2019 March Board Book

CALIFORNIA MILK ADVISORY BOARD

Board of Directors Meeting

March 6 – March 7, 2019

CALIFORNIA MILK ADVISORY BOARD 2316 Orchard Parkway, Suite 200 Tracy, California 95377 (209) 883-6455 RealCaliforniaMilk.com BOARD MEETING AGENDA Wednesday, March 6, 2019 at 7:30 am and Thursday, March 7, 2019 at 8:00 am DoubleTree by Hilton Fresno Convention Center 2233 Ventura Street, Fresno, California 93721 (559) 268-1000

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 – California Milk Producers Advisory Board v. James W. Jones [Government Code 11126(e)(1)] – CDFA Legal and Deputy Attorney General 5. Reconvene Open Session 6. Financial Report – Treasurer Tony Louters

7. Individual District Reports 8. Marketing Branch Report 9. Report from Chairman – Dante Migliazzo

10. Election of Board Officers and Executive Committee 11. Report from Chief Executive Officer – John Talbot 12. Program Review and Proposals a. Advertising b. Communications c. Business Development

d. Processor Relations e. Producer Relations

13. Breakout Sessions: Advertising/Communications; Business Development/Processor Relations; Producer Relations: followed by Board discussion of Breakout Sessions highlights 14. Guest Speaker – Daniel Sumner, Director, UC Agricultural Issues Center, UC Davis 15. Committee/Industry Meetings Update 16. National Dairy Board Update 17. Minutes of Last Board and Executive Committee Meetings – Secretary Essie Bootsma a. Public comments on agenda items 18. Other Business a. Previously discussed or tabled agenda item(s) for this meeting b. Items to be discussed at next board meeting 19. Public comment on non-agendized items 20. 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, Treasurer, 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

Over

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 Advisory Board Comparative Statement of Income and Expenses As of December 31, 2018

Year Ending 12/31/2018

Year Ending 12/31/2017

Year Ending 12/31/2018

% to

PY % to

Budget

Budget

Actual

PY

Budget

Revenue Assessment Income

40,130,947 $

$

39,762,800

39,000,000 $

103%

102%

Non-Assessment Income

216,198

502,027

385,000

56%

115%

Total Revenue

40,337,569

40,264,827

39,385,000

102%

94.00

Expenses

Advertising

17,716,934 3,260,986 4,642,302 1,029,115 5,286,018

16,435,521 3,561,836 4,657,265

18,955,000 3,529,000 5,497,000 1,550,000 5,450,000 1,085,000

93%

90%

Communications

92%

90%

Business Development

84%

76%

Foodservice International Tradeshows

755,354

66%

43%

4,920,287 1,025,418

97%

85%

825,693 544,560 438,875 384,831 27,196

76%

95%

Processor Relations Industry Intelligence Producer Relations

236,386 369,499 397,873 16,401

610,000 400,000 456,904 48,000

89%

70%

110%

92%

84%

87%

Education and Community Relations

57%

11%

Dairy Research Foundation

1,942,096 36,098,605

1,950,000 34,325,841

1,942,096 39,523,000

100%

100%

91%

85%

Office Operational

400,090 251,367 52,659 134,854 121,534 27,870

293,853 241,304 43,991 57,042 96,817 24,493

305,000 248,600 47,000 75,000 140,000 40,000 30,000 40,000 45,000 100,000 740,000 55,000 85,000 30,000 90,000 25,000

131%

100%

Rent

101%

100%

Travel & Automobile

112%

98%

Legal

180%

76%

Insurance - Employee Freight & Postage Automobile Purchase Liability Insurance Money Investment Plan Admin Salary & Wages Board Travel Expenses Board Meeting Expenses Retirement Plan

87%

72%

70%

61%

0

0

0%

0%

32,655 34,456

38,578 42,269

82%

96%

77%

106%

0

0

0%

0%

712,771 84,365 77,270 34,149 73,070 75,655

707,759 51,297 56,519 21,975 72,072 22,500

96%

96%

153%

68%

91%

57%

Board Per Diem Marketing Branch

114%

55%

81%

80%

Fiscal & Compliance Audit Assessment Collection Fee

303%

90%

8,500

8,500

8,500

100%

170%

2,121,265

1,778,969

2,104,100

101%

84%

Total Expenses

38,219,870

36,104,810

41,627,100

92%

85%

Net Income

2,117,699 $

4,160,017

(2,242,100) $

Year to Date Payroll: $2,797,422

ADVERTISING

Presentation to the Board of Directors

March 2019

2018 Year in Review (Jan – Dec 2018): ● 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) each ran at equal weights o Q4: “Dad’s Pancakes” (butter) and “Bribe” (yogurt) are running at equal weights o 34.9M impressions o 6M video views (:10) o 319K engagements o We’ve promoted 94 pieces of content across Facebook and Instagram in 2018

● Paid Social Media:

● Search:

o 13.6M impressions o 151K clicks o 3.4M impressions o 1.1K views

● YouTube:

● Digital Media:

o 121M impressions o 95M completed video views Research and 2019 Creative Development: In 2018, we 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 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 over-indexes with Hispanics, millennials and moms. We conducted focus groups with our new Lifestyle Balancer audience to explore how effectively our current TV campaign communicates to these consumers and how alternate creative concepts might perform. We then interviewed a variety of chefs, nutritionists and foodies in California to further develop our understanding of CA and food trends and culture. We are taking what we have learned and continuing to explore the best opportunity and execution for our new core audience and how to best create interest and demand for products with the Real

California Milk seal. We will apply these learnings as we look at new work in 2019. 2018 Messaging: We continued 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). We will continue to run these spots throughout 2019 until we land on new creative work.

2018 Digital Media Plan: Our media plan for 2018 was designed to deliver 88M targeted views and 149M targeted impressions against our new Lifestyle Balancer audience through a mix of the following digital media programs: • Shopper Marketing Campaigns through Shopkick and Ibotta : Shopkick shopper app campaign pushed live in July and Ibotta kicked off in August. Both ran through the end of the year and focused on reaching consumers while in-store. Both performed well, with Shopkick garnering 78k scans of the RCM seal in-store, and Ibotta resulted in nearly 9K RCM yogurts purchased. ● National and Local Video : Launched in early September and ran through the end of the year. Our campaign included a layer of National video aligned with TV-like content through partners like Hulu and a local market focus with pre-roll in our top 20 sales-driving markets. Overall, our partners over- delivered and served over 121M impressions and 95.5M video completions at an efficient cost per completed view of $0.02. ● Micro-influencers with Linqia: Launched in September to support the Fall Snacking program in California. The Holiday flight ran in November to support sales initiatives in Maryland, Delaware, Washington, D.C., Virginia, South Carolina, Georgia and Florida. Overall, we received 480 pieces of content and 55K engagements.

● Custom Program with Food52: Our partnership included two custom articles, two custom Facebook recipe videos and two custom Instagram posts. As added value, we sponsored the “Genius Desserts” book tour in LA and SF. Roughly 100 baking enthusiasts attended in total and the events included RCM branding, co-promotion on Instagram and product placement in a live cooking demo with RCM products served at the events. And we received over 2M views on our recipe videos. messaging objectives (protein for breakfast, Hispanic dairy, healthy snacking and holiday entertaining). 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. We will begin 2019 running our existing content. Once we have our new 2019 campaign, we will look to produce and cycle in new content and will also continue to support localized business development efforts. Social Content: We tailored our social content strategy to align with CMAB’s quarterly

Recipe Videos

CA Dairy Stories

Better with Cheese

Monday Melt

RealCaliforniaMilk.com: Last year, we made multiple optimizations to the site, including implementing a global search functionality, removing the Real California Cheese seal, creating a Product Locator landing page, expanding the Foodservice content and updating the URL structure to provide unique URLs for specific recipe types, which helps our search efforts. On an ongoing basis, we continue to add recipe content and provide up-to-date information on sustainability, nutrition and technology in the dairy industry. In 2019, we will look to redesign certain elements of the site and reskin the site to give it a makeover to match our new creative work.

YouTube Marketing : 2018 YouTube efforts continued 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. Below are our 2018 metrics and top-performing posts. Paid YouTube 2018 (Jan –Dec) Impressions Views Clicks CPV 3,357,357 1,146,408 5,755 $0.03

Stacked Grilled Cheese

Respect the Tortilla

Impressions: 219,954

Impressions: 297,261

Views: 113,134

Views: 106,392

Search Engine Marketing: This year, we’ve focused on tapping into more highly qualified traffic that will stay on our site longer. We decided to focus our efforts on Google only (rather than Google, Bing and GDN). Google is the leading search platform and by having our sole focus on Google, we are able to increase our share of voice. We also have shifted our targeting to focus on our top 26 markets, so we are focusing on consumers that have the most access to find our products in-store. Industry Efficiencies: We are also working more closely with our national partners: including MilkPEP, DMI and CMPB to share information pertaining to our individual search efforts. This way we reduce overlap of messaging and do not compete/bid against each other on key terms, allowing all of us to maximize our message. YTD Paid Search 2018 (Total 2018 [January – December] includes search and display; display was stopped 9/30) Impressions Clicks CTR Avg. Position 13,610,493 150,853 1.11% 2.0

COMMUNICATIONS

Presentation to Board of Directors

MARCH 2019

Public Relations Program

COMMUNICATION SERVICES Public relations activities in Q4 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 CMAB Functional Priority Increase Value of the Seal/Activate the Seal Activation

Regional Business Development Promotions: • Back to School/Healthy Snacking – Real Food, Real Snacks • Holi-Dairy – Savor the Season California is a source for quality, sustainable dairy foods. Importance of California dairy industry to state economy [in CA] Look for the Real California Milk seal California dairy means real food from real people

Key Messages Delivered

“Real Food, Real Snacks” Campaign Results: 183 placements/20.3M impressions

The healthy snacking with California dairy campaign launched in mid-September with a consumer survey about snacking preferences, content partnerships with California fitness and lifestyle influencers and a micro-influencer campaign through Linqia, which ran primarily throughout October. “Savor the Season” Holi-Dairy Campaign Results: 914 placements/30.7M impressions – 25 posts/235k influencer impressions Fourth quarter focused on holiday entertaining with California dairy tapping into the “grazing table” trend. A national release outlining stress-free holiday entertaining tips was shared on the news wire and a micro influencer campaign tapped into regional (Southeast) social media influencers to share usages ideas and messages about California dairy products. Key Messages Delivered California milk and dairy products are a healthy, tasty way to get essential vitamins and minerals 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: 12 posts/398k Impressions (to date, 2018) During the 4 th quarter, Nurse Barb Dehn continued sharing the health benefits of dairy foods with her followers, including recommendations on the introduction of yogurt, CMAB Functional Priority Reframe the Dairy Health Story Activation Influence the Influencers

cheese and whole milk into toddler diets and research about the importance of quality protein and exercise for healthy aging.

Health Influencers: Social Media Influencers Results: 98 posts/4.3M impressions (to date, 2018)

CMAB continued its partnership with social media influencer, Run-Eat-Repeat and added content from Diet Assassinista to our ongoing content series showcasing how dairy fits within an active, healthy and balanced lifestyle. During 4 th quarter, additional content was produced by A Sid of Sweet, Mom’s Kitchen Handbook, Dash of Ting and A Lady Goes West.

CMAB Functional Priority

Activate the Seal/Position CA as Essential FS Partner

Activation

Foodservice PR and Advertising

Key Messages Delivered

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

REAL Makers Campaign Season three of the REAL Makers foodservice advertising campaign continued with production of a second video hack featuring Chef Brandi Key of Houston’s Tasting Room showcasing how she uses California Hispanic-style dairy in a Mexican pizza. The video hack will be promoted through print and digital ads in Q1 pushing foodservice professionals to the RCM.com/foodservice site.

CMAB Functional Priority

Establish California as the undisputed leader in sustainability

Activation

Benchmark Sustainability Milestones

Key Messages Delivered

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

California Dairy Sustainability Summit The inaugural California Dairy Sustainability Summit was held November 27-28 th in Sacramento. The CMAB coordinated a consumer-focused panel with experts from Ketchum, McDonalds, Nestlé and Hilmar, which was presented on day one. The event garnered 662 registered attendees with dairy farmers making up nearly a third of the registrants. CMAB Functional Priority: Activate the Real California Milk Seal/Ongoing Communication of CA Dairy Story, Shared Values

Key Messages Delivered:

California dairy means real food from real people Look for the Real California Milk seal 99% of California dairies are family owned

California Dairy Social Media Team Results: 725 posts/641k impressions (to date, 2018)

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 also provided communication updates to the group around various issues activities to align on information and responses. 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 utilized food and farmer content to continue to tell the Return to Real story on CMAB social channels. Facebook and Instagram were our primary channels for paid social, along with YouTube. We also utilized Twitter for the latest information on dairy and sustainability and we continue to use Pinterest to amplify new, trendy recipes from our influencer campaigns. In 2019, we will run existing content and optimize accordingly until we land on a new campaign, when new content will be created. Social content was scheduled to be in line with national partners/initiatives (DMI, MilkPEP, etc.) as well as quarterly content focused on priority business development pillars: protein for breakfast, Hispanic-style dairy, healthy snacking, and holiday entertaining. We also provided localized support to sales team initiatives in Texas, California, and the Southeast. Total 2018 metrics are outlined below: • 94 pieces of content were promoted across Facebook and Instagram o 34M impressions

o 12M video views (:03) o 6M video views (:10) o 319K engagements

Content: CMAB Channels Recipe Videos

Throughout 2018, we leveraged existing Tastemade and Cooking Panda recipe videos. We also worked with Food52 to create two influencer-led recipe videos - a California Yogurt Ranch dressing/dip, great for healthy snacking, and Spiced California Cheese Puffs, perfect for the holidays. In total, recipe videos achieved 3.9M :10 views on CMAB channels in 2018. • Number of posts: 47 • 18M impressions on CMAB channels • 7.4M video views (:03) • 3.9M video views (:10) • Best-performing post: Yogurt Sticks, which received a VTR (:10) of 39%

Monday Melt Monday Melt is another food-focused video content series continued last year. These short videos of dairy melting received over 1.6 million views. Below are full metrics for 2018: • Number of posts: 15 • 1.6M video views (:03) • Best-performing post: Cheese Bubbles, which received a VTR (:03) of 49%

Better With Cheese This photo series highlights popular day-specific food occasions and highlights how cheese can make them better. Below are the metrics for 2018: • Number of posts: 10 • 2M impressions • 128K engagements • Best-performing post: Taco Plate, which received an ER of 23% Farmer Videos We continued to tap into the Growing Up Dairy and CA Dairy Stories video content to tell the people story behind Real California Milk throughout 2018: • Number of posts: 22 • 6.2M impressions

• 2.3M video views (:03 secs) • 1M video views (:10 secs)

• Best-performing posts: Dairyman, which received a VTR (:10) of 78%, and Photography, which received a VTR (:10) of 38%

Appendix The chart below shows social metrics for evergreen content on CMAB owned channels for 2018. “Other” includes metrics from the Texas Campaign, Food52 recipe videos, and several PR posts:

Content

Impressions 7,420,265 9,536,842 2,031,898 4,118,426 6,232,422 952,550 4,670,843 34,963,246

Engagements

Video Views (:03)

Video Views (:10)

Tastemade

55,973 86,705 128,747

2,900,040 4,128,196

1,844,335 1,925,551

Cooking Panda Better With Cheese

-

-

Monday Melt

4,536

1,678,899 2,353,785

543,164

California Dairy Stories

11,354

1,065,649

TV

921

328,930 1,323,300 12,713,150

158,952 536,759

Other Total

31,200 319,436

6,074,410

The chart below details metrics by quarterly messaging objective for 2018:

Content

Impressions 8,403,413

Engagements

Video Views (:03)

Video Views (:10)

Breakfast

70,480 58,444 71,489 37,336

3,548,253 3,907,837 2,115,118 1,684,055

1,934,571 2,253,921 1,403,832

Healthy Snacking Hispanic Dairy

9,632,858 5,253,321 4,253,995

Holiday Entertaining

708,513

Coverage Dashboards

In the Media Executive Overview Q4 2018

TOPLINE RESULTS

Farmer 1%

Nutrition 5%

61.53 M National 4.17 M CA + Southeast

100% Key Message Delivery

65.7 M Impressions

1,872 Stories/Mentions Consumer + Foodservice Traditional/Social Media

1.3 M Impressions

Angle

Consumer + Foodservice Traditional/Social Media

Foodservice Advertising

Food 94%

DETAILED RESULTS Ranked by t r ad i t i ona l / soc i a l med i a imp r e s s i ons ( + f oodse r v i ce adve r t i s i ng f or bus i ne s s ob j ec t i ve s ) Tot a l imp r e s s i ons ex ceed t he t op l i ne numbe r due t o s t or i e s /men t i ons i nc l ud i ng mor e t han one f unc t i ona l p r i or i t y , me s sage or bus i ne s s ob j ec t i ve

TOP 3 FUNCTIONAL PRIORITIES

TOP 3 MESSAGES DELIVERED

TOP 3 BUSINESS OBJECTIVES

1. Activate the Seal 61.1 M Impressions

1. CONSUMER DEMAND: VALUE OF THE SEAL 63.6 M Impressions Real food and/or real people content + Dairy Social Team 2. CONSUMER DEMAND: DAIRY HEALTH STORY 22.9 M Impressions Dairy health, protein, fats and/or nutrients content

1. Look for the RCM Seal 64.9 M Impressions

2. Real Food 63.4 M Impressions

2. Expand Ethnic Foods 32.9 M Impressions

3. Real People, Farm Families 54.1 M Impressions

3. CONSUMER DEMAND: INDUSTRY LEADER 1.3 M Impressions Foodservice advertising

3. Win with Healthy Snacking 23.4 M Impressions

Activities Overview Q4 2018

Foodservice Editor Event

Dairy Industry Leadership & Integration

• Int l Food Edi tors Conference ( IFEC) • (8) Edi tor meet ings • RCM Seal giveaways to 30 edi tors • Topi cs covered: • Da i ry prote in in a pl ant - forward menu • REAL Makers chef s and rec ipes

Cal i fornia Dai ry Sustainabi l i ty Summi t • Keynote speaker address • Speaker panel • Consumer research study • Sustainabi l i ty Summi t Handbook ( i ssues support mater ial s)

Reputation Management

Dairy Social Media Team

• Animal act ivi st support • CMAB Master Messaging updates • Dai ly tradi t ional + social media moni tor ing and report on dai ry and food industry news, trends and i ssues

• 186 Social posts • Weekly content recommendat ions

Activate the Seal Q4 2018 TOP 3 FUNCTIONAL PRIORITIES DETAILED REPORT

KEY INSIGHTS Several act i vat ions drove meaning for the Real Cal i fornia Mi l k seal . A keynote address at the CA Dai ry Sustainabi l i ty Summi t , suppor ted wi th new research, shared how the CA dai ry indust ry can l everage i ts sustainabi l i ty l eader ship. Two media re l eases suppor ted bus iness deve lopment ef for ts and generated the highest amount of impress ions dur ing the quar ter .

TOPLINE RESULTS

1 Sustainability Summit Event

1,378 Stories/Mentions

61.1 M Impressions

Dairy leadership & industry integration w/CA Dairy Sustainability Summit, Dairy Social Team, animal activist support

TOP 3 MESSAGES* Ranked by ove r a l l imp r e s s i ons 1. LOOK FOR THE RCM SEAL 60.9 M Impressions

4. ACTIVATION XX impressions XX mentions 5. ACTIVATION XX impressions XX mentions 2. SALTY VS SWEET RELEASE 20.3 M Impressions Consumer survey and healthy snacking info 3. MICROINFLUENCERS 464 K Impressions Holiday entertaining posts in southeast region 2. TACTIC XX metric 3. TACTIC XX metric 1. ENTERTAINING RELEASE 30.6 M Impressions Holiday entertaining w/CA dairy content TOP 3 TACTICAL ACTIVATIONS Ranked by ove r a l l imp r e s s i ons

1. TACTIC XX metric

2. REAL FOOD 60.8 M Impressions

2. TACTIC XX metric

3. REAL PEOPLE, FAMILY FARMS 51.5 M Impressions

3. TACTIC XX metric

*Total impressions exceed the topline number due to stories/mentions including more than one message