The milk category is getting frothy as processors try hard to differentiate their products. They are not just competing against each other; makers of soft drinks, energy drinks, teas, juices and bottled waters want their share of consumers’ dollars.

Milk processors use flavors, processing techniques and packaging to make their beverages stand out in the dairy case. But the battle for market share and share of stomach is not fought solely in the grocery store. Savvy marketers are placing their products in alternative channels such as health clubs, home improvement stores and outdoor equipment retailers.

Upstate Farms, Buffalo, N.Y., is selling its Crave flavored milks in Dick’s Sporting Goods stores and Home Depot. Upstate identified active young males and construction workers as key consumers of chocolate milk, says Ken Voelker, director of marketing. It developed a self-service cooler for extended shelf life, so that retailers can position the milk in the checkout aisle. Crave is packaged in resealable aluminum pint bottles.

Nestlé also identified the hard hat wearer, and the 18- to 35-year-old male in general, as an important demographic for its Nesquik chocolate milk, says Chip Marks, a marketing associate in the company’s Glendale, Calif., headquarters. The beverage is consumed across all dayparts, he says, including breakfast, as a snack and in the evening. At the NACS tradeshow for convenience store retailers in October, Nestlé promoted its new 8-ounce bottles of strawberry and chocolate low-fat milks, which will be available in February 2012.

A Nesquik sales sheet encourages retailers to “think outside the cooler” by placing aseptic packages of the beverage near pastries, cold sandwiches and fruit. The company cited information from Dairy Management Inc., Rosemont, Ill., showing that when Nesquik was placed in a secondary location, it generated additional sales of 40%.

Chocolate milk is also a favorite of children who buy it in schools. The added sugars have proven to be a lightening rod, attracting activist parents who seek to ban flavored milk from school cafeterias. Chef and nutrition gadfly Jamie Oliver used his ABC television show, “Jamie Oliver’s Food Revolution,” to force the Los Angeles Unified School District to toss flavored milk off the menu.

Dean Foods Co., Dallas, one of the leading school milk providers in the nation, developed chocolate- and strawberry-flavored non-fat milks for school foodservice under the name TruMoo. (Dean Foods has a low-fat version for retail sale.)

“We’re proud to offer a fat-free flavored milk that meets the proposed USDA school meal guidelines a full year in advance of their anticipated implementation,” says Rick Zuroweste, Dean’s chief marketing officer. “Our school customers see the future, and we’re offering them a solution today. As a result, many of our school customers converted to the fat-free TruMoo at the start of this 2011-12 school year.”

“In regards to flavored milk, the consumer patterns continually shift between concern over calories, concern about grams of total sugar and concern about high-fructose corn syrup. Our research and development group did an excellent job of navigating the shifting sands in developing TruMoo, a product that addressed several consumer preferences while keeping taste priority No. 1,” Zuroweste says.

Some milk processors have dropped high-fructose corn syrup (HFCS) from their formulas, and tout that on their packaging. The stance of corn syrup providers is that “a sugar is a sugar,” and that compositionally, table sugar and corn sugar are nearly identical, and that nutritionally, the two ingredients are the same.
Last summer, Prairie Farms Dairy removed HFCS in its flavored milks for schools. The dairy cooperative, headquartered in Carlinville, Ill., offers chocolate, strawberry, vanilla and cookies and cream flavors. An 8-ounce serving of the reformulated fat-free milk has 130 calories and 11 grams of added sugar. The previous 1% formula had 170 calories and 16 grams of added sugar.

Dean’s Zuroweste says the company’s focus in 2011 “has been innovating across our businesses in 2011, including our plant-based Silk product line, Horizon Organic and conventional milk categories.”

He calls the national launch of TruMoo flavored milk “a potential game changer for the dairy industry. Consumers have been calling for a better-for-you flavored milk, and TruMoo delivers on a scale unseen in the dairy case.”

Adding flavor is one way to differentiate milk; processing is another. Dean’s WhiteWave Foods division is testing a fine-filtered milk called Simply Pure that is sold in half gallons in fat-free, reduced-fat and whole options.

“We believe, and our research suggests, that about a third of conventional milk purchasers are looking for something new and different in their milk choices. Simply Pure meets this demand with the extra step of fine filtering to remove more of the impurities left behind in conventional milk,” says Sara Loveday, senior communications manager for the Broomfield, Colo.-based company.

Before pasteurization, WhiteWave passes milk through a very fine filter to physically remove some of the impurities.

“Because we’ve taken care to create just the right degree of filtration, certain impurities are removed, but the protein, calcium and vitamins you count on from milk remain. Our fine filter traps and removes coarse natural impurities such as non-nutritional matter and cellular material, including many of the somatic cells found in unprocessed milk,” Loveday says.

Loveday says the company does not claim that Simply Pure tastes better or is fresher than conventional milk.

Another way to differentiate one milk from another is to add probiotics. In June, Foster Farms Dairy, Modesto, Calif., launched Dairy Balance, sold in whole and 2% varieties.

“Probiotics are ‘good bacteria’ that have been shown to improve digestive health and support immunity,” says company president Jeff Foster. “Sales of yogurt enhanced with probiotics have dramatically grown, and studies have proven Dairy Balance delivers more active cultures than yogurt.”

Processors of organic milk have been able to distinguish their beverages from conventional milk while receiving a premium. The price of a gallon of organic milk can be double that of conventional milk.

“In the organic dairy category, we’ve seen growing consumer interest in fortified organic dairy products,” says Loveday. Horizon is WhiteWave’s brand of organic milk brand. “Our largest growth in this area has been with our omega-3 DHA organic milk products.”

Earlier this year, Horizon launched a fat-free, plant-based omega-3 DHA organic milk.

Organic Valley, La Farge, Wis., also markets a line of milks fortified with the omega-3 fatty acids DHA and EPA. The switch to organic milk from conventional milk is often triggered by a change in lifestyle, says Tripp Hughes, the company’s director of category management. Triggers include having children, a desire to eat better foods because of a health problem and a general interest in health and wellness.

While sales of organic milk increased 12.2% from 2009 to 2010, the product makes up just 3.3% of total milk sales, according to the Milk Processor Education Program (MilkPEP), which helps processors develop marketing messages. The milk industry is not going to grow on organic sales alone.

In 2012, the Washington, D.C.-based organization is making “fewer but bigger bets” in its messages, says MilkPEP CEO Vivien P. Godfrey. First, milk processors must “defend breakfast” as the important milk-drinking occasion of the day. Second, processors will promote chocolate milk as a recovery beverage to replace sports drinks. The so-called Breakfast Project has the message “Every good day starts with milk.” The audience for the Refuel with Chocolate Milk message is the active 18- to 34-year-old adult who works out hard and participates in triathlons, marathons or other extreme sports.

If MilkPEP is successful, this young cohort will develop a favorable attitude toward chocolate milk. This will carry over as they begin to start families, so that when their children enter school, flavored milk won’t be the bugbear it is now. Then processors will truly savor the flavor of increased milk sales. 

Milk Processors Are Talking About

• The movement to ban flavored milk in schools
• Positioning chocolate milk as a post-workout recovery beverage
• The 12+% growth in organic milk sales
• Finding new channels of distribution for single-serve milks

Milk’s Bold Message: An Irreplaceable Package of Nutrients
By Peggy Biltz, CEO, Dairy Council of California

A surge in research supporting a stronger health profile for milk and milk products is emerging. The research paints a picture of the benefits of milk beyond bone health and supports what we at Dairy Council of California, Sacramento, Calif., believe — milk and milk products provide an irreplaceable package of nutrients for men, women and children.

It may seem like a bold statement, but consider this: Where else can you find the unique package of nutrients found in milk and milk products? Add to that the fact that dairy is convenient, cost-effective and tasty.

Recent research reveals how milk and milk products can protect health at every stage of life – from preventing childhood bone fractures and helping athletes build muscle and replenish fluids to protecting the immune system and reducing the risk of select chronic degenerative diseases. The results of multiple new studies at major universities shows milk also helps:

• Control blood pressure
• Reduce the risk of some cancers
• Reduce the risk of heart disease
• Support healthy weight
• Enhance satiety
• Reduce the risk of type 2 diabetes
• Improve intestinal health

An area of note is research surrounding the unique healthy benefits of dairy proteins. Casein and whey are high-quality proteins found in dairy that have unique metabolic traits, yet act synergistically to increase protein synthesis and suppress protein breakdown more effectively than other proteins. Satiety, weight management and blood glucose control have all been suggested in early research findings as health benefits of these dairy proteins.

The 2010 Dietary Guidelines for Americans cites the dairy group (milk, cheese and yogurt) as a substantial contributor of many nutrients important for good health, such as calcium, potassium, phosphorous, magnesium, zinc, protein, riboflavin, and vitamins A, D and B12. The recently revised guidelines even increased the daily recommendation by one-half cup to 2 ½ servings for 4 to 8 year olds.

The guidelines also focus largely on dairy’s bone health attributes, while acknowledging a moderate level of evidence supporting milk and milk products’ role in decreasing the risk of cardiovascular disease and type 2 diabetes and lowering blood pressure in adults. The Dairy Council sees this as an area of opportunity. Strong clinical research in these other areas is needed to strengthen the evidence base in time for the next round — the 2015 Dietary Guidelines for Americans.

The MyPlate icon, which replaced the Food Guide MyPyramid, recommends increased consumption of food groups, including non-fat and low-fat milk, fruits, vegetables and whole grains. New research, coupled with support from the USDA and the dietary guidelines, speaks to an expanded benefit package of milk products above and beyond bone health that is the foundation for a broader and stronger health position for milk and milk products. It also provides important educational opportunities at a time when milk products aren’t always top of mind among health professionals and consumers.

This is a time when all corners of the dairy industry need to come together to tout milk’s expanding profile and make the case for milk’s irreplaceable nutrient package. 

Drink Up, Baby Boomers
By Madlyn Daley

With competition from soft drinks, bottled water, coffee and tea, dairy needs a new way of thinking to recapture consumers’ beverage preferences. New consumer research analysis from the Innovation Center for U.S. Dairy, Rosemont, Ill., suggests the industry can bring consumers back to milk by better tailoring products based on specific consumer needs. To do this, milk needs to compete in two ways — first, become the competition, and second, protect its share.

Dairy needs to focus on the 50-year-old-plus population segment because of the size and buying power of the Baby Boom generation. This group will account for more than one-third of the total population by 2015; it already controls 80% of personal financial assets and owns 50% of discretionary spending power. Plus, general wellness and the importance of healthy eating increase with age.

The Kantar Worldpanel Beverage Report, the foundation for the Innovation Center’s analysis, tracks the beverage choices and decision drivers of more than 40,000 children, teens and adults to provide a better understanding of the current climate for milk. With this knowledge, the dairy industry is better able to address milk’s challenges and opportunities by leveraging consumer insights.

The Kantar research identifies seven macro consumer needs that influence most beverage decisions: thirst, fun/treat, food accompaniment, nutrition, energy, low-calorie and relaxation. Milk excels in a couple of so-called need-states: nutrition and parent-recommended, but these needs become less important once people reach their teens and as their beverage decision drivers change. 

New consumer research based on the Kantar report shows that milk’s offerings are out of sync with what the powerful group of 50-plus purchasers is looking for in a beverage: satisfying thirst, accompanying food and providing fun or a treat. (Currently, tap water and carbonated soft drinks dominate the food accompaniment state, and competition is fierce with carbonated soft drinks, coffee and tea for the fun/treat state.) Functional beverages also present a promising opportunity among this consumer segment.

Significant, smart product innovations that are not marketed as milk and meet the energy, fun/treat and functional needs of the 50-plus population are a way to make dairy drinks more relevant for this group. To be more competitive and to better meet these driving beverage need-states, milk must innovate as an ingredient. Consider:

•Taste. The fun/treat need-state accounts for 38% of beverage occasions, plus enjoyment is a key factor when consumers choose any beverage.

•Thirst. Milk as an ingredient has an opportunity to penetrate this need-state through lighter, refreshing beverage innovations.

•Functionality. Milk can grow in this need-state by leveraging functional claims that focus on heart health, digestive health, immunity and cancer prevention.

Youngsters drink milk, too

In addition to focusing on need-states that drive boomer beverage consumption, the dairy industry should also remain vigilant in reinforcing milk’s nutritional superiority. Competitors are challenging milk’s nutritional position, with functional claims nearly quadrupling since 2006. Flavored waters, teas, juices and meal-replacement beverages are all active in this space. Heart health, immunity, energy and digestive health represent today’s most important functional areas.

Nor should the importance of children as milk drinkers be forgotten. There is an opportunity to grow the frequency of milk consumption with this group by focusing on breakfast and dinner. These meal occasions often occur among a large group of individuals, so growing frequency by a small amount will reap large incremental growth.

Through bringing Baby Boomers back to milk and meeting consumer need-states, milk will remain a competitive beverage choice. As consumers continue to look for fun/treat state beverages and as health concerns remain a consistent thought, milk has the opportunity to capture consumers’ needs. By using milk as an ingredient in beverages that fit these consumer needs, dairy can grow consumption by leveraging beverage drivers that it normally does not meet on a stand-alone basis. 

Madlyn Daley is the senior vice president, strategic insights, dairy, at the Innovation Center for U.S. Dairy, Rosemont, Ill.