Real California Cheese
California Milk Advisory Board
Real California Cheese
This case was written by Professor Michelle Greenwald, Visiting Professor at HEC, Paris, for use with Advertising and Promotion: An Integrated Marketing Communications Perspective – 7th edition by George E. Belch and Michael A. Belch. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. Introduction
In 1982, faced with declining milk consumption and a surplus of milk production, the California Milk Advisory Board (CMAB) hired the Stanford Research Institute (SRI) to conduct a comprehensive analysis of the growth options for California’s dairy industry. The CMAB, a promotional board that is an instrumentality of the California Department of Food and Agriculture, represents all California dairy farmers by developing and executing generic promotional programs for the state’s dairy products, including cheese. The SRI analysis concluded that cheese was the industry segment that offered the greatest profit and growth potential for California dairy farmers. Per capita cheese consumption in the state at the time was 23.3 lbs., exceeding the national average of 19.7 lbs. Moreover, California’s population was projected to grow faster than the nation as a whole with a major portion of the growth coming from Hispanics, an ethnic group that consumes a significant amount of cheese. However, California was a net importer of cheese as out-of-state manufacturers supplied 80 percent of the natural U.S. produced cheese consumed in the state and nearly all of the processed cheese. Cheese also had faster historical and projected consumption growth rates than other dairy categories such as butter, ice cream and cottage cheese. Cheese production was viewed an excellent growth opportunity as it takes approximately ten pounds of raw milk to make one pound of cheese. It was also more profitable to produce. Because of
Real California Cheese
This case was written by Professor Michelle Greenwald, Visiting Professor at HEC, Paris, for use with Advertising and Promotion: An Integrated Marketing Communications Perspective – 7th edition by George E. Belch and Michael A. Belch. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. Introduction
In 1982, faced with declining milk consumption and a surplus of milk production, the California Milk Advisory Board (CMAB) hired the Stanford Research Institute (SRI) to conduct a comprehensive analysis of the growth options for California’s dairy industry. The CMAB, a promotional board that is an instrumentality of the California Department of Food and Agriculture, represents all California dairy farmers by developing and executing generic promotional programs for the state’s dairy products, including cheese. The SRI analysis concluded that cheese was the industry segment that offered the greatest profit and growth potential for California dairy farmers. Per capita cheese consumption in the state at the time was 23.3 lbs., exceeding the national average of 19.7 lbs. Moreover, California’s population was projected to grow faster than the nation as a whole with a major portion of the growth coming from Hispanics, an ethnic group that consumes a significant amount of cheese. However, California was a net importer of cheese as out-of-state manufacturers supplied 80 percent of the natural U.S. produced cheese consumed in the state and nearly all of the processed cheese. Cheese also had faster historical and projected consumption growth rates than other dairy categories such as butter, ice cream and cottage cheese. Cheese production was viewed an excellent growth opportunity as it takes approximately ten pounds of raw milk to make one pound of cheese. It was also more profitable to produce. Because of