2018 September Board Book

CALIFORNIA MILK ADVISORY BOARD

Board of Directors Meeting

September 12 – September 13, 2018

CALIFORNIA MILK ADVISORY BOARD 2316 Orchard Parkway, Suite 200 Tracy, California 95377 (209) 883-6455 RealCaliforniaMilk.com

BOARD MEETING AGENDA Wednesday, September 12, 2018 at 7:30 am and Thursday, September 13, 2018 at 8:00 am DoubleTree by Hilton Modesto 1150 9th Street, Modesto, California 95354 (209) 526-6000

All matters noticed on this agenda may be considered for action. Items listed on the agenda may be considered in any order at the discretion of the Board Chair. Any item not so noticed will not be considered or discussed. All meeting agendas and notices are available on the California Department of Food and Agricultural website at: https://www.cdfa.ca.gov/mkt/mkt/ . (select meeting notices) Each of the agenda items below will include discussion and possible action by the Board. Time will be allowed for members of the public to make comments on each agenda item. Comment time may be limited based on the number of agenda items and/or number of commenters.

1. Call to Order – Chairman Dante Migliazzo

2. Roll Call – Secretary Essie Bootsma

3. Introduction of Guests

4. Closed Session Pursuant to Government Code section 11126, the Board is authorized to meet in Closed Session for the purpose of considering matters involving: a. Pending litigation – Misappropriation of Assets [Government Code 11126(e)(1)] b. Personnel matters – Employee Misconduct and Possible Disciplinary Action [Government Code 11126(a)(1)]

5. Reconvene Open Session

6. Public Hearing on Employee Misconduct

7. Reconvene Closed Session from item 4 above pursuant to Government Code 11126(a)(4)

8. Reconvene Open Session

9. Financial Report – Treasurer Tony Louters

10. Individual District Reports

11. Marketing Branch Report

12. Report from Chairman – Dante Migliazzo

13. Report from Chief Executive Officer – John Talbot

14. Program Review and Proposals a. Advertising/Communications b. Business Development (Retail, Foodservice, International, Processor Relations) c. Producer Relations

15. Breakout Sessions: Advertising/Communications; Business Development; Producer Relations

16. International Interns

17. Guest Speaker – Sara Dorland, Managing Partner, Ceres

18. Committee/Industry Meetings Update

19. National Dairy Board Update

20. Minutes of Last Board and Executive Committee Meetings – Secretary Essie Bootsma a. Public comments on agenda items

21. Other Business a. Previously discussed or tabled agenda item(s) for approval b. Items to be discussed at next board meeting

22. Public comment on non-agendized items

23. Adjournment

Americans With Disabilities Act Persons with disabilities needing special accommodation or modification in order to attend or participate in any Board or Committee meeting or other Board activity may request assistance by contacting John Talbot, C.E.O., California Milk Advisory Board at 209-883-6455.

B AGLEY -K EENE O PEN M EETING A CT S ECTIONS 11120 THROUGH 11132 OF THE C ALIFORNIA G OVERNMENT C ODE

Objective of the Act

When the Legislature enacted the Bagley-Keene Open Meeting Act (Act), it imposed a “value judgment” on the Governmental process. In effect, the Legislature said that when a State body sits down to develop its consensus, there needs to be a seat at the table reserved for the public. By reserving this place for the public, the Legislature provided the public with the ability to monitor and participate in the decision-making process. If the State body were permitted to meet in secret, the public’s role in the decision-making process would be negated. Therefore, absent a specific reason to keep the public out of the meeting the public should be allowed to monitor and participate in the decision-making process. If one accepts the philosophy behind the reservation of a seat at the table for the public, many of the particular rules that exist in the Act become much easier to accept and understand. Simply put, some efficiency is sacrificed for the benefit of greater public participation in government. A State body is every state board, council, commission or similar multimember body that is created by statute or by executive order including committees appointed by a State body (if the committee consists of three or more members). A meeting occurs when a majority of a body convenes, either serially (not permitted) or, together in one place, to address issues under the body’s jurisdiction. This includes meetings solely for the purpose of presenting information to a body. Even if no actions or decisions are contemplated, a gathering of a majority of a body to discuss issues under the body’s jurisdiction is considered a meeting under the Act. Serial Meetings occur when a member or staff of a State body communicates by telephone or email individually with a sufficient number of other members to constitute a quorum in order to discuss issues to come before the body. Such serial communications are prohibited by the Act. Social gatherings of a State body are not considered meetings covered by the Act so long as official business is not discussed. Teleconference meetings are permitted provided that information necessary to access the teleconference electronically and a primary physical location are included on the meeting notice, the location is accessible to the public and at least one member is present. Members planning to participate electronically must notify the Board office at least 24 hours in advance. The meeting minutes must reflect those members participating electronically. A Meeting Notice must be published at least ten (10) days prior to the date of the meeting. To avoid issues, issue notice 11 days before meeting at the latest. Meeting Notice must be mailed (or emailed) to anyone requesting a copy and must be posted on the Board’s website. The Meeting Notice must also be posted on CDFA’s website.

What is a State Body?

What Constitutes a Meeting?

What are Serial Meetings?

Social Gatherings

Teleconference Calls

Regular Meeting Notice Requirements

Required Posting

Special Meetings

In order to provide State bodies with a means of holding a meeting on short notice because of the occurrence of an unforeseen event, the Act allows for “Special Meetings” with a 48-hour notice with copies to all national wire services. The purposes for which a body can call a special meeting are quite limited. Examples include pending litigation, legislation and certain personnel actions.

Notice Content

The Meeting Notice must include: ▪ Date, time and place meeting is to be held ▪ A specific agenda for the meeting ▪

If there will be a Closed Session, must be on the agenda and must cite Code Section and Subsection providing legal authority for Close Session. ▪ Notice that for every agenda item there will be discussion including public comment, and that board action may occur. ▪ Must list a contact person for questions concerning the agenda or for needed special accommodations. ▪ See example notice and agenda attached. The Agenda should allow opportunity for public comment on each agenda item . Members of the Public should also have opportunity to offer comments on subjects not listed on the agenda (reasonable time limits can be applied) A state body must record in the meeting minutes any action taken by the body and the vote or abstention of each member present for the action. In most cases, there are only two authorized reasons for Closed Sessions for our programs: ▪ Personnel Issues [Government Code Section 11126(a)(1)] ▪ Pending Litigation – Attorney should be present with memo prepared for the board of directors. [Government Code Section 11126(e)(1)] ▪ Chair must announce in open session that the Board is entering into closed session and state the (general) purpose of the closed session ▪ Only board members and people necessary to conduct the business of the closed session should be present ▪ When closed session adjourns, open session must be reconvened and the general nature of any actions taken in closed session must be reported ▪ Minutes of the closed session must be prepared and kept in confidential file

Comments from Public

Minutes Must Indicate Each Member’s Vote on Motions

Closed Sessions

Closed Session Process

Rights of the Public:

▪ To attend meetings free from conditions ▪ To tape, record or broadcast meetings ▪ To comment on any agenda item (may post a time limit) ▪ To make comments regarding non-agenda items (may impose time limit) ▪ To have access to documents provided to board members ▪ To receive notice to all meetings of the board or its committees including agenda ▪ Assurance that the meeting will not begin before the time stated on the notice

California Milk Advisory Board 2316 Orchard Parkway, Suite 200 Tracy, CA 95377 Telephone: 209-883-6455

I. Required Continuation Hearing – A public hearing must be held every five years to consider the CMAB’s continuation. The last continuation hearing was August 19, 2015. The next required continuation hearing will likely occur in the summer of 2020.

II.

Fiscal Year – January 1 to December 31

III. Board Composition – 24 producer members, 24 alternates, and 24 reserve alternates [Public Member is permissive.] There cannot be more than 1 vote from any one dairy production entity. Board seats are allocated in accordance with each district’s production and number of producers. The allocation of seats is reviewed every three years.

IV. Board Terms of Office – March 1 st through February 28 th The terms are for 3 years and are staggered so that one-third of seats must be filled each year.

V. Term Limits – No member or alternate may serve more than four consecutive three-year terms in the same position.

VI. Vacancies – Alternate serves in the stead of vacant position and reserve alternate in the stead of the alternate. Vacancy is not filled until the next annual nomination meeting.

VII. Executive Committee – Each March the Board shall select an Executive Committee consisting of a Chairman, Vice Chairman, Secretary, Secretary and three additional members of the Board. The Chairman is limited to three consecutive terms.

VIII. Board Quorum and Board Voting Procedures

A quorum is 13 members.

•

• Board actions that do not regard expenditures of program funds and do not regard selection or dismissal of management personnel require an affirmative vote of a majority of the total members of the board. (13 votes) • Board actions related to expenditure of funds for any program requires a ⅔ vote of the voting members present, or 13 votes , whichever is greater . • Board actions related to selection or dismissal of management personnel require a ⅔ vote of the full board. (16 votes) [17 votes if there is a public member appointed.]

IX. Maximum Assessment – Either 10 cents per hundredweight or 1% of Gross Dollar Value

X.

Authorized Activities:

A. Research Authority – Relating to market milk and dairy products, research studies concerning health, food, nutritional, therapeutic, dietetic or such qualities of other food products, for the development of new food products, or for the development of new uses for milk or dairy products. B. Education Authority – Programs may include programs designed to acquaint producers, Producer-Handlers, or other interested persons with quality improvement, including sanitation practices, procedures, or methods as applied to such market milk or dairy products, and may also include educational programs designed to make available to producers, producer-handlers, handlers, and the public generally the findings of research programs. • Milk and Dairy Products Other than Cheese, Ice Cream and Butter - The Board may develop programs of advertising and trade promotion relating to market milk and dairy products, provided , that any such plans, with the exception of plans that make incidental references to brands of cheese, ice cream, or butter as described below, shall be directed toward increasing the sale of such milk and dairy products without reference to any private brand or trade name used by any handler or producer-handler of milk or dairy products. • Cheese, Ice Cream and Butter - The Board may develop advertising and sales promotion plans to allocate funds for promotions of cheese, ice cream, or butter products made with California milk, including promotions in which brand or trade names are used; provided , that the use is incidental to the promotion of the California milk product and not in direct promotion of the brand or trade name; and provided further , that the allocation of funds is made available on a nondiscriminatory basis to all retailers and C. Advertising and Sales Promotion and Market Development Authority: manufacturers of butter, ice cream, or cheese utilizing milk produced in California. Permissible private brand or trade name marketing promotions may include advertising, performance allowances, sales promotions, couponing subject to Section 61375 and in-store promotion programs and materials, and other marketing communication tools • Official Board Brands, Trade Names, Labels and Other Distinctive Designations - The Board is authorized to establish and to regulate the permissive use of official Board brands, trade names and labels, and other distinctive designations of grade, quality or condition, except the grade or quality designations in effect pursuant to State or Federal grade standards, for any product in which market milk or other dairy products are used. Any official Board brand or trade name which is established pursuant to this section shall not be construed as a private brand or trade name with respect to Section 58889 of the Code.

CMAB Glossary of Terms

ACV (All commodity volume) – Total grocery dollars attributed to individual retail groups in a defined geographic trade area .

Advertising awareness – One diagnostic tool that companies use to gauge the success of a campaign, advertising awareness studies measure whether or not consumers have knowledge of the ad or recall seeing it.

Advertorial – An advertisement in a print publication designed to look like a news or feature article.

Brand – A name or symbol that identifies a company’s product as distinct from those of its competitors. A well-developed brand communicates a promise to the consumer about a product’s unique benefits.

Broker – An agent who is authorized to buy or sell products for another organization. Brokers facilitate the movement of dairy products from processors to retail stores.

California Dairy Quality Assurance Program (CDQAP) – An educational program collaboratively offered by the California dairy industry, state and federal regulatory agencies, and the University of California. Its goal is to encourage, through education and voluntary certification, science-based dairying practices which promote the health of the consumer, the environment and dairy livestock. California Dairy Research Foundation (CDRF) – The mission of the CDRF is to increase the utilization of milk through investments in research. The scope of this research includes dairy foods, dairy herd health and food safety, nutrition and dairy quality assurance. California Department of Food & Agriculture (CDFA) – The CDFA promotes and fosters confidence in California agriculture by implementing and communicating public policy and programs. The CDFA interfaces with the dairy industry in a variety of areas including exports, promotion and research marketing orders, producer milk pricing, pooling and distribution of milk revenue, quality and sanitation, and animal health.

Cable TV – Television service purchased by consumers that is carried to homes by direct wires (cables).

Centralized buying – Under a centralized buying system, the responsibility for product selection and purchase is consolidated in a central market office, rather than with the individual stores.

Club store – A members-only, large-scale, high-volume store that stocks a large number of products that sell at low prices. Examples include Costco and Sam’s Club.

Control label products – A brand developed by a small regional or local wholesaler, as distinguished from a brand bearing the name of a manufacturer or producer. Control label products are typically distributed to a limited number of retailers.

Cost-per-engagement (CPE) – A means of measuring digital and social media advertising effectiveness that shows the cost when a digital ad or piece of social media content is engaged with.

Cost-per-thousand (CPM) – A means of measuring advertising effectiveness that shows the cost, per 1,000 people reached, of buying advertising space or time in a given media outlet.

Cross-promotion – A sales promotion that uses one brand to promote another, non-competing brand.

Dairy Management, Inc. (DMI) – A non-profit organization that conducts integrated programs in marketing communications, promotion and research on behalf of America’s dairy farmers. It was formed in 1995 by the National Dairy Board and the United Dairy Industry Association. Designated Market Area (DMA) – Is a region or territory where people get the same television and radio options. They are often linked by major metropolitan cities, but in rural areas, can be combined. Nielsen divides the country into 210 DMAs. These areas represent 210 television media markets.

Foodservice – The business of making or serving prepared foods, as in a restaurant.

Gallup – A market research company that tests television and radio commercials, print ads and Internet ads to measure their effectiveness. Gallup tracks ads after they run to measure how effective they are at reaching a targeted market segment.

Green House Gasses (GHG) – Includes water vapor, carbon dioxide, methane, nitrous oxide and ozone. The balance of these gasses in our atmosphere control the temperature at the surface of the earth.

Independents – Food retailers that are one-store operations. Independents are usually small businesses serving local communities.

In-store demos – Retail store promotions which involve handing out product samples directly to consumers staffed by a trained local product demonstrator.

Integrated campaign – A marketing campaign that employs a variety of promotional methods – advertising, public relations, direct marketing, in-store promotions -- and coordinates them so they work together to reach the greatest number of people.

IRC (instant redeemable coupon)/on-pack IRC – A coupon placed directly on a product that either gives a price off on that package or a related product in the store immediately at check-out.

IRI (Information Resources, Inc.) – A company that gathers data on food products sold in supermarkets and grocery stores nationwide, and sells it to subscribers. The data is collected on a weekly basis from the stores’ scanners, and IRI analyzes it to provide information on pricing, speed of sales and geographic distribution. Mat mail – A publicity method in which a brief feature story on a product is formatted and typeset so that newspapers can run the story as-is. The mat mail typically includes a visual and is distributed to small suburban daily and weekly newspapers. Media Monitoring – A company that monitors traditional and online media as well as social media and captures articles for its customers. For example, through Ketchum, the CMAB contracts with Cision and Lexis-Nexis to capture news and feature stories on California dairy. This enables the CMAB to track its publicity efforts. (formerly Clipping Service)

Merchandising – Drawing attention to products inside a store by arranging them in creative, eye- catching displays.

Network TV – A group of television stations that are linked for the simultaneous broadcast of the same programs. With the network system, advertisers can reach a larger audience at a lower cost-per-person than with a single station.

Nielsen – Nielsen is a company that collects sales data on products sold in supermarkets, like cheese and dairy products. These data allow manufacturers to track sales of their products.

Publicity – A form of public relations that takes the form of editorial exposure, such as a news or feature article about a product. Publicity differs from advertising in that the company doesn’t pay the newspaper or TV station to run the story. POS (Point of Sale)/POP (Point of Purchase) – The in-store promotion of a product to make the product stand out among its competitors. POS can range from a simple ad that is hung on a grocery store shelf to a large, elaborate display. Private label – A brand developed by a large retailer or wholesaler, as distinguished from a brand bearing the name of a manufacturer or producer. Since manufacturers’ brands have large advertising expenditures built into their cost, a private brand can buy the same goods at a lower cost and sell them at a lower price. Qualitative research – Advertising research that explores issues deeply to gain insight into how consumers feel about a product and why they buy it. Qualitative research relies on in-depth interviews with open-ended questions like “How do you decide which cheese to buy?”

Quantitative research – Research that gathers measurable information from a large number of consumers. The surveys use closed-ended questions that require a simple answer.

Rating points – The measurement of the actual viewing or listening audience for a program or commercial. If a program has a rating of 10 points, it means that 10 percent of all households in a particular area had their television sets tuned to that program. A program with a high rating will deliver a large audience to advertisers for their commercials.

Retail authorizations – Approval by retail chains for their local and regional buyers to purchase merchandise for their organization.

Rotation – The pattern of how television and radio commercials are aired during the broad time period purchased by the advertiser. If an ad runs in the same time period on different days each week, it is called a horizontal rotation. If the ad runs throughout a particular day, it is a vertical rotation. Satellite media tour – A publicity method that allows a celebrity or company spokesperson to participate in up to 25 interviews per day with TV reporters. The person being interviewed sits in a television studio and is connected to remote locations via satellite hook-up, increasing the reach of the publicity program at a relatively low cost. SKU (Stock Keeping Unit) – A number associated with a retail product for inventory purposes. Retailers use SKUs to identify and track individual products. Each product must have a SKU, and each SKU must be unique; for example, a pint bottle and a quart bottle of the same product have separate SKUs. According to recent research, the average number of SKUs carried in a typical supermarket is 30,580. Short-Lived Climate Pollutants (SLCP) – Short-Lived Climate Pollutants include black carbon, methane, tropospheric ozone, and hydrofluorocarbons (HFCs). They have relatively short atmospheric lifetimes but are believed to have significant warming impacts on climate.

Slotting fees – Fees that supermarkets charge suppliers and manufacturers to place their products on the shelf.

Spot TV – Commercial time on local television stations, as distinguished from commercial time on a network.

Talent Fees/Residuals – Fee paid to actors used in a broadcast commercial.

Unique Visitors Monthly (UVM) – Refers to the number of distinct individuals requesting pages from the website during a given period, regardless of how often they visit. Visits refers to the number of times a site is visited, no matter how many visitors make up those visits. United Dairy Industry Association (UDIA) – UDIA coordinates with its members, 18 state and regional dairy promotion organizations, to develop and implement programs and services to support the dairy industry. Universal product code (UPC) – Grocers use the UPC to identify products and prices, and to track their sale. UPCs are translated into barcodes (a series of vertical parallel bars printed on a product’s package) that are read or “scanned” by electronic cash registers. Video news release (VNR) – Information about a product produced in a video newscast format and distributed to the news departments of television statements. If, after the news director reviews the VNR and he/she decides to use it, the video is typically edited and aired as a news item during a newscast. Warehouse store (superstore ) – A large-scale, high-volume store that stocks a large number of products that sell at low prices such as Wal-Mart. Can be called a “warehouse club” if the store sells only to members such as Costco or Sam’s Club.

Wire service (Associated Press) – A newsgathering organization that that collects stories for newspapers and distributes them electronically to subscribers.

Cheeses

Artisan Cheese – Refers to cheeses that are handmade in small quantities with respect for the tradition of the cheese. Artisan cheeses can be, but are not necessarily, made from milk obtained from animals located on the farm where the cheese is made. Commodity Cheese – Describes popular varieties of cheese typically produced in large quantities with a flavor profile that appeals to the majority of consumers. These cheeses are sold in supermarkets, either as branded products or under private labels, or distributed for foodservice use. In California, Cheddar, Jack and Mozzarella (low-moisture form) are popular commodity cheeses.

Farmstead Cheese – Refers to cheeses made from milk obtained from animals located on the farm where the cheese is made.

Specialty Cheese – A broad term that describes non-commodity cheeses. Specialty cheeses are cheese varieties with distinctive flavor profiles catering to a special niche in the market. Specialty cheeses can be unique varieties of cheese (i.e., Camembert, St. George, Teleme) or specialized versions of popular cheeses such as Cheddar, Jack or Mozzarella (i.e., raw milk Cheddar, Dry Jack, high-moisture Mozzarella). This category also includes handmade artisan and farmstead cheeses. Specialty cheeses are typically sold as branded products in specialty food stores and in supermarket gourmet cases.

Organizations

CARB – California Air Resource Board CARES – Dairy CARES CCOA – California Creamery Operators Association CDC – California Dairy Campaign CDI – California Dairies, Inc. CDFA – California Department of Food and Agriculture CDQAP – California Dairy Quality Assurance Program

CDRF – California Dairy Research Foundation CEPA – California Environmental Protection Agency CFMPB – California Fluid Milk Processor Board CMAB – California Milk Advisory Board

DCC – Dairy Council of California DFA – Dairy Farmers of America DIC – Dairy Institute of California DMI – Dairy Management, Inc. DWR – Department of Water Resources

IDFA – International Dairy Foods Association IFIC – International Food Information Council IMGC – International Milk Genomics Consortium LOL – Land O’ Lakes MilkPEP – Milk Processor Education Program MPC – Milk Producers Council NMPF – National Milk Producers Federation USDA – United States Department of Agriculture

USDEC – U.S. Dairy Export Council WUD – Western United Dairymen

California Milk Producers Advisory Board Comparative Statement of Income and Expenses For the 7 Months Ended July 31, 2018 and 2017

18-Jul

%

17-Jul

%

2018 Budget

Revenue Assessments

23,658,732.43 $

61 40

23,550,640.89 $

60 80

39,000,000.00 $

Non-Assessment Income

$

154,324.84

$

350,349.26

$

385,000.00

23,813,057.27 $

61

23,900,990.15 $

61

39,385,000.00 $

Program Expenses Advertising Communications

7,893,802.65 $ 1,943,050.95 $ 2,127,755.22 $

43 55 39 24 47 65 56 79 31 18 75 75 67 59

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

9,269,416.89 2,055,983.56 2,374,378.09 334,942.31 2,395,692.23 909,953.78 164,647.95 277,124.04 237,563.27

51 51 38 19 41 84 48 69 52

18,455,000.00 $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

3,529,000.00 5,497,000.00 1,550,000.00 5,450,000.00 1,085,000.00 610,000.00 400,000.00 456,904.00 305,000.00 248,600.00 47,000.00 75,000.00 140,000.00 40,000.00 30,000.00 40,000.00 45,000.00 100,000.00 740,000.00 55,000.00 85,000.00 30,000.00 90,000.00 25,000.00 48,000.00 1,942,096.00

Business Development

Foodservice International Tradeshows

$

376,225.46

2,584,244.19 $

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

702,232.87 342,240.67 315,088.04 142,016.29

Processor Relations Industry Intelligence Producer Relations

Education/Community Rels CA Dairy Research Foundation

8,519.78

3,335.97

2

1,456,572.00 $

1,462,500.00

75

Operation Expenses Office Operational

228,576.45 165,688.70 27,614.71 75,737.45 75,117.53 18,535.86

224,757.48 160,476.90 28,351.45 36,842.31 44,649.83 20,528.34

76 66 63 49 33 51

Rent

Travel & Automobile

Legal

101

Insurance - Employee

54 46

Freight & Postage

Automobile Purchases

-

0

-

0

Liability Insurance

43,578.90 21,303.85

109

38,578.00 24,724.30

96 62

Money Investment Plan

47

Retirement Plan

-

0

-

0

Admin. Salary & Wages Board Travel Expenses Board Meeting Expenses

386,214.91 56,772.96 46,682.71 21,425.00 48,463.67

52

434,473.23 35,977.61 45,015.70 15,125.00 41,822.75

59 48 45 38 46

103

55 71 54

Board Per Diem Marketing Branch

Fiscal & Compliance Audit Assessment Collection Fee

-

0

-

0

8,500.00

100

5,000.00

100

8,500.00

Total Expenses

19,115,960.82 $

47

20,641,860.99 $

48

41,127,100.00 $

Net Income

4,697,096.45 $

$

3,259,129.16

YTD Payroll $1,715,000.00

ADVERTISING

Presentation to the Board of Directors

September 2018

2018 Q1-Q2 in Review (Jan – July): • TV: o

Q1: “Respect the Tortilla” (cheese) and “Bribe” (yogurt) each ran at equal weights o Q2: “Respect the Tortilla” (cheese) and “Dad’s Pancakes” (butter) each ran at equal weights o Q3: “Artisanal” (ice cream) and “Bribe” (yogurt) are running at equal weights • Paid Social Media: o 19.6M impressions o 7.2M video views (:03 secs) o 3.6M video views (:10 secs) o 194K engagements o We’ve promoted 48 pieces of content across Facebook and Instagram in 2018 • Search: o 9.7M impressions o 108K clicks • YouTube: o 1.5M impressions o 584K views • Digital Media: o Digital banners targeted to four Texas DMAs: San Antonio, Houston, Austin and Dallas, utilizing the new product locator tool ran throughout February and March. o Shopper app campaign with Shopkick pushed live in July, and Ibotta will be starting in August. Both partners focused on reaching consumers while in-store. o Our remaining digital media will begin in September and run through the end of the year. We will present an update at the September board meeting Research and 2019 Creative Development We have concluded an initial round of quantitative research (Murphy) to better understand the current dairy landscape, specifically among key segments: boomers, millennials, Hispanics and Californians. Using the research findings, we have crafted a new psychographic target audience of key dairy purchasers, which we are calling “Lifestyle Balancers.” This target is slightly younger than our previous target and spotlights Hispanics, millennials and moms. New research is underway to explore how effectively our current TV campaign communicates to these consumers and how some alternate creative concepts might perform. This research will inform creative recommendations for 2019. 2018 Messaging: We continue to air our current roster of TV spots throughout our 2018 national broadcast/cable media schedules: Bribe (yogurt), Dad’s Pancakes (butter), Artisanal (ice cream), and Respect the Tortilla (cheese).

2018 Digital Media Plan: Our aim for this year’s digital media is to fit California dairy into the “Lifestyle Balancer’s” purchase decision process. We will do this by buying digital video partnerships that extend viewership of our TV spots beyond traditional TV, by reaching consumers as they shop, and by demo-targeting Hispanic consumers via targeted digital placements. Another change for this year is that we will still have a layer of nationally targeted media, but will also focus on key local markets, which are strategically aligned with our business development efforts. Digital media partners Shopkick and Ibotta have already started, but the majority of our media weight will run from September through the end of the year. We will present the details of these digital media efforts at the September board meeting. Social Content: We tailored our social content strategy to align with CMAB’s quarterly messaging objectives. During Q1, we promoted mostly breakfast-focused recipes. For Q2, we shifted our food focus to Hispanic dairy recipes. We also created a separate social campaign targeted to Texas, promoting Hispanic dairy and drove traffic to the new Product Locator tool on the website. Along with our food content, we continually promote farmer content as well as community/PR content. Below are some of the content series that have run continuously throughout the year. • Recipe videos (Tastemade and Cooking Panda) • CA Dairy Stories • Better With Cheese • Monday Melt

CA Dairy Stories:

Monday Melt:

Better With Cheese:

Recipe Videos:

RealCaliforniaMilk.com: This year, we have made multiple optimizations to the site, including implementing global search functionality, removing the Real California Cheese seal throughout, creating a Product Locator landing page and updating the URL structure to provide unique URLs for specific recipe types and ingredients, which helps with our search efforts and more localized ingredient/occasion-specific promotions.

YouTube Marketing : 2018 YouTube efforts continue to focus on supporting the CMAB TV ads and recipe videos. Targeting optimizations were made to focus on interests and channels within the recipe and lifestyle verticals.

Paid YouTube 2018 (Jan – July)

Impressions

Views

Clicks 2,521

CPV

1,577,720

584,347

$0.03

In October ‘17, we changed the YouTube content strategy to feature two videos each month, one commercial and one recipe. We have continued this strategy throughout 2018, juxtaposing both recipe and food content within our YouTube ad strategy to showcase California Milk’s diversity.

Return to Real – Respect the Tortilla

Stacked Grilled Cheese

Impressions: 219,954

Impressions: 272,269

Views: 113,134

Views: 97,076

Spicy Carrot Nachos

California Queso Fundido

Impressions: 211,579

Impressions: 192,267

Views: 65,319

Views: 61,616

Search Engine Marketing: In 2017, we focused on tapping into more highly qualified traffic that would stay on our site longer. We optimized the structure of the ads to adhere to Google’s updated standards and continued to look for the best keywords to match our quarterly messaging pillars. In 2018, we continued to build on this strategy and decided to focus only on Google rather than both Google and Bing moving forward. Google is the leading search platform and by shifting focus to Google only, we are able to increase our share of voice. We also have shifted from a national search approach to focusing on our top 26 markets in terms of sales. This also allows us to increase share of voice and allows us to reach consumers who we know are more familiar with our brand. From here, we will analyze each market’s performance and optimize toward the best performing markets. We will also be adding Google’s new "in-market" audience that enables us to target people who show strong purchase intent or interest in our brand. This new feature will be implemented once it’s available for the food category. We are also working more closely with our national partners: including MilkPEP, DMI, and Got Milk to share information pertaining to our individual search efforts to maximize industry messaging.

YTD Paid Search 2018 (Total 2018 [Jan – July] includes search and display ) Impressions Clicks

CTR

Avg. Position

1.1% DCM + Search

9,790,271

108,643

1.5

1.79% Search

COMMUNICATIONS

Presentation to Board of Directors

September 2018

Public Relations Program

COMMUNICATION SERVICES

Public relations activities in Q2 2018 focused on supporting CMAB functional business priorities and delivering key messages to differentiate California dairy among consumers and health professionals. ______________________________________________________________________________ Drive consumer demand for CA Dairy in select regions of the U.S

Increase Value of the Seal/Activate the Seal

CMAB Functional Priority

Regional Business Development Promotion: June Dairy Month California is a source for quality, sustainable dairy foods. Importance of California dairy industry to state economy Look for the Real California Milk seal California dairy means real food from real people

Activation

Key Messages Delivered

Lifestyle Segments in 2 California TV Markets Result: 2 Broadcast and 1 Online Segments/555k impressions Lifestyle experts Parker Wallace and Whitney Bond featured California dairy products in broadcast segments that aired in the San Francisco/Bay Area and San Diego.

Micro-Influencer “Tastes Like Summer” Social Campaign Result: 53 Posts (2.4% engagement rate), 414 comments, 19.3k likes/584.9k Impressions Instagram influencers inspired consumers to experiment with California dairy products and post about their favorite way dairy #tasteslikesummer. “Mix & Match” Cheese Board Infographic Release Result: 464 Placements/30.85M Impressions A “Mix & Match” infographic guide to creative cheese boards was created and distributed nationally. The piece provided usage ideas for creating eight show-stopping cheese boards and included a call-to-action to look for the Real California Milk seal with the new Product Locator Tool.

Regional “June Dairy Month” Release Result: 20M impressions

A release announcing Governor Brown’s declaration of June as “Real California Milk Month” was created and distributed in California. The release highlighted the contribution of California dairy families to the state’s economy and the health of the national.

Reframe the Dairy Health Story

CMAB Functional Priority

Influence the Influencers

Activation

California milk and dairy products are a healthy, tasty way to get essential vitamins and minerals

Key Messages Delivered

California dairy is a healthy source of protein Dairy fits into modern diets, healthy eating plans Look for the Real California Milk seal

Health Professionals: Health Expert Social Media Content Results: 4 posts/135k Impressions CMAB partner Nurse Barb Dehn shared the health benefits of dairy foods with her followers,

including recent research about how high protein dairy contributes to a reduced risk of diabetes and the benefits of milk nutrition on World Milk Day (June 1).

Health Influencers: Social Media Influencers Results: 1.05M Impressions (to date)

CMAB partnered with eight social media influencers that focus on food, nutrition, health and family for a day-long learning session with culinary, nutrition and social media experts to share the dairy nutrition story. Partners Run- Eat-Repeat, Eat Live Run, Petite & Toned, Dash of Ting, Diet Assassinista, A Lady Goes West, Mom’s Kitchen Handbook and Coach Alyssa Chang will be sharing content on health eating with dairy and how dairy fits into current health eating trends throughout the summer. May launched an ongoing partnership with social media influencer, Run-Eat-Repeat for an ongoing content series showcasing how dairy fits within an active, healthy and balanced lifestyle. Health Influencers: College Students Q3 will launch a partnership with Spoon University, an everyday food resource for millennials with content from over 5,000 contributors at more than 150 college campuses nationwide, for a recipe video and custom article featuring Real California Yogurt in three recipes for students to help fuel them as they head back to school. The campaign is expected to garner 7M potential social impressions with 1M guaranteed video views. Health Influencers: Elementary Students – Farm Academy Live CMAB is sponsoring an update to the dairy curriculum offered to elementary school students through Farm Academy Live, a series of programs that facilitate science-based learning directly into classrooms using video conference technology to connect, and agriculture as the platform driving the discussion. Farm Academy Live provides virtual field trips to farms using interactive video conference technology. This partnership gives CMAB/the dairy industry to review and provide input on updated curricula as well as incorporating the RCM seal (and dairy nutrition elements) into the dairy programming. The new, on-demand format will provide access to a Health Influencers: Social Media Influencers Results: 13 posts/978k impressions

“virtual farm tour” that we can leverage for website content and consumer outreach. All content will be created to meet National Science Standards and will be available on the PLANT Foundation’s farmacademy.tv website, YouTube, and other education-based video platforms. Health Influencers: Elementary Students – Fuel Up to Play 60 The CMAB partnered with Dairy Council of California to provide healthy eating messages to female high school athletes from the Bay Area at the T.H.I.N.K. Gold event with the San Francisco 49ers in mid-May. Activation of the Fuel Up to Play 60 (FUTP 60) program has transitioned to national under the oversight of Alyssa McClelland who will be working with the Los Angeles Chargers and Rams, and San Francisco 49ers on an abbreviated implementation plan.

Activate the Seal/Position CA as Essential FS Partner

CMAB Functional Priority

Foodservice PR and Advertising

Activation

Innovative chefs use Real California dairy products California is the leading producer of Hispanic cheese and dairy products

Key Messages Delivered:

REAL Makers Campaign Results: 33 Digital & 8 Print Insertions/1.56M Advertising Impressions

CMAB continued its 2018 media campaign, which effectively reaches existing target and enters the non-commercial segment with a creative rotation was maintained to distribute impressions among all REAL Makers ads. Our print and digital media buy drove 95% of all traffic to the Foodservice section of RCM.com (up from 90% in Q1) and total site visits increased approximately 35% from Q1 2018 with recipe resources leading content engagement.

Establish California as the undisputed leader in sustainability

CMAB Functional Priority

Benchmark Sustainability Milestones

Activation

California is a source for quality, sustainable dairy foods. Importance of California dairy industry to state economy Look for the Real California Milk seal California dairy means real food from real people

Key Messages Delivered

California Dairy Sustainability Summit The CMAB will participate as a presenting sponsor in the first inaugural California Dairy Sustainability Summit, which will be held November 27-28 th in Sacramento. The event, organized by Dairy CARES, will showcase the leadership of the California dairy industry to a variety of audiences.

Activate the Real California Milk Seal/Ongoing Communication of CA Dairy Story California dairy means real food from real people Look for the Real California Milk seal 99% of California dairies are family owned

CMAB Functional Priority:

Key Messages Delivered:

California Dairy Social Media Team Results: 203 posts/163k impressions

CMAB supported farmer team member content development to encourage positive conversations about California dairy in their social communities, which included recommendations around dairy, food and agriculture posts. CMAB amplified posts on its owned channels and conducted a training session with team members to continue to develop their skills. California Dairy Communicators CMAB convened the California Dairy Communicators group for a meeting to discuss individual organization’s updates and upcoming initiatives. CMAB also provided communication updates to the group around various issues activities to align on information and responses. Issues Management/Crisis Preparedness CMAB supported the California dairy industry around various activist activities and demonstrations. Several preparedness activations were conducted in Q2, including: • A workshop for processors on dairy facilities security with the FBI, CDFA, CDQAP and the Western Institute for Food Safety & Security. • A media and message training session for the California Dairies Inc. leadership group. • A dairy producer message training session in anticipation of county/regional fair season. Daily Monitoring & Social Listening CMAB monitored traditional and social media daily, tracking Real California Milk proactive coverage, dairy and food industry trends, and issues (food safety, environmental, animal care, drought, etc.). The team provided an analysis and POV on impacts pertaining to the California dairy industry, in addition to recommendations for amplifying positive stories on Real California Milk owned social channels. Social Media In 2018, we are utilizing both food and farmer content to continue to tell our Return to Real story. When promoting content on our channels, we used the following targeting parameters: • Women 25-54 • Those who show interest in food and farm content • Those who have interests that go along with “parenting” • Optimizing toward video views for video content • Optimizing toward engagements for static content We’ve planned our social content to be in line with what our national partners are messaging. In Q1, we posted food content that highlighted protein for breakfast. In Q2, we focused more on Hispanic dairy and in Q3, we are transitioning toward healthy snacking for back-to-school. Total metrics from Jan-July are outlined below: • 48 pieces of content were promoted across Facebook and Instagram o 19.6M impressions o 7.2M video views (:03 secs) o 3.6M video views (:10 secs) o 194K engagements

Food Content One content series we’ve been running are recipe videos show step-by-step instructions on how to make recipes using California dairy. We partnered with Tastemade and Cooking Panda to create these videos – below are the metrics through the end of July for this year. • Recipe videos o Number of posts: 16 o 9.4M impressions on CMAB channels o 4M video views (:03 secs) o Best-performing post: Yogurt Sticks, which received a VTR (:10) of 39%

Another food content series we’ve been running this year is called Monday Melt. These videos feature looped short clips of dairy melting. In addition to Monday Melt, we also have a static image content series titled Better With Cheese, where we highlight how to improve your day with cheese. This content series uses day-specific relevant hashtags to help improve the reach of our messaging. Below are the stats through the end of July for this year. • Monday Melt: o Number of posts: 9 o 1M video views (:03 secs) o Best-performing post: Cheese Bubbles, which received a VTR (:03) of 49% • Better With Cheese: o Number of posts: 7 o 1.6M impressions o 87K engagements o Best-performing post: 2-Taco Plate, which received an ER of 23%

Farm Content In addition to promoting food content, we continued to promote farmer content to tell the story of real people behind the food. In addition to last year’s Growing Up Dairy videos, we’ve been promoting our California Dairy Stories. These videos showcase moments on CA dairy farms, ranging from growing up on a dairy to gathering for large family meals - to hobbies our farmers enjoy. • Farmer content o Number of posts: 13 o 3.6M impressions o 1.4M video views (:03 secs) o Best-performing post: Photography, which received a VTR (:10) of 38%

Appendix The chart below shows social metrics for evergreen content this year (Jan 1 – July 31, 2018). The chart does not represent metrics from our Texas-targeted Hispanic dairy campaign.

Content

Impressions

Engagements

Video Views (:03)

Video Views (:10)

4,914,038

42,786

2,011,559

1,266,518

Tastemade

4,580,698 1,645,495

36,411 87,097

2,085,385

1,008,278

Cooking Panda

-

-

Better With Cheese

2,549,050

3,161

1,087,615

369,609

Monday Melt

3,660,203

3,509

1,436,818

710,551

California Dairy Stories

932,749

905

321,715 281,669

155,786 188,634

TV

1,403,362

20,449

Other

Total

19,685,595

194,318

7,224,761

3,699,376