- Farming cooperative Darigold is making organizational changes to support its initiative to become a global dairy ingredients business. The Pacific Northwest cooperative will announce the location of its manufacturing plant, along with more specifics surrounding the products it intends to bring to market, in 2021.
- On Nov. 1, Joe Coote will assume Darigold's newly-created role of president of global ingredients. He comes from New Zealand dairy nutrition company Fonterra, where he served as the director of global supply chain and optimization. Current chief operating officer Grant Kadavy will transition to become Darigold’s chief growth and risk officer. He will be responsible for overseeing the launch of the new ingredients plant as well as integrating new offerings into the cooperative’s overall businesses. Matthew Sagendorf is coming from shelf-stable dips and sauces company Berner Food & Beverage to lead the construction and start up of the new ingredients plant.
- Darigold also signed a lease for 284,000 square feet of warehouse space near the Port of Seattle.
For years, the dairy industry has struggled. Overall sales of dairy milk dropped 15% in five years, from about $18.9 billion in 2012 to $16.12 billion in 2017, according to Mintel. And the pandemic has only exacerbated this decline. Dairies around the country are facing forecasts that indicate many markets will have a slow, uphill battle to offset the declines that came during the pandemic.
With such a bleak prognosis, it is no surprise that those who can are looking elsewhere. Darigold set its sights on moving into the ingredients space two years ago when it finalized its 10-year transformation and growth strategy. Now, the cooperative is accelerating the pace and actively moving to execute the transition.
Unlike the traditional milk market, growth expectations for dairy ingredients are headed in a positive direction. The global dairy ingredients market is estimated to rise at a compound annual growth rate of 7.1%, from $53.8 billion in 2019 to $81.4 billion by 2025, per Markets And Markets data. The milk powder segment is projected to have the largest growth in terms of value. Powdered milk brings richness to food products and is used in applications from infant formulas to sports drinks.
Darigold has a relatively straightforward path to tap into the milk powder segment. Already, the dairy cooperative has experience working with farmers and milk. The next step is to create a shelf-stable powdered version rather than a liquid.
Being able to provide ingredients that can create functional food products with both good flavors and enhanced nutritional profiles may prove to be an advantageous move for Darigold. If the dairy co-op moves into milk protein isolates, that advantage may grow even further. Research and Markets estimated the global protein ingredients space could be worth $48.77 billion by 2025.
While the overall direction of the market seems to be toward plant-based dairy alternatives, there are other companies that are eschewing this trend to provide innovative dairy ingredients to consumers. Ingredient manufacturers including Kerry, Batory Foods and Milk Specialties Global all offer milk protein isolates. Denmark’s Arla foods recently launched an organic milk protein isolate and has previously invested in a line of clean-label, dairy-based ingredients for use in cake toppings, cream cheese and cooking cream.
Food Business News reported Darigold’s purchase of waterfront warehouse space will facilitate the management of the global container business and partnerships with international shippers. Growing their international presence may prove to be especially shrewd for a co-op that is transitioning into ingredients manufacturing. According to Markets and Markets, global demand for dairy ingredients is anticipated to be dominated by the Asia-Pacific region as consumers there search for functional and fortified foods.