most people going for this advice? And who’s giving the people on the GLP drugs the advice as to what to eat?
Dr. Chris Cifelli:
That’s a great question. I think we all have to recognize their knowledge that medical doctors, general practitioners, family practitioners, insert doctor there, nutrition education is just not something that they get, and just like the rest of us, they’re getting it from sources that may or may not be reliable. In an ideal world, their practices would have a registered dietitian nutritionist partnered with them that after the doctor leaves the office, the nutritionist comes in. But we don’t live in the ideal world.
As Paul mentioned, we have this collaboration with Mayo. One of the things we’ve been talking about with them is how do you over time, increase the nutrition knowledge of the primary care physician so that they are understanding of what are the current recommendations? What is the latest science? Acknowledging that NDC has done a great job. Katie Brown, our colleague, working with them to ensure that, at least at the Mayo Clinic, we’re providing them that information, because it is a frustration. There is a lot of education that has to go on. And unfortunately then you go to social media, which gets like only 2% of what’s on TikTok nutritionally is accurate. That is an opportunity space for all of us, the education especially around dairy foods of their health and wellness benefits and dispelling some of these myths that you only have to have low fat, or you got to cut it out or it’s not improving your health because it’s categorically false.
Paul Ziemnisky:
I think the way to think of it, medicine to date is reactive medicine. It’s shifting though, Josh, to preventative medicine and we win, because that’s where food is. Medicine comes in. That’s where we’re at the forefront. If you guys have the ability and the privilege to go through the Mayo Executive Program, anybody has $20,000 to play with, you go in there and they look at your blood, they look at all these other tests, they do to EKG.
But the great thing is Mayo, they’re developing algorithms and they can say she’s predisposed of these three or four things. They can tell you that now based upon the executive program. But their goal is with telehealth and technology because they’re passionate about the rural consumer. They recognize whether it’s farmers or the inner cities. They don’t have the access like the Suburbans do to all the high-end doctors and stuff like that. So, Mayo is aggressively saying, how do we develop modern systems and technologies? The great thing is that will get to the youth fast. They’re telling you that three to five years you’re going to start to see these things roll out. And then when they recognize they’re going to put you on a food diet versus a pharma diet. Like Chris said, it’s always been pharma and the doctors because it’s reactive. When it comes to preventative medicine, food is going to be the solution. That’s where we’re really investing in that space.
Mike Brown:
Those of you who’ve known me a long time know I’m a lot smaller person than I used to be and GLP-1s played a big role. My house much better. My diabetes is fully in control. My cholesterol is actually below average, below for the first time in my life. But the other thing I want to comment on is my partner, who is eating the way I eat now. And frankly my diet, even though I’ve been on Ozempic for two years, was not prescribed by doctors. I did the work myself, because they don’t provide information. Part of that I think is because health insurance doesn’t really cover it, so they don’t worry about it too much. But he’s lost weight, too. He’s healthier, he’s more fit. So, my question is, this role of dairy protein and fats in our diets goes far beyond whether or not you’re on an expensive pharmaceutical from Eli Lilly or Novo. And what do we see as far as that broader impact?
These benefits go beyond just the shot. A big part of my success has frankly been the diet change. And yes, Ozempic makes it easier. We just eat differently. And I think we don’t need to tie the success just with an injection. The point was made earlier. A lot of it’s just diet decisions and it’s how we educate our physicians and our health community to help people make the right decisions. Chris, what do you see as the best things that are effective in helping with that education? Because it’s more than just giving someone a shot. It’s got to do with changing the way you manage your diet.
Dr. Chris Cifelli:
Great question and point, Mike. There’s a lot of nutrition size out there. We’re pretty confident in what protein does, fat does, the different diets. One of the joys of being on Paul’s team and the innovation team is when I’ve thought about these things differently. Now, I think these things are wearables and these things are phones, are going to be our best educator. Because as we get better at reliably tracking what we eat through the day like they do your sleep and your blood pressure, that kind of data motivates you to make change. The biggest gap right now in technology is that we have no easy way of capturing what you eat. I’ll say to you, “Hey, what did you have for breakfast today?” Or the thing will ask you, but it needs to be more real time.
Imagine merging your real time nutrition data with what your primary care physician and your insurance company takes from a healthcare. Now suddenly, you can enact change. You can start manipulating the two things and marrying to drive holistic change. In the next five, 10 years, you’re going to see this technology and the ability of AI to scan through some of that and say, “Hey, you ate this. Your blood pressure’s this. Tweak this a little.” Maybe for you, yogurt and cheese is the best option. Maybe for you it’s whole milk. Maybe for you you need to go lactose free. And then you see those real time changes almost like a video game and suddenly you’ll see those health improvements. It’s a really exciting, innovative time right now. I think nutrition field is poised to take a leadership in health.
Mike Brown:
Yeah, speaking of wearables, because I have a long-term serious type two diabetic, thankfully now completely in control. But the thing that’s helped me as much as Ozempic has been a CGM. I know what my blood sugars are. I can tell you right now what it is if I looked at my phone, and when they get to the point where they can do that through the skin and not having an attachment, I change every 14 days, it’ll be better. But that to your point is a tool and I’ve learned what I can eat and what I can’t eat. And if I eat six servings of whole grains a day, I’d be back above an A1C 6.0. I’ll guarantee you.
So, those tools are going to help me as they become more accessible and affordable, it’s going to benefit everyone because cost of healthcare goes down if we’re healthier. As I’ve gone through this journey, the thing that’s been most exciting to me of all, what a big role dairy personally is paid for me in solving my health issues because of the proteins and the satiety of the fats. I haven’t changed my fat consumption. I tell people, if you’re a cheese maker, you still love me. If you grow wheat, potatoes or rice, you don’t like me so much. You do make changes in your diet.
Dr. Chris Cifelli:
For sure. And I think the exciting thing about personalized nutrition is… I’m Italian descent. I can’t give up pasta. I mean, I think my grandmother might come down from heaven and beat me. But how do I manage eating a portion of that or mixing it with Parmesan cheese or mixing in some ricotta so that I’m getting a little bit more protein and not overeating on the carbohydrate part? The more information, the more power then the consumer has and the more empowered they are to make these healthy choices. Like you said, continuous glucose monitoring is a great way. You do that because you have to link it to your foods. You want to know what’s spiking. Now the average person, they can make better and more informed choices and maybe stay away like I did right before this call because I was stressed and I grabbed a handful of Doritos. Maybe I’ll reach for the yogurt next time.
Josh White:
What are the next five years of this GLP innovation? What are the possibilities?
Paul Ziemnisky:
You’re seeing things in direct foods, high protein beverages, customs-focused products to help nutrition like PROTALITY from Abbott. Nestle is going big with Vitality. So, to give you food solutions that are higher protein, nutrient dense, low-processed carb, low sugars, you’re seeing food solutions. You think about the old meal kits that were hot a decade ago or during COVID, these custom boosters were GLP where they’ve got patented fiber blends. You got these online meal programs, high in fiber, low in fat, free of cholesterol, no added sugars. And this is where the dairy proteins, whether it’s dairy protein as a powder and different functional delivery vehicles are going to be put in. So, there’s going to be direct dairy as an ingredient on the pizza that Vital Pursuit has. There’s going to be direct milk as an ingredient in these beverages. But in these other meal pieces, these milk kits, these powder kits that you can be on the go take to the office, take it to work with you and do it yourself.
And then how do we attack supplements? We haven’t played deep in the supplement space, but we’re developing technologies like encapsulation so we can encapsulate and deliver things. So, right now, we’re in the ability to do encapsulated lactoferrin because it loses a lot of its efficacy when it hits either the liquid processing or even like a colostrum, holding that efficacy and bioavailability, by taking that next level down of dairy components and putting it back into dairy even, and adding functional things to it. Looking at different ways we attack the supplement aisle and bring added value. Because the one thing, Mike, to your point earlier, when people go on those diets, the households spend more on groceries. They’re spending more on food. And we know why. Consumer’s number one discretionary spending is health and wellness. We don’t often think about it, but that discretionary spending of, “I’m going to a health club. I’m ordering X and Y,” that adds up.
I remember when we helped launch Fairlife eight, 10 years ago, people said no one would pay $9.50 a gallon of milk and they’re paying 30 bucks a gallon of water that has no functional benefit. They will pay for high functional beverages for dairy and high functional foods for dairy, or just in an industry that’s been run by operations people. I come from the marketing side. You have companies like Procter & Gamble who make tons of money on margin on products on razors. They move people off a 10 cent Bic, into a $10 Fusion, $12 razor. I think the same thing’s going to happen in dairies. We’ve got to think value on top of the volume in these spaces because it’s a huge opportunity for us to look at the whole production line. It’s not just a cheese line, it’s not just a whey line, but we’ve got some great value added products that we’re going to be able to deliver.
GLP just as carve out piece, when I was talking to you guys about health and wellness, they’re spending as much money in these other spaces in health and wellness as their physical performance. Mental emotional health is going to be 10 billion this year. Chris talked about dairy, and tryptophan and casein helps sleep, There’s $5 billion. So, you start to go to these places, you’re going to see a combination, Josh, of innovation, very specific GLP, but broader dairy is a functional piece to deliver all those health benefits and high margin areas that we haven’t thought about playing before. And so, the question is do we want to be a supplier as an industry of ingredients? Or do we want to get down the vertical chain? I keep encouraging the industry closer to the consumers where you make the money.
Mike Brown:
You’re right, you spend more for groceries. We eat out less because I can’t get the foods I want to eat if I go to a restaurant. We’d bring Chinese carry out home so I can make my way of making a California rice edibles so I can have that with my cashew chicken. Do you see innovation on the restaurant trade side to accommodate some of the people that are trying to eat the higher protein, lower carb diets?
Paul Ziemnisky:
Right now, you’re seeing it happening like chicken.
Mike Brown:
How do we make sure that that chicken still has a little dairy on top of it?
Paul Ziemnisky:
Yeah, we actually do a lot of concepting in that space and then we share with the dairy processors, “Hey, here’s ways to pitch.” I’d say it’s probably one of the biggest complaints we hear from the food service side, is we focus a lot as an industry on retail, but food service has got a huge opportunity for dairy. You’ll look at chicken channel, you’ll look at some of these different players and as a side as an ingredient, I think you’re going to see, Mike, a shift. Cheese is a part of that, but you’ve got sour cream and other components going in there and different ways to deliver it. If you look at Taco Bell’s menu 10 years ago, the most expensive item was Doritos. Now we’ve got a $7.99 grilled cheese burrito, but we’re also testing cheese shells. And we’ve got dairy whips and freezes for us in food service, beverage is a big venue to attack the carbonate soft drinks. You’ve got smoothies, protein, coffee at Dutch Bros is a great example of that. We’re just starting to scratch the surface.
But in health and wellness, Mike, the top 10, QSRs control 45% of the sales and food service. Crazy. McDonald’s and Starbucks, all those guys. About 86% of food service sales go through the top 100 quick serve and fast casual places. And the rest are just the dine-in fine dining and stuff like that. It’s the emergence of these fast casual players that you’ll see move up that didn’t exist a decade ago. Chipotle is one, Panera is one. But it’s that next generation of player. Like Raising Cane’s is coming in and they don’t have a lot of dairy. It’s in their batter. How do you make it more prominent? So, there’s a huge opportunity just outside of GLP in the food service space.
Josh White:
I think we’ve covered the full circle in the conversation. Everything from infant to elderly, from athlete and sports nutrition, to overweight and pharmaceutically, and in all cases, it sounds like our products are superior.
Dr. Chris Cifelli:
And then a great point is dairy foods in particular, yogurt, kefir, cheese, are augmented end have tremendous health benefits. There’s strong science on its ability to help with gut health and lower inflammation as well. There was one area we didn’t hit on yet for GLPs that I think is important and maybe, I don’t know, Mike, if you’ve experienced this. But not only do you not want to eat, but you tend not to want to drink as much as well. So, hydration is such an important part of GLPs. And we know from studies that milk is more hydrating the water based on the beverage hydration index and other studies. So, it is the protein and all that stuff, but as you’re even trying to stay hydrated during the day and with older adults, this is already a problem. You can see where milk and the lower lactose ones for those who are lactose intolerant could be an awesome solution to get the protein, the vitamins, the minerals, and the hydration they need as they’re on these pharmaceuticals.
Mike Brown:
Well, the sports benefits of a drinking dairy are the same if you’re on a GLP diet. You’re absolutely right. The other thing is, lactose is digested differently. I’m not intolerant, a little bit slower. And now in our local grocery store, I have a choice of three high protein milks. I have Kroger’s brand, I’ve got Fairlife, and I’ve got Darigold FIT. They’re all lactose-free, too. I mean, they’ve all been treated with lactase. So, the options for that consumer are a lot greater. I think you got to get away from the amount of calories in milk to the amount of nutrition there is in milk for the calories you drink. And I think a lot of consumers struggle with that.
One thing I’m learned through my wellness journey is that if you eat high-quality protein and good quality fat, you will eat less because you won’t be hungry all the time. I can’t tell you the last time we bought a bag of chips. It’s been at least two years. It’s just is what we do. I’m from a family of large people and this is what you do if you don’t want to be large anymore. The whole balance of calorie versus nutrition, I think, is something that dairy has the most wonderful story to tell. Always has. And we’re doing a much better job telling it frankly, thanks to folks like you. Well, it seems like plant protein beverages have had their day, at least for now. Of course, the amount of protein in some of them is also suspect.
Paul Ziemnisky:
I think the industry’s gotten together and done a good job informing whatever farmers do every day for a living. I think that education’s gotten out there. And what’s shifted is the consumer, this younger generation, gen Z and Y, they’re more diligent. If you look at where we had headwinds the last decade where we had all the famous celebrities, private equity, the billionaires chasing alternatives, plant-based and cellular, that private equity and that money’s drying up. I mean, they’re still out there. You’ve got Europe doing their crazy things. But domestically and internationally, we’re set up long-term. So, instead of having headwinds the last decade, we have tailwinds, investment back into dairy, not just the 10 billion of assets our own industry is doing, but you see the private equity guys are looking, the brands are coming back, all the different health spaces, they’re putting more assets and more investment in it.
So, you’re seeing companies act. You’re seeing consumers act in the space and the tailwinds behind us now, the high quality protein, all these different growth spaces that the consumers are spending against. And that brain cognition. We’ve got research emerging there. We haven’t even talked about the future milk fat globule membrane, WPPC. Historically, they will waste products right. Now those are going to be the next value areas you’ll hear about in dairy in the next couple of years outside of lactoferrin because they’re meeting these functional needs. If you look at the macro at retail and at home, this area of food is medicine or precision nutrition. As you start to understand what affects each person personally, there’s going to be that component. But we also forget if you shift over to food service, it’s mental health. When you think about mental health also, it’s a relief. And so, that’s why still 60 plus percent of the decisions at food service, I’m going to go and just get something great.
I want to cook. I want to have something that keeps everybody happy. My friend grew happy, my family happy, whatever. And guess what? When you look at that list of products and you ask them, it’s mac and cheese, and pizza, it’s ice cream, and dairy by far is the number one ingredient product in the food service space for meeting that mental health space. I say we’re set up to win because the two areas of growth is going to be this health and wellness space in this space of taste enjoyment that drives our society forward. If you look at exports, you’re seeing we’re penetrating markets. Pizza’s still underdeveloped and burgers’ underdeveloped, and all these other dairy carriers are across growing economies. The tailwinds are pushing us in all these spaces, in the US the way we’re set up is really to win.
Ted Jacoby III:
Awesome. Paul, thank you, Chris. Fantastic conversation today, guys. Paul, Chris, really appreciate you guys joining us. This was just a great conversation about all the different ways that dairy’s got a really bright future. So, thank you.
Dr. Chris Cifelli:
Thank you.
Paul Ziemnisky:
Thanks for the opportunity to talk to our farmers. We represent all the US dairy farmers. And we’re the voice for nutrition, science and product science on behalf of them. And our job is to drive dairy growth incrementally, so we’re trying to find ways to do that. That’s our team’s role, so thanks for the opportunity.
Outro with music:
We welcome your participation in the Milk Check. If you have comments to share or questions you want answered, send an email to [email protected]. Theme music is composed and performed by Phil Keggy. The Milk Check is a production of TC Jacoby & Company.
Dr. Chris Cifelli:
Rock and Roll.
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