DMI 03A - Dairy Foods

If you're interested in moving more milk in the beverage segment, it's time to look at secondary merchandising opportunities. These include freestanding refrigerated coolers, high- profile ice chests, cold merchandising racks and vending machines, as well as traditional refrigerated beverage units and display cases.

Beverage marketers recognize the value of merchandisers. Many invest quite heavily in units that increase consumer awareness and ultimately build incremental beverage sales.

The NesQuik giant bottle includes wheels so it can be rolled easily around for the best merchandising spot. The less expensive ice chest provides promotional billboard space.

This summer, Purchase, N.Y.-based PepsiCo. Inc., introduced two innovative, extra-tall, end-cap merchandising displays that feature high-impact signage. "They are hard to miss and easy to shop, providing a heightened wow factor for consumers," says Peter Kirchof, dir. of retail strategy and national sales. "These new units amplify in-store excitement and give our customers more flexible merchandising fixtures to maximize brand and package presence, and availability."

Granted, soda is not perishable like most milk products, so there is greater merchandising flexibility, particularly for large volume containers. But what about single-serve milk?

"One of the greatest opportunities to grow the fluid milk business is placement in secondary locations in addition to the dairy case," says Marty Schwartz, v.p. marketing and trade development for the northeast region of Dean Foods Co., Akron, Ohio. "Coolers in the front end of grocery stores do wonders for milk sales."

Mario Mercurio, v.p. for national accounts at Pepsi says, "Beverages are very much an impulse-driven category, with about a third of all purchase decisions made at the point of sale. This is especially true in high-traffic, front-end locations, where in-store advertising represents the last few feet of an integrated marketing plan and oftentimes the last chance to make the sale."

Cold merchandising racks in the dairy case are ideal for impulse-purchased single-serve milks.

Research shows 75% of time-deprived shoppers spend less than six seconds making a purchase decision. Further studies indicate end-caps are 42% more likely to draw consumers to a particular product than in-aisle displays or shelf signs.

What does this mean for dairy processors? Single-serve milks can, and should, continue to be merchandised in the dairy case next to the jugs, but they need additional positioning throughout the store in order to effectively compete for share of thirst.

Prior to single-serve bottles, processors were somewhat limited in their ability to capitalize on secondary merchandising opportunities that better position milk as a beverage. This is because paperboard is not as durable as plastic and glass. And, as most are tired of hearing, cartons don't fit in cup holders.

Now that NesQuik comes in PET bottles, Nestlé USA, Glendale, California, offers all its retailers use of various "on-ice" merchandisers that include leak-proof drainage systems. Previously, NesQuik came only in paperboard pints, which do not hold up very well in such displays because as the ice melts, the water penetrates the carton. This results in weakened carton walls and seams that leak.

Retailers welcome eye-catching containers of milk for merchandising along with on-the-go meals.

Secondary merchandisers effectively position single-serve milk as an impulse item.

NesQuik's giant bottle and chest cooler display units are high-profile, silent salesmen that grab consumers' attention at the point when they are deciding what drink to buy.

Bottles using paper and/or pressure-sensitive labels are not appropriate for on-ice displays because adhesive loosens and paper tears.

Refrigerated display units work well with any container or label. Research conducted by Seattle-based WestFarm Foods using refrigerated display units to merchandise its single-serve DariGo™ line showed as much as a 450% increase in sales volume when the unit was displayed in high foot-traffic departments including the deli, in-store bakery and express checkout lanes.

To maximize cold bottle availability of shelf-stable Frappuccino^®, retailers can use cold-merchandising racks that attach to dairy case shelves. These units merchandise four-packs in space that is currently not used.

All these merchandising units are adaptable to traditional retail milk venues--convenience, drug, grocery and mass merchandiser--as well as some non-traditional retailers such as copy centers, electronics, home improvement and even personal care.

To prove how important single-serve milk is to c-stores, the Fluid Milk Strategic Thinking Initiative (FMSTI), a joint effort of MilkPEP (Milk Processor Education Program) and Dairy Management Inc.™, analyzed the business and found that single-serve milk turns faster and generates higher returns on inventory invested than most other single-serve beverages. Unfortunately, single-serve milk suffers from lack of shelf space (only 5%), which leads to high out-of-stocks.

Retailers sell more DariGo single-serve bottles when merchandised in display cases.

The study showed sales increased when retailers added secondary locations for single-serve milk without a promotional price reduction. Specifically, when barrel coolers were added, single-serve milk sales increased more than 21%.

Vended milk's promising future

"Vending is also a very big business," says Dean Foods' Schwartz. The company's northeast region uses the vending expertise from its Dairy Express Div., Parker Ford, Pa., to make milk available to consumers 365 days a year, seven days a week, 24 hours a day. The vending ma-chines carry milk in both the Chug and Grip 'n Go bottle, as well as drinks, juices and iced teas sold under its Swiss Premium brand.

Other dairies might get real interested in vending milk soon when they see how quickly product moves.

A final report from the long-awaited school milk vending test sponsored by the National "got milk?"® Milk Mustache Campaign will soon be available from FMSTI. Results will be presented in an upcoming issue of Dairy Foods.

Overall, "Results from the school test are great, as are results from a separate test that targeted adults in the business environment," says Tom Nagle, v.p. marketing MilkPEP.

During the first weeks of the school test, average weekly sales were 360 pint bottles per machine, at a dollar a piece. As the test progressed, sales stabilized at the anticipated standard decline that every new product experiences, but the numbers were still impressive--about 220 pints per machine.

The primary objective of the test was to see if kids would actually buy more milk from in-school vending machines. "And they did," says Nagle. "We felt going into the test that vending milk to kids in schools is both a viable consumer proposition and a good business opportunity. The results confirm that. In fact, the results are better than any contingency had anticipated.

"Of the five dairies and third-party operators involved in the test, all were very surprised at how successful the test was," Nagle adds. "Vending is a better opportunity than any of them thought. Most, if not all, plan to continue to include milk vending in their future business plans."

Nagle cautions that not all dairies should be running out and buying vending machines. "The report will provide processors with pro-forma financial models to examine the best approach for vending for individual companies," he says.

Pat Rheel, dir. of fluid milk marketing at DMI, adds, "Now that most dairies around the country finally have the right container to market milk in vending machines (i.e., the single-serve bottle), vending is a secondary merchandising opportunity worth investing in."

Nagle says there were virtually no issues with container durability or leakers. "And with machines turning that many bottles per week, there weren't any shelflife concerns either."

Looking good

Unlike yesteryear’s milk vending machines, today's position milk as a cool alternative to soda.

With all secondary merchandisers, it is critical that the package's appearance and integrity be flawless. As an impulse item, if the package does not look good, it's not going to sell.

Leak-free closures are essential. This can be achieved through the use of an inner seal, which is also a tamper-proof indicator. If an inner seal is not used, some other form of tamper-evidence must be used, as consumers know to look for this feature on drink bottles.

With other beverage manufacturers investing in signature bottles, unique closures and high-impact labels, dairy processors must do the same to maximize secondary merchandisers.

A Closer Look

Marketers of all beverage sectors seek out unique packaging materials and designs to differentiate product at the point of purchase. Milk marketers need to be aware of these opportunities.

For the first time ever, Perrier brand mineral water is being marketed in PET. Mineral water's high level of carbon dioxide posed challenges for using PET; however, the bottle supplier developed a multi-layer container consisting of PET/ nylon/PET that made it possible to obtain the standard 12-month shelflife. The company was also challenged in developing a package that combined the typical Perrier bottle shape yet also include the robust type of bottom required on PET bottles for carbonated beverages.

By using PET rather than the traditional glass bottle, the company has been able to broaden its areas of distribution. Since May 2001, this green 0.5-liter container has been sold in service stations, cafes and vending machines throughout Europe. The sales volume for the new bottle is expected to rise from 15 million units to 50 million units in a year. Once it's introduced to North America, sales are expected to reach 150 million units annually.

Water can come in boxes too. Designed to appeal to kids ages 3 to 6, WaterBox™ Spring Water is a refreshing alternative to sugar-ladened, non-nutritious fruity drink boxes. After all, water is the fastest growing retail beverage segment, yet, ironically, consumers can get it free from the tap.

Glass continues to maintain its presence in the energy drink business. This is because glass, the most inert packaging material, provides the barrier needed to stabilize many of the functional ingredients used in these drinks. New Love Bus Brew is a dairy-based chocolate drink enhanced with Siberian Ginseng and vitamins A, E, B₆ and B₁₂.

The Original Watermelon Juice Drink, which debuted in June, uses full-body stretch sleeve labels over a PET bottle to effectively promote its contents. The label features mouth-watering, multi-color photos of watermelons, as well as nutrient content and composition claims.

A new 200-ml PET bottle holds the TGI Friday's® On the Rocks line of single-serve, ready-to-drink cocktails. "We were in the process of redesigning the line when we decided that we wanted to enhance the convenience and portability of our single-serve size by converting to PET," says Christina Catalano, packaging design director for United Distillers & Vintners, Stamford, Conn. "Our goal was to achieve a proprietary and appetizing look."

The glass container being replaced was round with vertical flutes. The PET bottle features a pattern that resembles pieces of ice. This posed a challenge that was overcome by hand etching each ice cube shape onto the mold surface, followed by a gentler form of sand blasting, referred to as bead blasting, to smooth out the lines in between the cuts.

To give the PET bottle a solid glass-like feel, a 30-gram preform is used, which keeps the container walls thick and solid yet still enable efficient blow molding. Three separate pressure-sensitive labels (front, back and neck) are applied in places that do not disturb the bottle's aesthetics. The front and back labels are placed in recessed, "ice-free" areas.

Still considered a rather new beverage package, octagonal aseptic containers are multi-layer laminates. To enhance the graphics on this container, the Oregon Chai Tea Latte package uses a layer of metallized oriented polypropylene film laminated to the paperboard and then printed. This material is then laminated to a layer of foil on the inside for a barrier and a thin layer of polyethylene on the outside to protect the graphics. The rolls of finished laminate are formed online and filled with ready-to-drink chai. This octagonal container with metallic properties differentiates itself from other aseptic paperboard containers, providing a unique marketing tool for the company.