Savoring the Possibilities
by Lynn Petrak
Flavored milks open up the beverage market with
innovative profiles, packaging and marketing.
First, there was
basic chocolate and strawberry. A few years ago, in a mini-revolution, came
the advent of single-serve plastic containers. Now, flavored milks run the
proverbial gamut, including profiles like mango and root beer, and are
packaged in an array of shapes and sizes. Such items are now available in
traditional venues like schools and supermarkets as well as emerging
locales like sports stadiums and fast-food restaurants.
The current debate isn’t so much about the
strength of the category, but its direction. “There is a difference
of opinion on whether these should be thought of as milks or
beverages,” says Joseph Hotchkiss, professor and chair of the
department of food science at Cornell University, Ithaca, N.Y. “My
own view is that the truth lies in between — how you position it
depends on the product.”
That positioning divide has also been noted by Stan
Kostman, president and chief operating officer of New York-based Beverage
Marketing Corp. “Someone famous in the dairy industry once said to me
that milk is a food and flavored milk is a beverage,” he says, adding
that either way, this is a segment to watch. “There is no doubt in my
mind that flavored milks are here to stay.”
Although no one would argue that flavored milks are a
market mainstay, their remarkable growth over the past decade may be hard
to sustain. “I would say that flavored milk and milk drinks is still
a very important segment of the fresh milk business, but flavored milk
sales growth and the number of units is leveling off,” says Mary Kay
O’Connor, director of education for International Dairy Deli Bakery
Association (IDDBA), Madison, Wis.
Research from Chicago-based Information Resources
Inc.(IRI) underscores that assessment. The total category declined by 0.5
percent from December 2003 through December 2004, with retail sales now
totaling $719.9 million. That said, sales of private label flavored milk
rose a healthy 3.8 percent to top the category over leading brands.
Flavor and Fat
However they may be tracked and positioned, more SKUs
of flavored milk and milk drinks are on the market today.
One of the most notable trends has been a renewed
focus on better-for-you products. “In the past two years there has
been a large increase in no-sugar-added varieties. These are typically
sweetened with various artificial sweeteners, but sucralose seems to be the
most frequently used option,” says Sharon Gerdes, technical support
consultant for Rosemont, Ill.-based Dairy Management Inc. (DMI).
Several brands have recently introduced reduced-sugar
and lower-calorie flavored milks. The Hershey’s® line from the
Dallas-based Morningstar Foods division of Dean Foods Co., for example, now
includes a No Sugar Added Chocolate flavor in single-serve, 14-ounce
bottles and 64-ounce cartons. “The no-sugar-added introduction was a
result of increased consumer demand for healthier, lower-calorie,
lower-sugar alternatives for today’s most popular snacks and
beverages,” explains Nancy Thorn, senior brand manager.
“Chocolate remains Hershey’s number-one flavor, so it made
sense to combine the most popular flavor variety with the benefits of a
lower-calorie, lower-sugar flavored-milk formula.” According to
Thorn, the new varieties also contain 67 percent more calcium than regular
|TOP 10 Flavored Milk/Eggnog/Buttermilk brands*|
| ||$ Sales|
vs. Year Ago
vs. Year Ago
|*Total sales of all forms of flavored milk, eggnog and buttermilk brands in supermarkets, drug stores and mass merchandisers (excluding Wal-Mart) in the 52-week period ending December 26, 2004.|
SOURCE: Information Resources Inc.
In late 2004, Shamrock Farms, Phoenix, introduced its
Chocolate Mmmmilkshake, which offers a creamy texture with 23 percent less
sugar than regular flavored milk. “We use reduced-fat milk fortified
with multi-vitamins and zero-calorie sweeteners like Splenda for partial
sugar replacement to provide a delicious shake that meets everyone’s
taste expectations as well as their nutritional needs,” says Wendy
Patterson, director of product development, adding that the line targets
kids and adults who enjoy milk but would benefit from nutritious choices.
Regional dairies are not left out of this trend.
Aurora, Ill.-based Oberweis Dairy, for instance, began earlier this year to
promote its new reduced-calorie chocolate milk. Like regular chocolate
milk, the reduced-sugar flavor is sold in the company’s trademark
glass bottles, as well as plastic quarts.
In addition to offering more options for dieters,
dairies are experimenting with new flavor profiles. Shamrock, for its part,
soon will add vanilla and Dulce de Leche flavors to its Mmmmilkshake line,
according to Patterson.
Meanwhile, the Dean-owned Longmont, Colo.-based
Horizon Organic, which distinguished its brand through shelf-stable boxes
of chocolate, strawberry and vanilla milk a few years ago, added a banana
flavor last summer. “We tested this product with kids before we
decided to launch it and they told us they thought it was great. It turns
out banana was the flavor of 2004,” says senior brand manager Caragh
McLaughlin, noting that several other companies have recently rolled out
While Horizon Organic and other processors have
largely targeted the youth market with flavored milks, O’Connor
believes dairies would be well served to focus on a greater spectrum of
demographic groups. “One of the big opportunities is for greater
niche marketing to population segments in the flavored milk category
— flavored sport milk drinks for teens; coffee, iced cappuccinos,
chai tea lattes, and other flavored milk drinks for adults;
tropical-flavored milks primarily because of Hispanic influence; and
reduced-fat varieties for weight-conscious consumers,” she says.
Kostman agrees that product appeal often hinges on the
user, and cites examples of products with future potential. “I
haven’t seen them in a store yet, but I have heard about dairies
working with blueberry and raspberry milks. Fruits like blueberries and
raspberries are getting nice press lately, plus these products would have
the benefit of dairy,” he says.
Another area of opportunity encompasses milk-based
beverages like those already developed by major beverage companies, such as
U.K.-based Cadbury’s Raging Cow product and the Nestle Choglit drink from Coca-Cola.
“There is no reason, in my opinion, that dairy processors should
simply cede to Coke and Pepsi,” Kostman says.
Packages as Portals to Sales
As the flavored-milk market grows more competitive,
processors also differentiate their products based on looks, with materials
like shrink-wrapped plastic bottles and thermoformed inks making a real
splash in the dairy case.
“Packaging is key,” says Hotchkiss, who
points to the phenomenon of bottled water. “If you are a dairy, you
have to stay on top of packaging technology in a way that it interacts with
the consumer and the product itself.”
For flavored milk, package size and graphics are major
considerations. Last summer, Horizon Organic added a half-gallon size for
its flavored milk and tweaked its single-serve designs. “We wanted to
make chocolate milk available in a size that more families want,”
says McLaughlin. “Also, we changed the graphics on our single-serve
milks to look more like the rest of the product line and to make the flavor
more obvious and appealing.”
Tied into both product and packaging, of course, is
shelf stability. More so than other milk products, flavored milks tend to
be available in extended-shelf-life (ESL) and shelf-stable formats.
It is an option that has worked well for Shamrock
Farms. “We have been extremely pleased with the widespread acceptance
of our extended-shelf-life 12-ounce milk beverage line. We have seen volume
growth from last year, with gains coming from vending and food
service,” Patterson says. “The ESL line has moved Shamrock
Farms from a regional dairy to a national supplier of milk beverages.
Alternate channels such as vending have opened numerous
Indeed, as Gerdes is quick to note, extended shelf
life behooves processors in a tangible way. “A lot of the flavored
milks are ultra-pasteurized,” she says. “This provides much
great cost efficiency, especially with the national branded
Lynn Petrak is a freelance journalist based in
the Chicago area.
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