US standards of identity for dairy have “served to limit the size of the domestic market” by protecting existing categories at the expense of new, innovative products, WhiteWave Foods chairman and CEO Gregg Engles has claimed.
In his recent SupplySide Beverage Insight report , the former Dean Foods chairman and CEO said that “by pushing manufacturers and marketers into other food forms in order to deliver the product attributes consumers want” these regulations have restricted the growth of the US dairy market.
Standards of identity for food are the mandatory federal requirements that determine what a product must or must not contain to be marketed under a certain name.
According to Engles, the existing standards are built on the concept that milk is “nature’s perfect food."
“Don’t get me wrong, dairy is great food,” he said. “But in an era of exploding consumer choice and information, the notion that one food is perfect, and that consumers are easily confused about ingredients or source materials, is both incorrect and limiting.”
Consumer calorie concerns
The US standard of identity for milk hit the headlines earlier this year when a dairy industry-requested amendment to the regulation was met by opposition from nutrition experts and consumers.
The petition, published in the US Federal Register by the US Food and Drug Administration (FDA) in February 2013, asked an amendment to the standard to allow milk flavouring ingredients to be sweetened with “any safe and suitable sweetener.” If approved, flavoured milk product manufacturers will no longer be required to indicate on front-of-pack labels that artificial sweeteners, such as aspartame, have been added.
The petitioners, the International Dairy Foods Association (IDFA) and the National Milk Producers Federation (NMPF), claim that approving the amendment will help stem the current milk consumption decline in US schools.
Engles gave his backing to the proposed amendment, and claimed that a “meaningful amount” of the recent decline in fluid milk volumes could be attributed to consumers switching to lower-calorie alternatives.
“Yet industry regulations, based on standards of identity, prevent manufacturers from removing the lactose (which isn't very sweet) and replacing it with a lesser amount of either sucrose or a non-nutritive sweetener, while still using the descriptor ‘milk’.”
“If the standards are not changed, consumers concerned about calories will continue to go elsewhere,” he said.
US dairy advancement “lagging”
Engles also questioned the effectiveness of the country’s existing class pricing system and its dairy price support structure.
The latter, Engles claimed, has negatively impacted the global competitiveness of the US dairy industry.
As a result of these pricing policies and standards, the US dairy industry “spends more time thinking about how to divide the pie, and less time thinking about how to grow it,” he said.
“For an industrialized nation, the United States is woefully lagging in its advancement of the dairy industry."
“An outdated regulatory environment has resulted in unfair competitive advantages for some segments – and penalties for others. Unless a handful of underlying key issues are addressed, dairy is unlikely to ever reach its full potential,” he added.