Key Channel

March 1, 2006
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Key Channel
by Pamela Accetta Smith
Vending continues to play an important role in milk marketing.
Vending machines are part of the business framework. Specific to dairy, however, they are essential to the milk marketing game, especially when trying to win the copious consumption of this wholesome beverage by kids, ’tweens and teens in schools across the nation.
And promoting vended milk can only boost its popularity among the older populace right? Exactly, says Julie Buric, senior director of promotions for Washington, D.C.-based International Dairy Foods Association (IDFA). “The adult market for milk is very large,” she says. “In a study that MilkPEP conducted in business and industry (B&I) locations, we saw a good increase in milk sales among adults. A good portion of vending operator business is in adult-oriented locations. MilkPEP sees an opportunity to grow both B&I vending business as well as school business.”
Milk vending continues to thrive as consumer demand, product availability and legislative activity converge, providing even more potential for increased vending sales. Experts agree, there has never been a better time for vended milk programs in schools, business and industry, and public locations.
Industry findings continue to show that milk is inching out other beverage choices in school vending machines throughout the country. In fact, recent guidelines issued by the American Beverage Association (ABA) — along with new school regulations — are limiting the variety and availability of soft drinks in elementary, middle and secondary schools. This development presents an additional opportunity for vending operators to expand their milk offerings in schools.
That said, more and more schools are discovering that new state-of-the-art milk vending machines can help increase milk consumption by making milk more accessible and appealing to students. Most school districts in Wisconsin, for example, coordinate vending programs through either school foodservice or agriculture education/FFA programs. Each school manages the machines and the profits received from vending differently. In Wisconsin, schools have reported using milk vending profits to support scholarships, field trips, athletics and in-classroom materials. These extra funds help schools, while the extra milk provides calcium and other important nutrients for students’ health.
The folks at MilkPEP say milk vending provides a solution to concerns about obesity and good nutrition for kids in schools, and for on-the-go kids and adults everywhere. At the same time, new technology in packaging and machine design make milk vending a much more viable — and potentially more profitable — business than any time in history. Helping its success is the fact that the milk category is experiencing great innovation; new milk flavors and formulations are making the refreshing beverage more appealing to consumers than ever before. MilkPEP has developed vending fronts, POS materials and a vending prize kit for use in vending programs, Buric says. “These materials are available for order by processors and vending operators at any time,” she says.
Buric says MilkPEP has a very extensive trade program that works to stimulate interest in milk vending among processors and the vending industry. “We run trade ads, press and editorials. We also have a milk vending advisory council to help us identify key issues and how to address them. They also provide direction on materials and research needed,” she says. “We have a trade show booth and have presence at both NAMA shows. We also produce sales materials that processors can use to work with vending operators and schools to further their milk vending programs.”
MilkPEP has conducted multiple vending studies showing the viability of vending, Buric says. “And we have developed a trade Web site, www.milkdelivers.org, that trade can peruse to obtain research information and order materials,” she says.
This site boasts that adding milk to existing vending operations gives consumers a convenient way to pick up a nutritious beverage. Vending operators that offer exciting new milk flavors in attractive, resealable containers give consumers more grab-and-go beverage options, and benefit from milk’s healthy image. By adding milk to the vending lineup, operators can tap into existing consumer demand — and the potential incremental sales boost it can provide, the Web site touts.
Consumer demand, weight-loss potential, a strong brand, new flavors and packaging, and the availability of branding and promotional opportunities are all attracting customers to the machines and spurring sales.
According to Buric, milk was vending’s highest growth segment for the second consecutive year. “This was among mostly low-growth or declining food/beverage segments,” she says, adding that for 2004, milk sales grew 10 percent versus the prior year according to Beverage Marketing Corp.’s Milk Vending State of the Industry and Tracking Study.
Buric says that while many processors have embraced vending, most of the growth is coming from vending operators who are adding milk vending to their business plan. “As far as processors are concerned,” she says, “Shamrock Farms in Arizona, Smith Dairy in Ohio and Galliker Dairy in Pennsylvania all have had success in this arena.”
The mission of MilkPEP’s Fluid Milk Strategic Thinking Initiative (FMSTI) mission is to provide milk producers and processors with the necessary information to conduct their own assessment of the vending opportunity, analyze its profit potential and initiate vending tests if their initial investigation deems it prudent. FMSTI has conducted several studies to explore the vend channel and understand the potential for vended milk. It continues to initiate research to evaluate the opportunities for dairy processors to increase sales of vended milk in schools, businesses, shopping areas and other locations, and provide the essential information processors need to become acquainted with the vending industry while exploring its opportunities.
The opportunity for milk vending is more viable than ever, with consumer trends, product development and even legislative actions paving the way and driving demand for healthier beverage options outside the home. Milk vending market tests continue to prove that consumers will buy milk from vending machines in a multitude of locations. And the trend does not seem to be showing any signs of slowing down any time soon.  
The Milk Processor Education Program (MilkPEP), Washington, D.C., is funded by the nation’s milk processors, who are committed to increasing fluid milk consumption. IDFA is contracted by MilkPEP to administer processor-funded programming. The Milk Vending Advisory Council was founded by MilkPEP. The Fluid Milk Strategic Thinking Initiative (FMSTI) is an industry think tank developed by MilkPEP that investigates category growth opportunities for milk.
Milk Vending Center Stage at NAMA National Expo
A highlight of the vending industry’s largest trade show last fall, NAMA National Expo, was a discussion on milk vending by a panel of experts belonging to MilkPEP’s Vending Advisory Council. The session provided data and testimonials that point to a growing opportunity for milk vending in schools.
“Milk vending can be viable for processors and vending operators,” says Julie Buric, senior director of promotions for Washington, D.C.-based International Dairy Foods Association. (IDFA). “This session let us share our data and perhaps more importantly, let attendees learn how other vending operators have created successful programs.”
The Vending Advisory Council members on the panel were Joe Melone, national vending and foodservice sales manager, Nestlé USA Inc.; Barry Frankel, president, The Family Vending Co.; Steve Harkins, director of marketing and national accounts, Cranes Merchandising Systems; and Julia Kadison, managing director and chief operating officer, Beverage Marketing Corp.
MilkPEP’s Vending Advisory Council meets once a year and participates in several conference calls to share feedback on challenges and opportunities for the milk vending business. To nominate someone to the council, contact Julie Buric at (202) 220-3547 or  jburic@idfa.org.
MilkPEP’s market research studies, which found that milk vending can be profitable in schools, at shopping malls, in businesses and on college campuses, can be accessed in the “Vending” section of www.milkpep.org. Also, learn more about opportunities in milk vending at www.milkdelivers.org.
Crown Jewel
Ice cream machine tops vending innovation.
MooBella LLC, Taunton, Mass., unveiled its MooBella Ice Cream System at DEMO 2006, the pre-eminent conference noted for showcasing the world’s most promising new technologies. The revolutionary system marries innovative, multi-patented technology with one of America’s favorite treats to produce a 4.5-ounce scoop of ice cream served in a cup — made fresh to order for each consumer.
MooBella has created a virtual ice cream shop that produces more than 90 combinations of ice cream in real time — in the space of a vending-style machine.
The machine’s attractive, lively and appealing design features brightly colored scoops of ice cream, which communicates to the consumer exactly what the system offers. Using an LCD panel that is both informative and intuitive, consumers select the ice cream type, whether premium or lowfat, the flavor and mix-ins of their choice, and the machine produces a frosty treat in about 45 seconds.
According to Bruce Ginsberg, president and chief operating officer of MooBella, ice cream has traditionally been a multi-step batch process. “Besides needing a lot of processing equipment, distribution to consumers is difficult and costly, requiring storage and shipping in sub-zero temperatures. Because the finished product can remain in the distribution system for up to a year, its quality can deteriorate due to temperature fluctuations throughout the distribution channel,” he says. “The MooBella System’s technology, however, enables us to instantaneously mix and flash freeze the ingredients, taking only seconds to provide consumers with a great-tasting scoop of ice cream plus mix-ins in the flavor of their choice.”
The MooBella Ice Cream System can be found in cafeterias at select hospitals and universities in and around Boston. The company expects to have commercial units in the New England area soon. For more information, visit www.moobella.com.  

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