Strategic alliances have enabled Dairy Farmers of America (DFA) to overcome the “emotion” that comes with attempting to enter emerging markets such as China.
Speaking at the Zenith International Global Dairy Congress in Istanbul last week , Jay Waldvogel, senior vice president of strategy and international development at DFA, said that manufacturers can “minimize the risk” associated with entering a new market by establishing partnerships and alliances.
“The challenge that you run into [when entering new markets] is emotion. That amplifies everything,” he said during his presentation, Building alliances for faster access to emerging markets.
“We find that alliances smooth over this.”
“We de-risk it and take out some of the emotion, and we’re able to grow much more quickly," said Waldvogel.
DFA and Fonterra joined forces in 2000 to form DairiConcepts, the first US commercial operation for milk protein concentrate (MPC).
To the partnership, DFA brought milk and Fonterra provided the technology and expertise needed to produce MPC.
"We had two different organizations approaching two different issues," said Waldvogel.
"That alliance allowed the both of us to go much faster."
These relationships, Waldvogel added, "come in many shapes and forms."
"Many shapes and forms"
Looking to capitalize on increasing Chinese consumer demand for imported UHT milk , DFA more recently established an alliance with US retail giant Walmart in China.
“Go into a store and you’ll see twenty different brands from around the world,” said Waldvogel.
“So how does DFA participate in this market? How do we do it in a way that allows us to build a long-term position in the market and put a branded product on the shelf as opposed to just UHT milk?”
Though its alliance with the retailer, DFA's US-produced California Gold brand ultra-high UHT milk is shipped to China is distributed at Walmart and Sam’s Club stores across the country.
“In this case we aligned ourselves with a retailer – a retailer who is prepared to position our product and promote our product," said Waldvogel.
"So, again, finding an alliance allows us to steer very quickly into the market. It allows us to get from nothing to a position in the market quickly, and in a position we think we can sustain us.”