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Food, Ag Innovations Keep Springing from Flyover Country

As the food industry followed American consumers into better-for-you eating, and Silicon Valley turned dietary consumption – like everything else – into a digital pursuit, the nation’s breadbasket lost relevance to the coasts.

But lately, entrepreneurs and big companies alike in Flyover Country are demonstrating they’re every bit as inventive as their counterparts on the seaboards. And they’re collectively determined to reassert the region’s rightful place as the font of innovation in agricultural technology and food development as well as in the more traditional pursuits of harvesting and processing foodstuffs.

Consider Matt Crisp, CEO of Benson Hill, the startup based in St. Louis that now is looking at a valuation of more than $1 billion after its pioneering scientific work on creating better plant proteins.

Also an outfit in Chicago called Bigger Table, a coalition of food and beverage companies that are coming together to source donated ingredients and manufacture them into healthy products that are given directly to food banks and food pantries around the area.

And Journey Foods, whose Austin-based founder, Rianna Lynn, is leveraging data to help food companies effectively manage and launch products and ingredients.

Still another Flyover Country innovator to consider these days is Dairy Farmers of America. If ever there were a traditional group, the Kansas City-based cooperative of 7,500 dairy farmers might just be it. But look at what DFA is doing nowadays, after swooping in last year to acquire the carcass of America’s largest milk producer, Dean Foods.

By far the nation’s largest milk producer, DFA has also become first to market with a hybrid product that combines milk and plant-based milk analogs into a new type of beverage meant to appeal to America’s growing class of “flexitarians.”

Now in its second market test, in New England, after DFA’s initial test in Minneapolis, the new brand called Live Real Farms offers five SKUs of “real milk blended with plant goodness.” Each of the beverages is at least 50 percent milk and is combined with either almond or oat ingredients.

The gambit is a huge one for DFA, which sees big reasons for hope that Live Real Farms could be a significant help in finally reversing the decades-long decline in fluid-milk sales.

“As we saw the flexitarian trend grow, it was important from our perspective to find ways to deliver modern beverages that get dairy to consumers,” said Rachel Kyllo, senior vice president of marketing and innovation for DFA dairy brands. She told me that about one-third of US consumers describe themselves as flexitarians. “We believed this product could be the best of both worlds.”

Of course, Live Real Farms also is heavily based on a brand and product narrative that weaves a sustainability ethos with Americans’ growing concerns about consuming locally originated products.

“This is a brand that could connect brand-to-table,” Kyllo said. “The back story for Live Real Farms is very much about ‘farmed from the heart,’ about working for a cause we believe in and being passionate about things rooted in goodness and honesty. It’s America’s story that goes along with Live Real Farms. And it’s very resonant with our target audience.”

It helps that, unlike most other mainstream beverages in the U.S., fluid milk remains highly fragmented on a regional basis, for a number of reasons. So, not only are there no real national brands for regular milk, there’s a predisposition by American consumers to believe that their local milk brand indeed is already “farm-to-table.”

Some handicappers believe DFA may succeed with its trailblazing hybrid line. “The dairy category has lagged many of the other beverage categories in innovation, so these products may be a welcome development for some consumers,” Gary Hemphill, managing director of research for Beverage Marketing Corporation consultants, told me. “The knock on some plant-based dairy alternatives has been limited protein content, and products like this may be the answer to that.”

But skeptics about Live Real Farms abound, projecting major difficulty for DFA in getting purists from either the dairy or plant-based camp to shelve their reservations in favor of the alternative. , as well as the overall beverage industry’s poor track record in selling similar hybrid propositions.

In any event, after winning 44 former Dean’s facilities out of bankruptcy with a $433-million bid in March, DFA has plenty of milk-processing and production capabilities, and Live Real Farms is a significant effort to harness them in potential new directions for growth. “We were looking for opportunities for dairy to play a role in more modern consumer lifestyles,” Kyllo said. “We saw plant-based growth.”

Live Real Farms’ path began with DFA research into changing consumer perceptions. “A lot of consumers are straddling the fence,” Kyllo noted. “They buy milk on a regular basis and plant-based milk on a regular basis; they use them for different reasons and occasions. We found that more than 40 percent of consumers shop and use both categories.”

DFA tested product concepts that “delivered the nutrition of dairy with what consumers saw as the plant goodness in plant alternatives,” she said. The company wanted its hybrid products to consist of at least 50 percent dairy “for high-quality protein,” in combination with almond milk, which yields little protein.

“After that, it was sensory exploration,” Kyllo explained. “These test products were perceived by consumers to be a little lighter and more refreshing than a full-dairy product but with the creaminess and body and texture of milk that can’t be delivered by plant-based alternatives. It was a matter of what percent of dairy was combined with what percent.”

DFA chose almond for four of its SKUS and oats for the fifth. “We wanted to play in the largest [plant-based] segments – the ones for which consumers have the largest frame of reference,” Kyllo said. “So almond was a natural. And, as we were beginning to plan for launch, oats were in their infancy, but we knew that ingredient was going to gain traction quickly.”

Sweetening wasn’t much of a challenge because, while regular milk isn’t sweetened, Americans love their chocolate milk, which is usually sweetened with sugar or cane sugar. Plant-based competitors such as Almond Breeze also use sugar.

“We’re familiar from a formulation standpoint, but it was a matter of finding the right level of sweetness” for the Live Real Farms SKUs, Kyllo said. “We wanted to deliver an enjoyable beverage.”

DFA introduced Live Real Farms in late 2019 in a small-scale test in the Minneapolis market, with an emphasis on 360-degree messaging that included not only social media and shopper marketing but also even local TV advertising.

“It was a difficult story to tell, communicating why it made sense to put [milk and plant-based analogs] together, and more of a challenge than we anticipated up front,” Kyllo conceded. “Our story was about a product that brings together the best of two worlds, and we knew that consumers perceived it to be very versatile. We showed them how to envision it in a glass or in smoothies or on cereal.”

But DFA found that approach wasn’t as effective as it had hoped. So in launching a second test market, in New England, several months ago, the co-op switched its messaging significantly.

“As we’ve refined it, it’s more about how Live Real Farms products provide a great nutrition package with plant goodness that delivers a great-tasting beverage,” she said. “It’s tighter positioning.” Also, DFA is aiming more precisely at “consumers who have interest in plant-based positioning” and is relying for such targeting solely on digital means; there’s no TV advertising in New England.

Kryllo said that retailers in the test markets have been willing to give Live Real Farms a try. “They have a strong interest in innovation in the dairy space,” Kyllo said. “We’re already seeing more hybrid products in the meat space that are being launched by major brands, so there’s more acceptance of blending. So [stores] are willing to give us space on the shelf.”

And to the extent that Live Real Farms succeeds, it’ll be more proof that Flyover Country is still home to significant innovation in the food business.


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