Head of the Class
July 1, 2005
Head of the Class
by Shonda Talerico Dudlicek
With the future of fluid sales on the line, the paper-plastic debate is dominating the dairy packaging scene.
How do you get kids to drink more milk? Some in the industry say it’s all in the packaging.
Amid a packaging landscape strewn with tamper-evident seals, full-body shrink sleeves and reclosability, it’s the paper vs. plastic debate that seems to be making the most noise. In what’s shaping up to be a watershed issue for the struggling fluid segment, processors and pundits alike are taking sides in the argument over the best way to win over a new generation of milk drinkers.
Final results came in this month from the St. Louis Milk Test, sponsored by Carlinville, Ill.-based Prairie Farms Dairy Inc., the Milk Processor Education Program (MilkPEP) and the St. Louis Dairy Council. Begun in January, the test involved about 165,000 students introduced to new multi-colored paperboard packaging, improved formulations and new flavors to determine which products are most popular with children. Milk sales increased an average of more than 12 percent per school.
Meanwhile, Dairy Management Inc. (DMI), with its own studies long finished, is aiming to convince processors that for getting kids to stick with milk after they graduate, there’s a great future in plastic.
The Paper Chase
“This test confirmed our hypothesis that marketing efforts including enhanced packaging and new and improved flavors can significantly increase school milk sales,” Victor Zaborsky, senior marketing manager for the International Dairy Foods Association (IDFA), Washington, D.C., says of the St. Louis experiment. “What was somewhat surprising was the huge increases in sales realized by schools that incorporated a number of marketing tatics to promote the new milk. The best-performing schools had increases of 35 percent.”
The 290 participating schools are divided into three groups, each of which receives a different combination of enhanced paper cartons with colorful graphics and new flavors (a control group of 120 schools got no changes in milk offerings).
The driving force behind the St. Louis Milk Test is Prairie Farms’ chief executive officer Roger Capps, who wanted to test gabletop cartons with enhanced graphics and a variety of flavors. “We’re not fighting plastic. I’m not going to get into that argument. [But] for school milk, it would cost 5 cents more per unit. In school milk, you can improve the packaging with quality graphics,” says Capps, whose company packages milk in both materials.
“As an industry, the way we were treating our school milk program would cause children, by the time they hit eighth grade, to become tired of milk. By high school they’d get sports drinks and Cokes from a machine. Drinking milk is a pleasure. The key is to not lose young people.”
The folks at Cantrell, N.C.-based Blue Ridge Paper Products, which makes the gabletop paperboard cartons for Prairie Farms’ school milk program, say it really isn’t even the packaging that makes the difference. “It’s the variations, choice and promotion,” says John Latham, Blue Ridge senior analyst in business planning. For example, in the St. Louis test, school cafeteria workers wore “got milk?” buttons and asked students if they wanted to add on milk to their lunch.
While the industry universally wants milk consumption to increase, Latham says, plastic bottles cost up to a nickel more per unit, “for packaging that taxpayers have to pay for in our school districts.”
Blue Ridge ran its own marketing test following the IDFA packaging test and came up with the same results. After 10 weeks, sales showed a 10 to 14 percent increase with the promotional materials and a 16 to 20 percent increase in flavor consumption.
Latham says rural school districts tend to prefer paper cartons because they crush flat and weigh less. “Recycling or recovery isn’t economical when there’s no close source for selling this,” he says. And Pam Paris, Blue Ridge’s director of marketing for school milk programs, argues that paper is superior for graphics because its shape yields four square sides. “Graphics can send a positive message to students to increase milk consumption,” she says.
Paper’s other assets: “Paper is 10 times more effective than plastic at keeping products cold,” Latham asserts. “Kids’ warm fingers withdraw the chill from the product when they put their fingers around the plastic. Paper retains a colder temperature longer, past the 30-minute milk period.”
Ultimately, Latham says, processors must emphasize the marketing and promotional areas in their school milk programs. “Dairy processors need to look at school milk as a business,” he says, “not a bid.”
Also on the paper trail, Orrville, Ohio-based Smith Dairy has been revamping the paperboard cartons it uses for its school milk program.
“We’re trying to explore some better options to make our cartons exciting, user friendly and attractive,” says CEO Steve Schmid. “School milk is not a huge amount of the business, but is a significant chunk of the business. We can’t ignore it. We can be a little more proactive.”
Smith Dairy has done some vending with its plastic bottles alongside paper cartons on the school cafeteria line. “But we’re not a vending company,” Schmid says. “Plastic has eye appeal. [But] not everyone wants plastic.”
Smith Dairy hasn’t finalized the graphics for its cartons, but plans to add another color before the redesign is introduced this fall. “Prairie Farms added some pizzazz to their paperboard cartons,” Schmid says. “They’re the ones who showed us it can be done.”
Passionate About Plastic
Tom Gallagher, CEO of Rosemont, Ill.-based DMI, respects those who prefer paperboard. But, he contends, packaging is the problem.
Three years have passed since DMI’s producer-funded School Milk Pilot Test, in which 12 processors served milk with plastic packaging, and enhancements in flavor, variety and temperature, at school districts around the country; sales rose 22 percent in high schools and 15 percent in elementary schools.
Today, more than 40 processors are actively converting their school milk to plastic, Gallagher says. “We’re putting in front of our children an unacceptable depiction of packaging that has not stayed competitive,” he says of paper cartons. “We do not need another study.”
Gallagher cites the growth in milk sales at Wendy’s and McDonald’s after the chains switched to plastic bottles, motivated by the test results. Store operators who hoped to boost weekly sales of 40 to 50 cartons by 10 units per store are now selling 275 to 325 bottles per week.
“The industry can grow the fluid milk business – not with another study, or how to talk to consumers. But at schools, if we change the packaging, we’ll grow the business,” Gallagher says. “Why don’t [kids] like paper? They can’t open them, can’t drink it. We’ve got to wake up here. This is a different era.”
Gallagher argues the increased sales in the St. Louis test are more due to flavors than packaging. “At the end of the day, you have to look at what happened in McDonald’s and Wendy’s and see that 90 percent of consumers prefer plastic,” he says, predicting that every major foodservice chain will switch to plastic packaging within the next two years.
“How long do you think we’ll be able to keep a school milk program if kids stop drinking milk?” Gallagher says, noting the average consumer drinks less than 8 ounces of milk a day — a consumption crisis for a segment in a 21-year decline. “That’s 55 million kids a day. How much is that worth to us? How many other products have that direct product placement?”
Gallagher agrees too many processors view school milk as an insignificant part of their business, noting that producers would favor anything to boost fluid numbers. “But these 40-plus processors looked at it and said, ‘The school milk program is 7 percent of my current volume, but what about all of my future volume?’” he says. “Look at what the soda companies do and how much they’re willing to keep water and juice in plastic bottles in vending machines. What would soda do if it had 55 million opportunities?
“Dairy processors should use their school milk program as the future of milk consumption, as a business. Plastic and flavors in the school milk program is a big change. We just can’t let the industry get distracted from the high prize, which is plastic. It’s not even a debate — it’s common sense.”
Garelick Farms, one of the original processors in DMI’s pilot test, now offers school milk in both paperboard and plastic bottles. The Lynn, Mass.-based unit of Dean Foods Co. ran its own test after DMI’s and came up with similar results, says Jerry Finn, senior director of Garelick’s fluid milk sales.
“We saw the value of plastic bottles in our 10-ounce bottles in Boston by our profile with Dunkin’ Donuts,” Finn says, explaining how Garelick stocks a four-sided glass cooler with single-serve milk and juice bottles near the restaurant’s entrance. When Garelick offered 10- and 16-ounce bottles from high school down to the lower grades, “sales catapulted when kids were eager and saw the opportunity to get these bottles like they get at Dunkin’ Donuts,” Finn says. “They picked those over the gabletop, or what I like to call ‘Leave it to Beaver’ packaging.”
Finn says consumption rose 32 to 35 percent when Garelick offered single-serve plastic bottles (made by Portola Packaging Inc., New Castle, Pa.), noting that the Tewksbury, Mass., school system served only increased by nine students.
Garelick started out offering 16-ounce plastic bottles in high schools, but demand drove them into the lower grades. “When you have little Johnny in sixth grade drinking out of the cardboard cartons and his older brother Joe in 11th grade can have strawberry and chocolate milk in plastic bottles, Johnny wants to be like his bigger brother,” Finn says. “Kids were buying three times and four times the milk a la carte, so they forced us to offer plastic bottles with the meals.”
Additionally, Garelick was able to take advantage of Northeast Dairy Council funding to provide school cafeterias with large four-sided glass-front coolers with fans to circulate air over the bottles. “When the flow of air gets around these bottles, it gets them ice cold at 35 degrees. It’s almost like there’s an air curtain pulled around it in these coolers,” Finn says.
Another advantage of plastic single serves, Finn says, is that they’re stored and shipped in shrink wrap, adding more protection. In crate storage, gabletops are exposed to the elements in Garelick’s territory, like New England snow and muddy boots. “Cafeteria staff wipes off the tops of the cartons,” Finn says, “but kids are still putting their mouths on them.” Furthermore, he says, plastic bottles are more space efficient in crates for delivery; drivers only need to make three shipments of milk weekly instead of four, and they’re able to store more milk on location.
As such, plastic is an easier sell to school systems, Finn says. Garelick has been able to increase its milk volume, and 5 percent more students are taking school lunches.
For some, the debate is within plastic itself. William Horner, CEO of organic processor Naturally Iowa, says his member dairy farms were looking for a niche and found it in NatureWorks PLA bottles, made from 100 percent corn.
“The company didn’t see itself as a viable competitor in the commodity dairy industry. If we produced just organic milk, we would still not be in the unique niche we felt would be needed to succeed,” Horner says. “So we asked Iowa State University to independently test PLA’s viability for bottling dairy products. After extensive testing, we were convinced the product had what it took to do the job.”
PLA (polylactide acid, a polymer made from corn dextrose) provides the convenience, look, feel and performance of petroleum-based plastic packaging while minimizing environmental impact. NatureWorks PLA bottles look and feel like traditional plastic packaging, but are compostable.
“Now I’m more convinced than ever that this packaging is revolutionary for dairy products,” Horner says. “I couldn’t tell the difference. The neat thing about these bottles is that they go back into the earth after 100 days, and they’re made from a renewable resource.”
And the consumer response? “We know from our market tests that people were flabbergasted and amazed and any other word you can think of to describe it,” he says. “When they hold it in their hands, they can’t believe it’s corn.”
The Clarinda, Iowa-based processor sells its organic milk in corn-based half-gallon containers, and is pursuing grab-and-go milk and yogurt bottles.
Horner says the unusual bottles prompted nationwide distribution in organic food retailers. “Frankly, we can be more selective where we can go with this because of the bottle,” he says. “Stores were just as interested in that as they were in us. It’s a big deal for our member dairy farmers.”
Environmentally friendly packaging provides a promotional advantage for products such as organic milk. “Retailers and brand owners are constantly looking for ways to enhance their brand image and increase customer loyalty, while helping their products stand out from the clutter of the beverage case and dairy aisle,” says Brian Glasbrenner, NatureWorks business development manager.
Horner says his company has new packaging concepts in mind, and plans to start a blowmolding division to help smaller dairies enter this arena.
First Ice Cream, Now …
Hitting the dairy case this summer are new scround cups with updated graphics from Kaukauna, Wis.-based Bel/Kaukauna for its cold-pack cheese spreads. Al Dummer, director of marketing, says the scrounds — made by Omaha-based Airlite Plastics Co. — were designed “from the ground up to be bold and innovative, appealing to customers across the age spectrum. It was a standard round with graphics on the cup, and our competition had the same. We wanted to stand out from the crowd. We wanted to create our own new cup and mold so we would have a unique shape, quality and eye appeal. We have a premium product and we had nothing to suggest that.”
A shrink-film label delivers bolder graphics so Kaukauna cheese really pops off the shelf, Dummer says. “The logo is new and does a great job of displaying the brand name and reinforcing the Wisconsin heritage of the company,” he says. “Also the bold banner below the brand name allows consumers to easily differentiate between flavors.”
The redesign offers a more contemporary look to attract younger consumers; the company reports most cold-pack consumers are over 55. Research also showed most consumers scooped their cheese out of the cup for serving “because the cup was kind of boring,” Dummer says. “Now the packaging is more exciting, so they can display the packaging on their table while entertaining.”
The new packaging extends to the Kaukauna brand in 8-ounce and 16-ounce cups and WisPride brand in a 12-ounce cup.
Lids feature a full-color label that displays the product well in a retail bunker display unit. Formerly, lids were blue for sharp cheddar and red for port wine varieties; now they’re all blue with a high-resolution, four-color variety label in the center. “Some grocers display the product on the dairy shelves, up high so you can see the cup,” Dummer explains, “while others put them in the dairy bunkers so you can see the brand when you’re looking down.”
Pushing the Envelope
While there seems to be excitement in dairy packaging among processors and industry promoters, a seasoned observer has a markedly different view.
Bob Messenger, editor and publisher of online industry newsletter The Morning Cup, longs for innovative products that are truly new, not revamped or improved.
“There’s nothing new in dairy packaging. It’s one of the most disappointing categories. It’s boring and predictable,” Messenger says, declaring there’s been nothing new in milk since the Chug. “This might be all the dairy industry needs. It’s their comfort zone. They might be making money, but they don’t like to rock the boat. There’s been no edge-of-the-envelope packaging. No one is willing to entertain risk.”
Messenger entertains it himself with some suggestions. “In the milk segment I’d love to see chocolate milk in a collapsible pouch that you can stuff into your fridge and that fits in every nook and cranny,” he offers. “I’d love to see pocket milk, squeeze milk — something that shouts convenience. … Squeezable butter — I’ve seen whipped, but I think squeezable would shout convenience. There’s been big talk about flavored milk or developing milk that’s more appealing to kids. What about dark blue, black or red milk? … You’ve seen those water bottles with the spigot or spout? Why are there no milk bottles with those? There may be an issue with stickiness or clogging, but at least something in that direction.”
Messenger charges the dairy industry has become too complacent, resting on the “got milk?” program. “It’s a problem that’s typical of commodity products in an industry. You have to keep striving for new, unique, entertaining and appealing products,” he says. “I love the category — I just think it’s boring. I think the industry needs to get cracking.” m
Shonda Talerico Dudlicek is a freelance journalist and a former managing editor of Dairy Field.
Other Trends Guide Packaging
From tamper-evident seals and snap-off rings to custom-shaped packages and metallic graphics, processors’ packaging demands are many.
“Everyone seems to be going to shrink sleeves due to the high graphics and 360-degree coverage,” says Howard Millstein, president of Chatsworth, Calif.-based Ameri-Seal Inc.
With the rise of the private label sector, PL processors are requiring packaging on par with national and regional brands, says Brian Metzger, director of business development at SleeveCo, Arlington Heights, Ill.: “Shrink-sleeve labels continue to enjoy tremendous popularity.”
Rich Szyperski, technical services manager at Evergreen Packaging Equipment, Cedar Rapids, Iowa, sees a trend toward higher barrier property to increase shelf life.
One of the newest innovations to help ensure integrity of the cold chain is Avery Dennison’s TT Sensor, a time-temperature indicator label. The Strongsville, Ohio-based Industrial Products Division of Avery Dennison created this active label technology for the seafood market and recognizes valuable applications for dairy processors for milk gallons, yogurt cups and cheese packages. The sensor label has a yellow dot that, if the product experiences a change in temperature, turns to pink.
Atlanta-based MeadWestvaco Packaging reports that consumers are most concerned with portability, space management and accessibility. The company’s multipack has a consumer-friendly handle; its opening feature is child-friendly, making it easier to dispense product. Pouch products will be useful in dairy applications, like drinkable yogurt, in demand by on-the-go moms and kids, says Paul Spitale, senior project manager of worldwide technology.
After an exclusive two-year arrangement with Sargento Foods, Lake Forest, Ill.-based Pactiv is now marketing its Slide-Rite zipper to other dairy-based companies. Marketing manager Larry Rebodos says there’s an untapped market for the closure, especially as manufacturers continue to grow their product lines to include items like individually wrapped snacking cheeses.
Tetra Pak, Vernon Hills, Ill., is a supplier of multi-layered, high-barrier cartons for single-serve milk consumption. School vending is a logical extension of the brick package, especially for shelf stability, says Jeff Keller, vice president of strategic business development.
Outlook Group Corp., Neenah, Wis., and Aviso Packaging LLC, Ossian, Ind., are bringing new technology to natural cheese packaging for retail and foodservice markets.
“The packaging technology for natural cheese products has not changed significantly in over 30 years,” says Joseph Baksha, president and chief executive officer of Outlook Group. “The new technology we are introducing enables cheese producers to wrap their cheese in film that is thinner, tougher and less expensive than the film currently being utilized.”
Aviso co-owner Keith Flesch said he saw the need for a more efficient and cost-effective type of film. “We developed the technology to enable cheese producers to benefit from the added strength, longer shelf-life and lower cost of co-extruded film,” he says.
Bob Koch of Multivac Inc. says new packaging solutions provide portability and ease of preparation, support healthy eating and create visual appeal on retail shelves. Taking advantage of these trends can help manufacturers grow their product lines, Koch says.
Multivac offers the R530 Zipline, an automated rollstock system in which slider zippers are applied to packages in-line. “Americans tend to eat on the run … [and] cheese, which travels easily and provides a source of energy, is an important part of this trend,” Koch says.
“Manufacturers can give consumers the convenience they need by packaging cheese with features such as resealable closures or by creating individually wrapped, ready-to-eat portions.”$OMN_arttitle="Head of the Class";?>