VALUE-ADDED DAIRY: Milk Money
While many shoppers may be in search of value-added dairy products with an exotic or gourmet pedigree, MilkPEP, the Washington, D.C.-based trade group representing the nation’s milk processors, reminds retailers not to lose sight of the homely charms of one of nature’s original beverages.
“Consumers are indicating that they value benefits and additional features, such as heart health and better-for-you attributes -- and appear willing to pay higher premiums for nontraditional products,” notes MilkPEP CEO Vivien Godfrey. “We’re seeing exciting innovations that add ingredients like antioxidants, fiber, omega-3 fatty acids and whey proteins to dairy products. Milk processors have started mobilizing their resources to bring new products to market that meet the shifts in consumer demand. While these are small segments, they are growing double digits.”
Counting products that are organic, lactose-free or reduced-fat, health-enhanced or processed for extended shelf life, Godfrey calculates value-added at currently 16 percent of total milk spending. “The other important takeaways that came out of our research are that organic and extended shelf life are the largest of the value-added segments, and health-enhanced milk in particular continues to show strong growth,” she adds. “According to our data collected in June, July and August, it experienced a 9.1 percent increase over a 13-week period, indicating consumers’ willingness to pay for increased health benefits for premium-priced products.”
Among the recent value-added milk products to arrive on the market, Godfrey offers up TruMoo, launched this past August by Dallas-based Dean Foods, made without high-fructose corn syrup and contains 15 percent to 20 percent less sugar than comparable beverages.
Additionally, Paramus, N.J.-based Smart Balance has introduced a line of milk to provide nutrition for healthy growth and development at each stage of a child’s life. “For example, the line offers full-fat milk for children up to 24 months, and a reduced-fat chocolate milk for kids ages 2 and up,” explains Godfrey. “The milk is fortified with DHA and omega-3s to give growing bodies the fuel they need.”
To spur value-added milk sales, grocers “should use compelling messages about their benefits ... in an integrated marketing campaign, including POS, circulars, social media, and in-store radio to let their customers know how vital it is to start the day with breakfast with milk as the centerpiece,” advises Godfrey, who believes that the near future will continue to see “processors innovating and bringing products to market to capitalize on the higher sales margin of value-added products, while also continuing to showcase the inherent value of traditional white and flavored milk through focused marketing spending, such as label changes, to keep milk’s very relevant benefits top of mind.”
She issues the following warning, however: “Ironically, there is also a new-found frugality in spending for staple everyday items, and value-added dairy is not immune from that.” In fact, Godfrey specifically cautions against retailers’ concentrating too much on the value-added segment.
“It is important that retailers not let their white milk go out of stock and assume that a value-added product, milk alternatives or orange juice hold more value for the consumer,” she recommends. “The reality is that if a consumer cannot find white milk, that is a missed sales opportunity, not only for the dairy aisle, but also for complementary items such as cookies or pancakes. Even though traditional milk is a frequently purchased item and is almost always in the refrigerator at home, retailers don’t always take advantage of the opportunity to cross-promote milk in areas where it makes sense, such as the cereal aisle or the bakery. With milk’s unique ability to complement almost anything, it gives retailers an ideal opportunity to drive traffic in various parts of the store.”
Moreover, Godfrey cites data showing that milk is often the catalyst for the shopping trip. “And equally important, milk has a 97 percent household penetration and is a consistent traffic builder,” she continues. “Marry that with the core nutritional benefits of milk and its ability to partner well with other grocery segments in the store, and that has the makings of a win-win meal solution. If retailers communicate breakfast-at-home meal solutions with milk as the centerpiece to their shoppers both in-store and in external marketing, milk can influence incremental purchases across the whole store and help double basket rings.”
MilkPEP is currently running a series of in-store tests on the concept of breakfast at home, with “promising” results so far, according to Godfrey. Full results are expected in the first half of 2013.
The organization also offers a range of free tools and resources enabling supermarket operators grow their milk sales, including a brand-new retailer-exclusive website, and a Breakfast Project Command Center to help grocers with their breakfast-at-home social media activities.