Honoring Heritage, Driving Innovation With Midwest Dairy's Vice President of Research & Innovation Michelle Watson

Fred Schonenberg
Hello everyone, and welcome to the VentureFuel Visionaries. I'm your host, Fred Schonenberg. I'm the founder of VentureFuel, and I'm so excited today. I'm joined by Michelle Watson. Michelle is the Vice President of Research and Innovation at Midwest Dairy. Her leadership experience spans everything from hospitality to retail, energy, agriculture, and entrepreneurship. So she has this very unique cross-functional perspective around innovation. 

And it now informs her work building partnerships and advancing new ideas to help shape the future of dairy through an initiative that we get to both work on together called the Midwest Dairy Accelerator, which we'll go deeper on, as well as all the other things she's working on. What's very interesting about this, the timing of it, consumer expectations continue to evolve so rapidly, and the food system is undergoing significant transformation. And so Michelle is helping to connect producers, industry leaders, researchers, and startups to identify new opportunities for growth across the dairy ecosystem. 

So today we're gonna talk about the reemergence of dairy as such a high growth category now, it's incredibly popular, and how innovation is reshaping the industry and why startups are playing such an important role in the future of food and agriculture. Please join me in welcoming Michelle Watson. Michelle, it's nice to have you.

Michelle Watson
Thank you for having me, it's a pleasure to be here.

Fred Schonenberg
So for people who may not be familiar with your background, can you give us a little bit of where you came from, what you do at Midwest Dairy, and how that role is evolving today?

Michelle Watson
Yeah, absolutely. So I am currently the Vice President of Research and Innovation at Midwest Dairy. My work is focused on helping identify opportunities from growth across the dairy category. A big part of my role is connecting people, ideas, and opportunities across that dairy ecosystem from foreigners and industry partners to entrepreneurs, researchers, and consumers. I spend a lot of time thinking about where consumer preferences are headed, what opportunities exist for dairy-based products, and how we can support innovation that keeps dairy relevant and growing.

One of the key initiatives I'm involved in is, as you mentioned, Midwest Dairy Accelerator Program, which really supports entrepreneurs and startups developing dairy-based products. The goal is to help bring the fresh ideas into the category and create more opportunities for dairy to show up in modern consumer-relevant ways. At the heart of my work, I see it as helping support dairy farmers by creating demand, encouraging innovation, and helping position dairy for long-term growth.

Fred Schonenberg
I love that. And I definitely will go a little deeper into the Midwest Dairy Accelerator, but I'm curious, I mentioned in the intro some of your experience across different industries. What drew you to the dairy industry and the innovation work specifically?

Michelle Watson
Yeah, so my path to dairy has really been shaped by experiences that helped me understand how deeply connected people, place, food, and business are. When I worked for the Shakopee-Midwestern Sioux community, which is a tribal-owned sovereign nation in Minnesota, I gained a much deeper appreciation for stewardship, sustainability, and making decisions with a long-term view. That experience shaped how I think about responsible growth, not just what works today, but what creates value for future generations. 

From there, my work in agriculture and energy gave me the opportunity to work more closely with farmers and understand the realities they face. Farming is complex. It requires resilience, innovation, business discipline, and a constant balance between productivity, sustainability, and taking care of the land and the animals. 

So when I came into dairy, it felt like those experiences connected. Dairy brings together agriculture, nutrition, sustainability, community, and consumer behavior in a really meaningful way. What drew me to this work is the opportunity to support dairy farmers, strengthen the category, and help bring forward product innovations that honor the roots of dairy while positioning it for the future. 

Fred Schonenberg
I love that line of honoring the roots and positioning it for the future. One of the things that made such a big impact on me early on is as we started to understand the dairy industry, was getting to meet the farmers and their stewardship of the land, the animals, how much this was a generational hand down from one generation to another, oftentimes fifth, sixth generation. And it's a really special industry. 

I think one thing that's been very exciting to see is staying true to those roots and now seeing these opportunities for innovation and the growth that has happened in the recent years. There's been such a transformation of the industry. I'm curious from your perspective, what do you think is driving that resurgence and enthusiasm for dairy overall?

Michelle Watson
Yeah, great question. I really think that several things are happening at once. For consumers, first consumers, they're really paying attention more to protein and nutrition and functional benefits. And dairy has a really strong story to tell there. Products like milk, yogurt, cheese, cottage cheese, and other dairy-based products naturally fit into many of the health and wellness trends that we're seeing.

Second, dairy is showing up in new ways. We're seeing more innovation around flavor, format, convenience, high protein options, lactose-free products, and functional benefits. That helps consumers see dairy as both familiar and fresh.

And I think third, people are reconnecting with real nutrient-dense foods. Dairy has a heritage and builds around trust, but also has the ability to evolve. And so that combination is really powerful. Consumers are looking for products that taste good, deliver nutrition, and really fit into their daily lives. And dairy can do all three of those things.

Fred Schonenberg
I love the familiar and fresh. There's just one of the things that's hard when we look at innovations across all different industries is if something is too new, if it's too different, if it's too different from what people expect or do in their daily lives, it's often hard for them to make that leap into should I try it or does this displace something? 

And dairy is something we all grew up with, right? Everybody has it in their lives. And so to now see new fresh forms of it, that connective tissue is so much easier to make the leap. It's really, really cool to see the way that the startups and founders in the industry really are pushing that envelope to connect better with consumers at the end of the day.

Michelle Watson
You got it. Yes.

Fred Schonenberg
For people that might not be familiar with the Midwest Dairy Accelerator, can you talk a little bit about it? What problem is it designed to solve and anything else you'd like to share about the program?

Michelle Watson
Yeah, absolutely. The Midwest Dairy Accelerator is a program designed to support entrepreneurs and startups who are creating new dairy-based products and brands. The problem it helps solve is access. Founders may have a strong product idea, but they often need industry insight, mentorship, consumer perspective, and connections to help them grow. At the same time, the dairy industry benefits from fresh thinking and new product concepts that help to keep the category relevant. 

The accelerator brings those two sides together. It gives entrepreneurs the opportunity to learn from the dairy ecosystem, and it gives the dairy industry a chance to engage with new ideas and new consumers and new ways dairy can show up in the marketplace. For me, the accelerator is really about creating a bridge between dairy farmers and the next generation of dairy products, between entrepreneurs and industry expertise and between consumer trends and real opportunities for category growth.

Fred Schonenberg
Yeah, I love that idea of the bridge. It's such an easy way to see how this actually works. Are there any, I know this is a little bit of an unfair question, but we've both seen the startups, but are there any startups or innovations that you're most excited about that are coming into the dairy ecosystem today? Are there any trends there or anything you wanna share about sort of where this is all going?

Michelle Watson
Yeah, I'm really most excited by products that solve real consumer needs. So that includes high-protein dairy products, functional products, new snacking formats, products that are convenient, lactose-free options, and ideas that make dairy feel more modern and accessible. I'm also interested in products that meet consumers in new occasions, whether that's breakfast, snacking, fitness, recovery, indulgence, or family-friendly nutrition.

The most exciting founders are typically the ones who understand both the product and the consumer. They are not just creating something new for the sake of being new. They are creating something that people generally see fitting into their daily lives. And when those products are rooted in dairy, they also have the potential to create more value across the dairy ecosystem, including for farmers who make the product possible. 

Fred Schonenberg
One of the things that strikes me as I just celebrated my 50th birthday, and I was asked a question about, like, what's changed over the different horizons of my life. And one of the things that popped in my mind for some reason was consumer preferences. Like, when I was like a teenager, it was like, no fat, low fat. And now it's like protein, fat's good, right? And I feel like consumer preferences around health, protein, even sustainability, functionality, all evolve so quickly. How is the dairy industry able to adapt in order to meet those changing expectations?

Michelle Watson
Yeah, dairy is really adapting by leaning into its strengths while also evolving how it shows up for consumers. So on the health and protein side, we have a natural advantage. Consumers are looking for nutrient-dense foods and dairy offers protein, calcium, and other important nutrients and products people already know and enjoy. On functionality, we're seeing dairy, more dairy-based products that connect to specific needs, things like gut health, energy, recovery, convenience. That is a big opportunity because consumers increasingly want food that does more for them. 

On sustainability, I think it's important to recognize the work that dairy farmers are already doing and continue to do. Farmers are constantly looking for how they care for their animals, how they use their resources, their responsibility, improving efficiency, and stewardship of the land for the future. The opportunity for dairy is to continue telling that story clearly while also supporting products that align with how today's consumers think about health, convenience, responsibility, and taste.

Fred Schonenberg
Yeah, I couldn't agree more there. I'm curious what role do startups play in helping industries like dairy that are legacy industries, they've been here for generations upon generations. How do startups, new technologies, enable industries like that to evolve faster at the speed of the consumer here?

Michelle Watson
Startups bring speed, creativity, and fresh perspective. So they are often close to emerging consumer trends and willing to test new ideas quickly. For a legacy industry like dairy, that is really valuable to us. Startups can help us see the category in new ways that they may identify new formats, new audiences, new flavors, or new benefits that larger organizations might not move on as quickly. 

At the same time, startups benefit from the knowledge and experience of the dairy industry. They need to understand the realities of the category, the supply chain, the consumer, and the farmers behind the product. When those two things come together, entrepreneurs' energy and industry's expertise, that's where you really get that meaningful innovation.

Fred Schonenberg
Yeah, and I think one of the things you mentioned before that I liked so much was this idea of the bridge between, and it's almost like a collaborative bridge between the startups. You've got large processors and corporations, the farmers, the researchers. It feels like this is an opportunity to bring those maybe disparate players together to help drive the next generation of innovation and the dairy industry overall.

Michelle Watson
Fred, it's essential. It really is. No single group can drive the future of dairy alone. Farmers bring the foundation. They understand the animals, the land, the work, and the responsibility behind every dairy product. Researchers bring the data, the science, and the insight. And then the startups really bring new ideas, the speed, and the consumer-focused thinking. Industry partners bring scale, market understanding, and the ability to help ideas grow.

When those groups collaborate, we can create products and solutions that aren’t only innovative, but also practical, scalable, and connected to the real needs of the dairy ecosystem. The collaboration is one of those things I'm most passionate about, because the best innovation does not happen in isolation. It happens when people with different perspectives work toward a shared opportunity.

Fred Schonenberg
Yeah, I couldn't agree more. I love that line. Innovation cannot be a silo. It has to be a group sport. I think one of the things, the first time I met you, and I think everyone listening feels this too, you have this contagious enthusiasm. And so I'm curious, what are you most optimistic about when you think about the future of dairy and food innovation?

Michelle Watson
Yeah, I think what gives me the most optimism is the people, honestly. Dairy farmers are incredibly resilient. They're innovative and they're committed to their work. Entrepreneurs are bringing fresh ideas, new products, ideas into the category. Consumers are showing renewed interest in protein and nutrition and real food. And across the industry, there is a growing recognition that innovation is how we continue to create demand and build the future. 

I'm also optimistic because dairy has both heritage and momentum. It has a strong place in people's lives, but it also has room to grow in new ways. The combination, strong roots and new possibilities is what makes this such an exciting time to be working in the dairy industry.

Fred Schonenberg
So Michelle, I always like to end our episodes with the rapid fire questions. We always have a tagline that we say, what's next is now. And so in the spirit of that, sort of like looking ahead and getting your gut instinct on things, I'm gonna give you a couple of rapid fire questions and just give us your gut.

Michelle Watson
Sounds good.

Fred Schonenberg
All right, so what's one word you would use to describe the future of dairy?

Michelle Watson
Dynamic.

Fred Schonenberg
I like that. What innovation trends are you watching closely right now?

Michelle Watson
Protein, functional nutrition, snacking, convenience, and products that connect dairy to modern health and wellness needs.

Fred Schonenberg
Is there anything that you would call out that you think makes the Midwest Dairy Accelerator particularly unique or different from other opportunities that are out there?

Michelle Watson
Yeah, it connects entrepreneurs creating dairy-based products with real insight, real industry insight, mentorship, and access to the dairy ecosystem.

Fred Schonenberg
Yeah, I agree on the access too. It's like the, I've been a founder a few times and one of the things that is the hardest is how do you get partners? Whether that is commercial customers, whether that is investors, whether that is suppliers. And so the whole program is built around that. It's just we can help you get from home base to third really quick. From there you've got to run, but this is a way to kind of leapfrog some of that. What do you think are the biggest opportunities or what's the biggest opportunity for startups in the dairy category today?

Michelle Watson
Yeah, I think creating products that help consumers see dairy in new, relevant, and everyday ways.

Fred Schonenberg
Is there one lesson you've learned from leading transformation in so many different industries and within the dairy industry? What's one lesson you would share with our listeners?

Michelle Watson
Sure, for me, transformation works best when you honor what already exists while creating space for what's next.

Fred Schonenberg
I like that. What's one thing you hope to see emerge from the second year of the Accelerator program?

Michelle Watson
Yeah, we're already starting to see it. Stronger product concepts, deeper partnerships, and ideas that can create real growth for the dairy category.

Fred Schonenberg
And I'll get you out of here on this. I asked a version of this question before, but what makes you most optimistic about the future of dairy?

Michelle Watson
The combination of resilient farmers, strong consumer interest in nutrition, and a new generation of entrepreneurs bringing fresh ideas to the category.

Fred Schonenberg
Michelle, this has been wonderful. Thank you for everything you're doing to spark change for the industry. I know it's all in service of the farmers, and it's really exciting to get to collaborate with you on a lot of this. Where would you have our listeners go to learn more about your work, the program? Where would you like us to send everybody?

Michelle Watson
Yeah, awesome. People can learn more at MidwestDairy.com. They can also follow Midwest Dairy on Facebook, Instagram, YouTube, and LinkedIn. I'm also on LinkedIn, and I always welcome conversations with founders, partners, and industry leaders who are interested in the future of dairy and food innovation.

Fred Schonenberg
Amazing. Thank you, Michelle.

Michelle Watson
Thank you.