Changing channels

Dairy Field, Aug 2003 by Cook, Julie

Oakhurst has been one of those processors and has racked up impressive sales as a result, according to Stadolnik. While private-label milk sales have proven strong in mass merchandisers, he reports especially significant growth in Oakhurst's branded products.

"It just shows that, even in those stores, the consumer is looking for a brand they can trust and a brand from which they know they are going to get the quality and various attributes on a consistent basis," says Stadolnik.

Although private label accounts for 60 percent of all fluid milk sales, Nagle cites a definite growth of brand marketing within the industry. This is particularly true when it comes to flavored milk, where 68 percent of all product sold is branded, he says. That figure jumps to 80 percent when one considers single-serves. Consequently, Nagle believes effective brand marketing will prove to be a significant driving force for the industry and help milk to shed its generic, commodity image. "This is an industry that grew up with tremendous strength in operations and sales, but not in marketing," says Nagle. "Now, many of the companies are building marketing departments that are really beginning to make a difference and that's what is going to help us drive effective brand marketing."

The industry had a front-row seat for witnessing the impact of brand marketing when it came to the introduction of single-serve milks in plastic bottles several years ago. Products like Dean Chugs and Shamrock mmmmilk built names for themselves, as consumers suddenly had real choices when it came to their milk selection. Taking a page from soft drink manufacturers, these and other dairies aggressively promoted their milks and built a fair amount of brand loyalty as a result. In the years that followed, just about everyone introduced their own plastic bottle single-serve milks, creating a new standard for the milk industry. Now that the initial excitement has calmed down, some processors believe the sense of newness has also vanished over time. "It's become a novelty at this point," says Stadolnik. "The myth is greater than the reality."

That's not to suggest that single-serves are merely taking up space in the dairy case and not doing the industry any good. While sales may not be through the roof, single-serve milks are playing a crucial role by raising awareness of the overall category. Bold packaging, coupled with aggressive marketing efforts, serve to remind consumers of how much they like flavored milks. "Single-serves are so bright and colorful, they're getting a lot of attention and putting flavored milk back in people's minds," says Mark Leitner, vice president, advertising services, DMI. "But the volume really is coming from gallons and half gallons."

While Nagle can't recall a single processor telling him of a decline in their single-serve business, Greg Hansen, vice president of marketing for Cass-Clay Cooperative Creamery Association, Fargo, N.D., says single-serve flavored milks are down nearly 10 percent, while "take-home packages" of flavored milk - half-gallon and gallon - are up 20 percent in his company's region. Hansen believes that's largely due to pricing and economic factors. "When you look at a single-serving of milk in those plastic containers being $1.10 to $1.40, that's pretty pricey," he says. "You can buy a gallon jug of flavored milk for $3, and that's 16 of those servings. There's a value issue here."