Darigold expands global operations: ‘All of Latin America is a target for us’

By Mary Ellen Shoup contact

- Last updated on GMT

Darigold expands global operations: ‘All of Latin America is a target for us’

Related tags: Mexico, Darigold, Cheese, butterfat

US dairy producer Darigold, Inc. has expanded its operations to new international markets including Mexico City to develop a stronger presence in the country, an “incredibly important market” for the company, says Jonathan Spurway, senior vice president of the ingredients division.

Headquartered in Seattle, Washington, Darigold is the marketing and processing subsidiary of Northwest Dairy Association (NDA) owned by nearly 500 dairy farm families and ships approximately 10 billion pounds of milk annually to its export markets.

As one of the largest US dairy producers, Darigold produces a full line of dairy-based products for retail, foodservice, commodity, and specialty markets.

Darigold has been exporting to Mexico for years, but now it will have a dedicated office in the country’s capital with a sales team of five to eight people, Spurway said.

“We’re a business that wants to get close to our customers,” ​Spurway told FoodNavigator-LATAM. “It’s not about the products in itself, it’s about our full service and our ability to find value added solutions for our customers.”

Mexican dairy preferences

Spurway highlighted skim milk powder, whey protein, cheese, and butterfat as some of its most valuable dairy products that it exports to Mexico where demand for dairy products has increased among the country’s rising middle class that has more disposable income.

According to Spurway, Mexico will continue to be a key market for the company because dairy products, particularly ones made with US ingredients, are seen as higher-end by Mexico's rising middle class.

“As you look to countries with populations with a growing middle-income bracket ​[such as Mexico], dairy products are seen as premium and continue to grow in demand,”​ Spurway said.

Cheese, for example, is a staple in the Mexican diet but fresh and aged cheese consumption (a quarter of which comes from the US) is driven by the middle to upper income brackets who seek out more hard cheeses that are seen as more “premium” ​by Mexican consumers, according to the USDA Foreign Agricultural Service GAIN report.

A broad consumer transition from margarine to butter among Mexican consumers has driven up imports of butterfat into Mexico. According to the USDA, Mexico historically imports 20% to 25% of the butter it consumes making it an attractive market for many exporters including the US.

However, the US currently represent just 3% of Mexico’s butter imports, dwarfed by New Zealand’s 90% share of butterfat imports.

According to Spurway, its new offices in Mexico is just the start of its penetration into the Latin American market stating, “all of Latin America is a target for us.”

Importance of dairy trade in Mexico

US dairy companies are recognizing the value in exports and have been targeting international markets such as Mexico that has become the largest importer of dairy products, according to the US Dairy Export Council.

Mexico accounts for roughly one-fourth of all US dairy exports – last year alone Mexico imported $400m worth of cheese – thanks to the North American Free Trade Agreement (NAFTA) that gave both countries tariff-free open trade access.

For Darigold, 40% of its farm milk production goes into export products today, and the company expects that to surpass 50% in coming years, in addition to overall farm production growth.

However, that goal may be harder to achieve with Mexico’s retaliation for US actions on steel and aluminum imports, adding new tariffs on US dairy products some of which are set to reach 25%.

In a letter to US Administration signed by numerous dairy industry players including NDA, company leaders urged President Donald Trump to maintain free market access between the US and Mexico because as it currently stands, the “[US] share of the Mexican market is in grave jeopardy.”

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