Secondary Merchandising

Dairy Foods, Oct, 2001

If you're interested in moving more milk in the beverage segment, it's time to look at secondary merchandising opportunities. These include freestanding refrigerated coolers, highprofile ice chests, cold merchandising racks and vending machines, as well as traditional refrigerated beverage units and display cases.

This summer, Purchase, N.Y.-based PepsiCo. Inc., introduced two innovative, extra-tall, end-cap merchandising displays that feature high-impact signage. "They are hard to miss and easy to shop, providing a heightened wow factor for consumers," says Peter Kirchof, dir. of retail strategy and national sales. "These new units amplify in-store excitement and give our customers more flexible merchandising fixtures to maximize brand and package presence, and availability."

Granted, soda is not perishable like most milk products, so there is greater merchandising flexibility, particularly for large volume containers. But what about single-serve milk?

Beverage marketers recognize the value of merchandisers. Many invest quite heavily in units that increase consumer awareness and ultimately build incremental beverage sales.

"One of the greatest opportunities to grow the fluid milk business is placement in secondary locations [in addition to the dairy case]," says Marty Schwartz, v.p. marketing and trade development for the northeast region of Dean Foods Co., Akron, Ohio. "Coolers in the front end of grocery stores do wonders for milk sales."

Mario Mercurio, v.p. for national accounts at Pepsi says, "Beverages are very much an impulse-driven category, with about a third of all purchase decisions made at the point of sale. This is especially true in high-traffic, front-end locations, where instore advertising represents the last few feet of an integrated marketing plan and oftentimes the last chance to make the sale."

Research shows 75% of time-deprived shoppers spend less than six seconds making a purchase decision. Further studies indicate end-caps are 42% more likely to draw consumers to a particular product than in-aisle displays or shelf signs.

What does this mean for dairy processors? Single-serve milks can, and should, continue to be merchandised in the dairy case next to the jugs, but they need additional positioning throughout the store in order to effectively compete for share of thirst.

Prior to single-serve bottles, processors were somewhat limited in their ability to capitalize on secondary merchandising opportunities that better position milk as a beverage. This is because paperboard is not as durable as plastic and glass. And, as most are tired of hearing, cartons don't fit in cup holders.

Now that NesQuik comes in PET bottles, Nestle USA, Glendale, California, offers all its retailers use of various "on-ice" merchandisers that include leak-proof drainage systems. Previously, NesQuik came only in paperboard pints, which do not hold up very well in such displays because as the ice melts, the water penetrates the carton. This results in weakened carton walls and seams that leak.

NesQuik's giant bottle and chest cooler display units are high-profile, silent salesmen that grab consumers' attention at the point when they are deciding what drink to buy.

Bottles using paper and/or pressure-sensitive labels are not appropriate for on-ice displays because adhesive loosens and paper tears.

Refrigerated display units work well with any container or label. Research conducted by Seattle-based WestFarm Foods using refrigerated display units to merchandise its single-serve DariGo [TM] line showed as much as a 450% increase in sales volume when the unit was displayed in high foot-traffic departments including the deli, in-store bakery and express checkout lanes.

To maximize cold bottle availability of shelf-stable Frappuccino(r), retailers can use cold-merchandising racks that attach to dairy case shelves. These units merchandise four-packs in space that is currently not used.

All these merchandising units are adaptable to traditional retail milk venues--convenience, drug, grocery and mass merchandiser--as well as some non-traditional retailers such as copy centers, electronics, home improvement and even personal care.

To prove how important single-serve milk is to c-stores, the Fluid Milk Strategic Thinking Initiative (FMSTI), joint effort of MilkPEP (Milk Processor Education Program) and Dairy Management lnc. [TM], analyzed the business and found that single-serve milk turns faster and generates higher returns on inventory invested than most other single-serve beverages. Unfortunately, single-serve milk suffers from lack of shelf space (only 5%), which leads to high out-of-stocks.

The study showed sales increased when retailers added secondary locations for single-serve milk without a promotional price reduction Specifically, when barrel coolers were added, single-serve milk sales increased more than 21%.

Vended milks promising future

"Vending is also a very big business," says Dean Foods' Schwartz. The company's northeast region uses the vending expertise from its Dairy Express Div., Parker Ford, Pa., to make milk available to consumers 365 days a year, seven days a week, 24 hours a day. The vending machines carry milk in both the Chug and Grip 'n Go bottle, as well as drinks, juices and iced teas sold under its Swiss Premium brand.