2023 May Board Book

CALIFORNIA MILK ADVISORY BOARD

Board of Directors Meeting

May 10, 2023

CALIFORNIA MILK ADVISORY BOARD 2156 W Grant Line Road, Suite 100 Tracy, California 95377 (209) 883-6455 RealCaliforniaMilk.com

BOARD MEETING AGENDA Wednesday, May 10, 2023 at 7:30 am

Deutsch LA 12901 W Jefferson Blvd Los Angeles, CA 90066 (310) 862-3000

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 Tony Louters

2. Roll Call – Secretary John Vander Poel

3. Introduction of Guests

4. Financial Report

5. Individual District Reports

6. Marketing Branch Report

7. Report from Chairman

8. Procedure for filling open board positions

9. Report from Chief Executive Officer – John Talbot

10. Program Review and Proposals a. Advertising b. Communications

c. Business Development d. Processor Partnerships e. CDIC f. Producer Relations

11. Committee/Industry Meetings Update

12. National Dairy Board Update

13. Minutes of Last Board and Executive Committee Meetings – Secretary John Vander Poel a. Public comments on agenda items

14. Report from Deutsch LA on programs/procedures

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

16. Public comment on non-agendized items

17. 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 2156 W Grant Line Road, Suite 100 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 September 16, 2020. The next required continuation hearing will likely occur in the summer of 2025.

II. Fiscal Year – The CMAB’s fiscal year is January 1 to December 31.

III. Board Composition – The Board shall consist of 18 producer members and 18 producer alternates. There may also be a public member and public alternate who may not have a financial interest in the milk industry. There may not be more than 1 vote from any one production entity. Board seats are generally allocated in accordance with the number of milk producers within each district. The district allocation of Board seats is reviewed every three years.

IV. Role of Alternates – When a producer member is unable to attend a meeting, he or she may designate any alternate member from their district to serve in their place.

V. Interim Filling of Vacancies – When a producer member position becomes vacant, the Chairman may designate any alternate from the same district to serve as an interimmember until the next round of district nominations and preference voting during which CDFA will seek a replacement. When an alternate producer position becomes vacant, the Board may recommend and the Department may consider appointment of a producer to fill the vacancy or the position may remain vacant until the next round of district nominations and preference voting during which CDFA will seek a replacement. VI. Term of Office – The term of office for all members and alternates is 3 years. Terms are staggered so that one-third of the Board positions are filled each year. Terms begin March 1 and run through February 28 three years later. VIII. Selection /Appointment Process – All members and alternates are appointed by CDFA. Recommendations for producer appointments for each district are generated through a two-step mail process conducted each fall consisting of a self-nomination procedure followed by preference voting. Recommendations for the public positions are generated by a vote of the producer Board members. IX. Executive Committee – Each March the Board shall select an Executive Committee consisting of a Chairman, Vice Chairman, Secretary, Treasurer and three additional Board members. The Chairman is limited to three consecutive terms. X. Board Quorum and Board Voting Procedures – A quorum of the Board shall consist of 10 members. Except as provided in the two exceptions below, actions of the Board shall be valid if approved by a majority of the members present, provided there is a quorum of the Board present. • Any action recommending a minor amendment to the CMAB Marketing Order must be approved by not less than 75% of the producer members of the full Board. • Board actions related to the selection or dismissal of the CEO shall not be valid unless approved by a ⅔ vote of the full board . VII. Term Limits – The CMAB has no term limits. Board members and alternates may serve as long as they continue to be rechosen via their district’s nomination and preference voting process.

Over

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

XII. Authorized Activities:

A. Research Authority – The CMAB may fund research relating to milk and dairy products. Such research may include research studies concerning the production, processing or distribution of milk, the health and nutrition of milk or dairy products or the development of new uses for milk or dairy products. B. Education Authority – The CMAB may fund programs designed to acquaint producers, handlers, consumers or other interested persons with educational information. Such programs may include information regarding quality improvement, sanitation practices, procedures, or methods as applied to market milk or dairy products. Education programs may be designed to also make available to producers, handlers and the public 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 trade name used by any handler or 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 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. C. Advertising and Sales Promotion and Market Development Authority:

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.

Aseptic: Aseptic packaging is a procedure consisting of sterilization of the packaging material or container, filling with a commercially sterile product in a sterile environment and producing containers that are tight enough to prevent recontamination (hermetically sealed). Aseptically packaged ultra-high temperature (UHT) milk is shelf-stable and does not require refrigeration.

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 Innovation Center (CDIC) – A collaboration of California processors, universities and check-off organizations focused on stimulating innovation in the dairy sector. Staffed and managed by CMAB. 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).

Cause Marketing – An initiative in which CMAB partners with one or more other organizations to positively address a specific need with a social responsibility charge. This includes things like food donation programs and often carry positive public relations opportunities.

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.

Culinary Advisory Panel – A panel of multi-cultural food bloggers who help guide CMAB on appropriate messaging, thematic content, and recipe creation for all ethnic promotions to ensure relevancy and lend authenticity. Dairy Business Innovation Initiative (DBII) – Pacific Coast Coalition – Funded by USDA, Dairy Business Innovation (DBI) Initiatives support dairy businesses in the development, production, marketing, and distribution of dairy products. DBI Initiatives enhance academic capacity, provide direct technical assistance and grants to dairy businesses. The DBII Pacific Coast Coalition, hosted by Fresno State, in partnership with CMAB/CDIC is one of four in the United States. 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.

Direct-to-Consumer (DTC) – A business model of selling products directly to consumers through an ecommerce platform without the help of third-party wholesales or retailers.

Drop Shipping – is a form of retail business wherein the seller accepts customer orders without keeping stock on hand. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details to either the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer. As such, the retailer is responsible for marketing and selling a product, but has little or no control over product quality, storage, inventory management, or shipping.

E-commerce – Sales completed through the online channel.

ESL (Extended Shelf Life) – means that the milk is “longer lasting” and does not spoil as quickly as fresh milk. Yet, like fresh milk, ESL milk has to be stored in the fridge regardless of whether it is opened or unopened. ESL milk will last drinkable for 4-6 weeks (unopened).

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

Freight on Board (FOB) – Is a shipment term that defines the point in the supply chain when a buyer or seller becomes liable for the goods being transported. Purchase orders between buyers and sellers specify the FOB terms and help determine ownership, risk, and transportation costs. 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.

HDPE (High Density Polyethylene) – A thermoplastic polymer made from petroleum. As one of the most versatile plastic materials around, HDPE plastic is used in a wide variety of applications, including milk jugs. HDPE is recyclable. HPP (High Pressure Processing) – A non-thermal preservation method which uses pressure and that guarantees food safety and achieves an increased shelf life, while maintaining the organoleptic and nutritional attributes of fresh products and can help protect heat-sensitive compounds in milk and colostrum (such as immunoglobulin). It can be applied to milk and dairy products but is not approved in the US as an alternative to pasteurization.

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.

PET (Polyethylene terephthalate) – Obtained from petroleum sources, PET is a clear, strong, and lightweight plastic that is widely used for packaging foods and beverages, especially convenience-sized soft drinks, milk, juices, and water. PET is fully recyclable. PHA (Polyhydroxyalkanoates) – An emerging class of bioplastics that are bio-based and biodegradable (some are compostable). PHAs are produced by bacterial fermentation using bio-derived feedstocks – including dairy waste (whey, permeate) – and thus are an alternative to fossil fuel-derived plastics in some applications.

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. Product Display Page – A webpage specific to a product, found on a retailer’s own website like HEB.com or other third-party e-commerce website like Instacart.com. This page can include an image gallery, a description of the product, nutrition information, video content, availability in-store, and more. An optimized product display page will increase the product’s relevancy to consumers and likelihood of it showing sooner in web search. 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. SEO (Search Engine Optimization, as it related to food commerce) – The process of improving the appearance and positioning of your product on a website page. This can be done by optimizing content and boosting relevancy, or through paid means where an individual product is boosted into a top position so more consumers see it, engage with it, and ultimately drive more sales. 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. Shopper Marketing – A retailers own communication vehicles within their physical store and digital touchpoints. Because it is executed by the retailer, loyal shoppers are more likely to engage with shopper marketing tactics such as their weekly email blasts, festival-type promotions, etc.

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.

Third Party Logistics (3PL) – An organization's use of third-party businesses to outsource elements of its distribution, warehousing, and fulfillment services.

UF/MF (Ultra- and microfiltration) – Membrane-based processes applied to milk to separate its components based on molecular weight/size. During UF all the proteins are retained, whereas MF selectively retains casein and permeates whey proteins. UF is primarily used to produce dairy ingredients that have an increased protein content and reduced lactose contents, such as milk protein concentrate (MPC) and whey protein concentrate (WPC) UHT – Ultra-high temperature processing sterilizes milk by heating it above 135 °C (275 °F) for a short time. UHT milk packaged in a sterile container has a typical unrefrigerated shelf life of six to nine months. 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.

Velocity – The rate of retail sales that a brand or SKU achieves through a store, group of stores or market area over a defined period of time.

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. CDIC – California Dairy Innovation Center 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

ADMINISTRATION

Presentation to Board of Directors

May 2023

Statement of Income & Expenses

Milk Production Comparison

California Milk Advisory Board Statement of Income and Expenses As of March 31, 2023

Month Ending CY % to Month Ending PY % to Year Ending 3/31/2023 Budget 3/31/2022 Budget 12/31/2023 Actual PY Budget

Revenue Assessment Income *

$ 10,476,186

25% $ 10,480,968

25% $ 41,530,000

Non-Assessment Income **

26,208 52,444

25,557

95,000 245,000

28% 21% 25% 13% 23% 10% 15% 15% 28% 20% 17% 23% 16% 25% 15% 23% 26% 13% 0%

24%

Other Income Total Revenue

61,484 176%

10,554,839

10,568,009

41,870,000

25%

Expenses

Advertising

2,252,014 925,992 643,680 318,810 949,613 410,848 199,641 128,713 158,172 132,255 433,242 6,552,979 -

2,691,083 966,137 779,981 218,020 609,271 367,384 278,698 224,661 164,160 151,226 433,156 6,884,706 928

17,834,000 4,039,000 6,350,000 2,175,000 6,438,388 1,459,000

15% 21% 11% 10% 25% 26% 27% 23% 15% 25% 15% 19% 25% 24% 18% 24% 26% 9% 2%

Communications Domestic Retail

Foodservice

International Initiative

Tradeshows

Processor Relations Industry Intelligence Producer Relations

981,600 753,658 695,750 48,000 816,000

Education and Community Relations

CDIC

Dairy Research Foundation

1,732,966 43,323,362

Office Operational

109,622 22,464 1,720 38,216 15,216 5,096

91,771 22,203 14,815 44,562 9,717 14,160 20,628 -

476,000 87,600 40,000 62,000 174,838 48,000 10,000 58,000 72,000 800,000 50,000 91,000 14,000 125,000 47,000 21,200 -

Rent

Travel & Automobile

10,290

Legal

3%

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

22% 32%

-

0%

0%

13,958 16,944

24% 24%

26% 25%

-

352,234 246,603 13,872 17,886

0%

117%

187,358 6,636 13,058 2,450 24,918

23% 13% 14% 18% 20%

27% 25% 20% 35% 20%

Board Per Diem Marketing Branch

4,850 25,499

Fiscal & Compliance Audit Assessment Collection Fee

-

-

0%

0%

5,450

4,397

26% 21%

23% 34%

463,107

893,487

2,176,638

Total Expenses

$ 7,016,086

15% $ 7,778,193

16% $ 45,500,000

Year to Date Payroll: $923,595 * Estimated March Assessment at $3,667,949 ** Estimated February and March Non-Assessment at $17,000

CMAB Milk Production Comparison

2020 to 2021 2021 to 2022 2022 to 2023 % Change % Change % Change 2.70% -1.90% -0.19% -0.97% -0.64% -1.18% 1.33% -0.16% -2.19%

2020

2021

2022

2023

January February

3,497,591,436 3,591,881,356 3,348,120,007 3,315,540,632 3,662,406,250 3,711,091,837 3,475,821,700 3,629,592,418 3,538,575,590 3,709,808,492

3,523,704,645 3,294,415,818 3,704,999,229 3,597,030,053 3,655,797,733

3,516,877,642 3,255,648,146 3,623,879,592

March

April May June

4.42% -0.90% 4.84% -1.46% 3.55% 0.39% -0.63% 2.53% 0.52% 2.27% -0.06% 0.08% 1.84% -1.05% 0.28% -0.84% 1.62% -0.30%

3,325,976,064 3,443,968,122 3,457,426,027 3,444,001,804 3,422,363,281 3,508,881,474 3,261,414,984 3,259,551,116 3,262,119,753 3,366,497,491 3,428,295,882 3,392,424,997 3,329,290,479 3,338,449,997 3,310,255,775 3,422,732,261 3,478,072,463 3,467,696,688 3,352,677,803 3,370,209,607 3,446,864,031

July

August

September

October

November December

Total

41,025,105,869 41,025,105,869 41,698,825,203

1.64%

-0.19%

41,698,825,203 41,621,616,223

-1.20%

10,523,119,692

10,396,405,380

4/24/202311:11 AM

Milk Assessments

Production Comparisons

ADVERTISING & COMMUNICATIONS

Presentation to the Board of Directors

Ma y 202 3

CMAB Advertising Update CMAB Social Media Update CMAB Communications Services Program Coverage Dashboard s Press Releases

CMAB Advertising Update

2023 Top-Line Recap

TV

2023 is set to launch on 4/10! ● Rotation of 3 new California Freestyle Remix spots: Latin Pop, Country, and Reggaeton

Paid Social

2023 (1/11/23 – 3/31/23)

● 21 Pieces of Content ● 67.7MM Impressions ● 85K Video Views ● 55K Clicks

Paid Search

2023 (1/1/23 – 3/31/23) ● 778K Impressions ● 71K Clicks

YouTube

2023 is set to launch on 4/10! ● Rotation of 3 new California Freestyle Remix spots: Latin Pop, Country, and Reggaeton

Digital Media

2023 is set to launch on 4/10! ● Rotation of 3 new California Freestyle Remix spots: Latin Pop, Country, and Reggaeton

Website

● We continue to conduct regular maintenance on the website in 2023, as well as translate and deploy updates in Spanish.

2023 Campaign On April 10th, we will be launching the next phase of the California Freestyle campaign, California Freestyle Remix. An evolution of last year’s California Freestyle work, our music driven campaign will continue to celebrate California dairy and the things that make our dairy and our home state so special. We will be launching three new spots, each with a different song from a different genre - Latin Pop, Country, and Reggaeton. A major element of this year’s campaign is the continuation of working with bilingual artists who can perform in both English and in Spanish. It was important to continue to create work that was inclusive and representative, which can speak to the significant portion of our CA audience that is Hispanic. 2023 Media For 2023 we’re excited to build on the success of 2022 and will be launching the next phase of the California Freestyle campaign on April 10 across TV, CTV, pre-roll, and social. The new spots will be running within home, food, and family content across partners like Peacock, Paramount+, Hulu, YouTube, Pinterest, Instagram, HGTV, Food Network, Bravo, etc. In 2023, we’ll also be supporting four local promotions throughout the year: Hispanic Lent; Tacos, Tequila y Màs; Summer Snacking; and the Holiday Mornings Mean More campaign. Research Update: Report on California Freestyle Performance As we await our Q1 ’23 brand tracking report, we’ve been seeing extremely positive results in our monthly brand trackers so far this year, showing us how the Real California Milk identity is in a strong and stable position going into the next phase of the California Freestyle campaign. We continue to see our awareness levels remaining high, along with key brand attributes including “CA Dairy Makes Me Feel Good” and “There’s Something Special About CA Dairy,” even though media has been on pause during Q1 ‘23 pending launch of new work. As the launch of the next campaign gets closer, we’re continually revisiting our brand tracking methodology to ensure that reports continue to be as actionable as possible, so we can learn and optimize as needed. Social Content Our 2023 social content strategy continues to utilize the “Fewer Things. Done Better. Seen More” approach, focusing on key messaging pillars including Our Food, Sustainability, and Brand through paid Facebook, Instagram, and Pinterest content in English and Spanish.

CMAB Social Media Update

Snapshot of 2023 social creative so far:

Local Promotions In February, we kicked off our first local promotion with Hispanic Lent where we established Real California Milk processors as leaders in Hispanic-style cheese and dairy during the Lenten season through paid social content. We focused on Hispanic consumers looking for non meat meal solutions and non-Hispanic cooks seeking to elevate their meals with better-quality and Hispanic style ingredients. In mid-April, we will be launching our second local promotion, Tacos, Tequila y Màs, where we will leverage the pairing of different beef taco recipes with tequila through digital banner creative and paid social content.

RealCaliforniaMilk.com We’re continuing to assess and deploy updates on the Recipes, Foodservice, Sustainability, and Health & Wellness landing pages within the English-language and Spanish-language sides of the Real California Milk website. Research Update: Sustainability Research Progress continues on a new research project in partnership with the California Dairy Research Foundation to learn more about what resonates with consumers when it comes to Sustainability, and how we can incorporate that into our own communications. We recently reviewed a slate of potential research partners and evaluated each one based on responses to our RFP and are moving closer to making a final decision so we can officially kick off research. Search Engine Marketing Search is always changing, and we must continue to change with it. In 2022 we focused on four key areas: 1) optimizing toward the most cost-efficient keywords, 2) maintaining 80%–90% branded Share of Voice, 3) updating the campaign based on Google’s latest changes— responsive and expanded text ads, as well as moving from broad match to phrase match keywords—and 4) incorporating Spanish-language keywords and search ads. Non-brand (dairy category) campaigns continue to be geo-targeted to California only, while brand campaigns (Real California Dairy specific) run nationally. One non-brand campaign of particular interest is the Dairy Mythbusting campaign, for which we lead users to our Sustainability or Health & Wellness landing pages, where they can learn the truth about dairy’s benefits.

We also meet with the MilkPEP, DMI, and CA Milk Processor search teams several times throughout the year to discuss search strategies and ensure we are not duplicating efforts.

In Q4 2022 we tested search campaigns revolving around dairy-specific national holidays (National Nacho Day and National Cookie Day) as search volume spikes around these events. We were happy to see that these holidays performed well, with National Cookie Day achieving the highest CTR of all non-brand campaigns.

In 2023 we plan to expand on the Spanish-language keywords and dairy-specific national holidays while keeping in mind our brand SOV goals.

2023 Paid Search:

Impressions

Clicks

CTR

777,958

77,229

9.16%

Appendix Paid Social Performance: The chart below shows social metrics for evergreen content across FB/IG and Pinterest through CMAB and influencer channels, from January through March 2023.

January 11 – March 31, 2023:

Content

Impressions

Engagements

Video Plays

Recipes

62,088,489

621,047

85,389

Influencers

3,015,569

341,584

6,052

Lent

2,636,785

15,674

-

CMAB Communications Services Program

COMMUNICATION SERVICES Public relations activities in Q1 and the first month of Q2 focused on supporting CMAB functional business priorities and delivering key messages to differentiate California dairy among consumers and retail/foodservice audiences. Key Communications Strategies: • Strengthen awareness, affinity, and preference for CA based dairy in CA markets • Highlight milk, cheese, butter, yogurt, cottage cheese and ice cream in creative/messaging • Nurture re-discovered habits and usage occasions that drive dairy sales (breakfast, snacking) • Reach consumers where they are, share farm to table, sustainability, and culinary stories • Continue to maintain role of dairy in fitness/health for consumer, health professional audiences • Spotlight value of dairy: monetary, nutritional, flavor in PR and social media messaging • Promote CA progress in achieving climate neutrality • Continue to provide relevant information/tools for foodservice operators

Regional (California)/National Consumer Martha Steward Tinned Fish Feature Results: 1 Story/10.7M Impressions The CMAB tapped into the tinned fish food trend to generate a piece of content shared on our RCM channels and on MarthaStewart.com. We partnered with content creator, Jessica Lawrenz (@mongermoldandmilk) to call out Real California cheeses as a perfect pairing for canned tuna. Lawrenz shared in an interview, "Try lightly tossing tuna with capers and thinly-sliced preserved lemons, pairing with hard, nutty aged cheese like a real California milk carmody or Dry

Jack reserve, along with a dry, floral, minerally white wine. Or try tuna on rustic crackers with hard cheese and pickled shallots." This story was amplified through online media placements like Yahoo! and MSN. San Diego Living Brunch Segment Results: 27K Impressions The CMAB partnered with dietitian spokesperson Amy Goodson on a spring brunch segment that included eggs, bread, and California dairy. The segment, which aired April 27th, featured messages about dairy as a nutritious and affordable ingredient in brunch recipes. California Freestyle Volume II: The Remix In support of the second round of the California Freestyle video content, CMAB distributed a press release outlining the messaging platform and creative execution for the three video spots. Experiential

CMAB sponsored two California cheese events – the California Artisan Cheese Festival in Santa Rosa, and the LiquidCity San Diego Cheese Expo.

Health & Wellness Farm-To-Table Travel Journal Jordan Mazur Social Posts Paid Amplification: 2 Posts/2.6M Impressions The CMAB continued to share out the messaging of pro football sports dietitian, Jordan Mazur’s (MS, RD) travel journal featuring visits to three California dairy farms to better understand where the foods he eats – and those his players rely on for fueling and recovery – come from. Jordan’s farm-to-training table visit shared messages of discovery about where the real milk we love comes from, how dairy cows are like athletes, and how farmers are investing in technology for continuous improvement in cow care and sustainable production for the future. This messaging continued to be amplified through the CMAB’s LinkedIn (with paid amplification) and Jordan’s social channels and through the National Athletic Trainers Association (NATA) and Idea Fit. Latinos and Hispanics in Dietetics and Nutrition (LAHIDAN) • Online Toolkit: 500 Members • EBlast: 500 Members • Latina Dietitian/Krista Linares: 2 IG Posts/14.3K Impressions • Latina Dietitian Paid Amplification: 2 Posts/2M Impressions

The CMAB partnered with Hispanic dietitian and influencer Krista Linares (@latina.dietitian) to create and distribute an information piece in cooperation with Latinos and Hispanics in Dietetics and Nutrition (LAHIDAN) and the Academy of Nutrition and Dietetics titled “Navigating Dairy in Latine Diets.” The health and wellness peer-to-peer education piece targeted providers with

both English and Spanish language materials and gave tips for dairy consumption for consumers with lactose sensitivities.

Sustainability Results: > 752K Impressions (thru April 14) To continue to dispel myths and share California dairy sustainability achievements the CMAB partnered with The San Francisco Chronicle, The San Diego Union Tribune, and The Sacramento Bee on digital advertorials sharing how California dairy farmers are focused on sustainable farming practices, including water conservation.

Dairy Mythbusting Taboola Recycle the Jug Results: 8.2M Impressions

The CMAB continues to share mythbusting and dairy sustainability messaging with audiences through social media and partnerships, as well as through sponsored ads via Taboola. “An easy way to be eco-friendly: recycle your plastic milk jugs. Learn how.” was the top performing headline.

Foodservice General Program Results • Earned Media: 4 Stories / 155K Impressions

• Print Advertising: 35.5K Impressions • Digital Advertising: 180K Impressions • Social Media Amplification and SEM: 2.5M Impressions

Foodservice was supported by PR and Communications through press releases shared with the media regarding foodservice competitions. Foodservice messaging was also shared through print and digital advertising, as well as through the Real California Milk Foodservice social media channels. These social channels drive target users to the foodservice portion of the Real California Milk website, while sharing pertinent information with the foodservice operator