The milk category is not growing. Sales of whole milk declined 9.8% (measured in dollars) and 7% (units) for the 52-week-period ended Sept. 5, according to SymphonyIRI Group, a Chicago-based market research firm. (The decline is less than in 2009, which showed a 13.4% decline in sales dollars.)
Among the top 10 brands, Horizon Organic, Tuscan Dairy Farms, Hiland and Dean’s posted increases in the period (see table on page 30.).
Sales of skim and low-fat milk declined too, but not as much as whole milk. Dollars in the category were off 2.7% and units were down 0.6% in the same period. Horizon Organic, the No. 3 ranked brand, posted gains in sales and units, as did No. 6 Prairie Farms Dairy and No. 9 Hiland.
In the world of beverages, milk sales continue to rank third behind carbonated soft drinks and bottled waters, according to Beverage Marketing Corp., New York. One bright spot: milk posted a greater share increase than any other category in its competitive set thanks to declines in consumption of other drinks, says BMC’s Gary Hemphill. He said dairies also have begun to get more marketing savvy to respond to other beverages.
A Dairy Management Inc. (DMI), Rosemont, Ill., analysis of research shows that while Americans are eating less red meat, they seek protein from other sources. Communicating the multiple nutrients-especially protein-in milk and other dairy products is critical. Compared to those who say they consume dairy products because they are good for bone health, relatively fewer consumers turn to dairy products as a source of high-quality protein, according to the DMI analysis.
New product launches as a whole were off in 2010, but BMC’s Hemphill expects to see more next year. Processors are focusing on cost reductions. Dean Foods, which has 38% of the fluid milk market in the United States, expects $100 million in cost savings in 2010, according to its presentation at the Barclays Back-To-School Consumer Conference in September. Sales of the company’s International Delights coffee creamer products grew at double-digit rates in the first half of 2010, while Horizon Organic milk and the plant-based milk alternative Silk grew in high single digits.
Targeting the lactose intolerant
Ordinarily, processors introduce new products to help grow milk sales. But with launches down, processors are seeking out new market segments. The Innovation Center for U.S. Dairy sees lactose-intolerant Americans as a growth market. In a white paper released this fall, the group says the dairy industry could achieve 273 million gallons of incremental growth if lactose-intolerant individuals drank more milk.“Converting lactose-intolerant consumers into devoted dairy consumers is not simple, but by understanding their preferences and attitudes and applying other insights, the industry will be better able to meet their needs and further protect and promote dairy,” said Jim Layne, vice president of strategic initiatives with DMI. (Read more in this month’s Newsline.)
The DMI white paper states, “Many lactose-intolerant respondents who currently don’t drink milk as a beverage said they would be extremely or somewhat likely to consider drinking milk that doesn’t cause digestive problems. By converting individuals to lactose-free milk, the industry could increase their consumption to be on par with the lactose-tolerant general market per capita consumption.”
Price and taste are main reasons lactose-intolerant individuals don’t drink lactose-free milk. In blind taste tests, consumers preferred lactose-free milk to soy milk. Fuller-fat lactose-free milk fared better than lower-fat products.
Last month, Smart Balance, Paramus, N.J., launched a lactose-free, fat-free milk sold in half-gallon containers. Smart Balance also expanded nationally its lactose-free and Omega-3 milk, which it had rolled out on a limited regional basis this year. (It has been available in Florida for several years and in the Northeast for more than one year.) The lactose-free, fat-free and calcium milk has 75% more calcium and 20% more protein than whole milk, the company states.
Lactose-free, Omega-3, probiotics
Other processors are developing products for niche markets. Earlier this year, Organic Valley, LaFarge, Wis., began selling gallon and half-gallon containers of organic milk with Omega-3 fatty acids ALA, DHA and EPA. The Omega-3s are from sustainably harvested fish, sourced through Ocean Nutrition Canada Ltd., Nova Scotia.“Consumers are also continually seeking brands that can offer them solutions. A great example related to health and wellness is the growth in Omega-3 supplemented milks, which have been driving growth in the fluid dairy category for the past couple of years and continues to gain momentum as consumers look to add more Omega-3 to their diet,” says Elizabeth Horton, the company’s director of public affairs.
This spring Guernsey Farms Dairy, Northville, Mich., launched a line of probiotic milk. Before it went public with it, dairy employees drank the product for a year. Rita Rice, general office manager at the family-run dairy, said the staff is reporting better health and even her family doctor noticed a difference.
Guernsey Farms Dairy sells low-fat and skim milk in half-gallon containers in Michigan groceries and at the dairy’s own store. Guernsey uses BanedenBC30 probiotic strain from Geneden Biotech, Cleveland. The strain withstands the heat used in pasteurization. Rice said sales are growing but the public needs to be educated about probiotics and its benefits. Meijer’s will be carrying the probiotic line and the dairy is talking to hospitals about the milk.
Processors who don’t add priobotics or Omega-3s to their products can fall back on the traditional message of freshness.
“Code dates are becoming more of an issue to consumers. As prices increase, consumers want the freshest of the fresh,” says Jeff Kleinpeter, president of Kleinpeter Farms Dairy, Baton Rouge, La.
“Over the past two to three years, awareness to support ‘local’ has grown tremendously,” he says. “We have also focused on freshness and extended code dates as well, keeping our products really fresh in the marketplace. We buy back the milk that is near to expiration, and donate it quickly to area food banks.”
Appealing to the Hispanic market
Beyond advertising, brands are trying technology to develop a relationship with their customers. In April, Nestlé USA developed a mobile website and a custom iPhone application that it said targeted directly at Hispanic consumers. The website and app draws recipes from MiConcinaLatina.com, the website of Carnation evaporated milk. Web-enabled phones can search more than 300 recipes on the website, which has content in Spanish and English. Carnation cited research from the Pew Internet & American Life Project, which showed that more than 47% of Hispanics used a handheld device to go online compared to 28% of whites.The iPhone app delivers a recipe at random when users shake their phones. Shaking the phone reminds shoppers that they need to shake a can of evaporated milk before adding the contents to a recipe.
Eagle Brand sweetened condensed milk from J.M. Smucker Co., recruited Spanish-language television personality Ingrid Hoffman for a recipe contest awarding a $10,000 grand prize. Hoffman is host of “Delicioso” (Galavision/Univision) and “Simply Delicioso” (Food Network).
An ambitious campaign this year by the California Milk Processor Board used traditional advertising and event-based marketing to reach Hispanic consumers in that state. Ad agency Grupo Gallegos, Long Beach, Calif., produced a campaign called “More than Just Milk,” showing how the nutrition in milk benefits hair, teeth and muscles. The 30-second television commercials were called “Pelo” (hair), “Dentista” (dentist) and “Bebida Deportiva” (sports drink). The hair advertisement, for example, showed a long-haired woman walking in a forest. It had the look of a shampoo commercial. A Spanish-language voiceover says, “The proteins in milk help your hair look healthier and stronger.” The ad ends with “Toma leche” (drink milk).
To emphasize milk’s contributions to health and beauty, the campaign operated pop-up stores for two weeks at three Macy’s department stores in California. Beauty consultants handed out a booklet of tips to keep skin, hair and nails healthy and served milk-based drinks. The campaign’s Beauty By Milk counter was set up in the cosmetics department at Macy’s on Union Square in San Francisco. The other counters were set up at entrances to Macy’s stores at malls in Santa Ana and San Diego.
A beautiful hair contest also was part of the campaign. Entrants submitted a color photo showing their hair and a glass of milk along with a short caption in Spanish describing how “beautiful hair starts with milk.” The prize was $500 and a day at a spa with two friends and popular Hispanic singer Carmen Jara. Although the contest was oriented toward women, the winner was a man.
Alternative sales channels
Grocery stores often drop the price of milk to increase traffic. In the foodservice channel, one restaurant chain gave away milk when diners purchased a new menu item. Whataburger restaurants gave away free milk for two days as part of a customer appreciation event in March. To promote the addition of Chocolate Chunk and Sugar cookies to its menu, the San Antonio, Texas-based chain gave away regular or chocolate milk with a cookie purchase.“We appreciate our loyal customers and couldn’t think of a better way to introduce our new cookies than with free milk,” said Rich Scheffler, the restaurant chain’s group marketing director. Whataburger also distributed milk and cookies at children’s hospitals in eight cities.
Smith Dairy, Orrville, Ohio, redesigned its school-milk packaging this year (see page 30). The designs on its chocolate, strawberry, vanilla and regular low-fat pints feature a cow. The processor also has a cow coloring contest for children. They can have their artwork featured on Smith Dairy’s website and win a gallon of milk.
With the economy slowly improving, and new introductions expected, milk processors have some reasons to be optimistic about 2011.
