Innovation in face of fluid milk decline

by Donna Berry
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Fluid white milk volume sales continue to decline despite efforts to promote milk’s inherent protein content. It does not help that average milk prices remain significantly higher than last year, with a gallon of white milk currently averaging $3.61, an increase of 8%, according to the I.R.I. Custom DMI Market Advantage Database. Flavored milk, refrigerated and aseptic combined, averages $8.07 per gallon, which is up 5%.

Thus far in 2014 (up to July 13), retail volume sales of all milk are down 3.6%. It is conventional milk sales (-4.2%) causing the decline, as sales of value-added milk items are up (+5.4%) during the seven-and-a-half-month period.

The term conventional includes white and standard flavored milks. Among white milks, whole milk is the only variety to experience growth (+1.2%) during the period. Fat free showed the greatest drop in volume sales, a whopping 12.6%, whereas reduced-fat milk, which accounts for about 40% of all white milk sales, decreased 2.4%.

Price is likely a contributing factor to the 2.7% drop in flavored milk volume sales. However, many processors see the flavored sector as the best approach to turning the category around.

One such innovator is Prairie Farms, Carlinville, Ill., which initiated a limited-edition seasonal milk program during the winter holiday months in 2013. The company offered, under its brand as well as its partner brands, four holiday-inspired flavored milks: chocolate mint, pumpkin spice, red velvet and Snickerdoodle.

“We wanted to offer our customers a festive, sweet treat to enjoy during the holidays,” said Gary Aggus, president and general manager of Hiland Dairy Foods Co., Springfield, Mo., a branding partner of Prairie Farms.

For the spring, the company rolled out chocolate marshmallow, Easter eggnog and jelly bean. Prairie Farms decided to take a thematic approach for the summertime months with a cupcake classic series. The cupcake theme was chosen because of the popularity of birthday cake ice cream. The difference being the cupcake theme does not risk limiting usage occasion as birthday cake might. The varieties in the seasonal line are chocolate truffle reduced-fat milk, strawberry banana low-fat milk and a vanilla low-fat milk.

Value-added drives growth

Value-added milks include those labeled organic, lactose free and grass fed. Specifically, organic (+7.2%) and lactose-free milk (+6.3%) products are performing well. It’s no wonder that more milk marketers are exploring techniques to add value to fluid milk.

Some are adding value by enhancing milk with such nutrients as omega-3 fatty acids, plant sterols, prebiotics, protein and probiotics. Such functional ingredients with health and wellness benefits continue to make inroads in the fluid milk business.

Earlier this year, Savannah, Ga.-based Arboris L.L.C., a manufacturer of non-bioengineered plant sterols, entered the North American market with its flagship heart-healthy plant sterol ester ingredient. Dairy foods, in particular fluid milk-based beverages, are an ideal candidate for addition. Such products would be targeted to health-conscious aging consumers taking a proactive approach to maintaining heart health.

“Adding plant sterols into a person’s diet has been clinically proven to reduce cholesterol,” said Steven Stauffer, business manager of Protanica, at Arboris. “In fact, more than 200 human clinical studies during the past 60 years have shown that sterols are safe and effective in reducing low-density lipoprotein (L.D.L.), the bad cholesterol, by 8% to 10%.”

The Food and Drug Administration approves the following health claim: “Foods containing at least 0.4 grams per serving of plant sterols eaten with meals or snacks for a daily total intake of 0.8 grams as part of a diet low in saturated fat and cholesterol may reduce the risk of heart disease.”

The European Atherosclerosis Society (E.A.S.), whose members consist solely of clinical researchers in the field of atherosclerosis, recently published an endorsement of the use of plant sterols to help manage cholesterol in its journal Atherosclerosis. The E.A.S. researchers state that 2 grams of plant sterols or plant stanols per day in functional foods may help manage cholesterol for those with moderate heart disease risk and who are taking statin drugs.

“We see this consensus statement as a very positive step in the acceptance and adoption of plant sterols as a functional food ingredient in North America and believe that, in time, an increasing number of food products will include heart-healthy sterols,” Mr. Stauffer said. “Our naturally occurring plant sterols are compatible with non-G.M.O. certified foods. They have been clinically tested and demonstrated to be safe and effective and are endorsed by the American Heart Association. But even better, they are easily formulated into heart-healthy foods, with minimal sensory impact.”

Recently, Arboris’ plant sterols received non-G.M.O. verification from the Non-GMO Project, an independent non-G.M.O. verification lab.

Other approaches to adding value to milk include using filtration to eliminate components such as lactose or concentrating components such as protein. Another approach to adding value is to source milk from specific cow breeds.

For example, Promised Land Dairy, San Antonio, a Borden Dairy operation and a subsidiary of Group LALA, only uses milk from Jersey cows, which is recognized as being naturally richer, creamier and higher in calcium and protein. The company offers it in white, chocolate and strawberry, as well as rotational seasonal flavors.

Pomeroy, Ohio-based Snow-ville Creamery L.L.C. uses milk from a mixed breed dairy cow herd, which includes Brown Swiss, Friesian, Guernsey, Jersey, milking shorthorn and others. All the cows are pasture-grazed with a minimal 75% pasture or preserved grass diet, supplemented with up to 10 lbs of non-bioengineered grain per day to get their required amounts of energy and protein. The combination of breeds and feeds gives Snowville Creamery milk a distinctive dairy-rich flavor, according to the company.

Adding value by adding consumers

There’s a new type of white milk making its way into the U.S. marketplace. Its protein composition is reflective of the way all milk once was produced, according to The a2 Milk Co. headquartered in North Sydney, Australia.

The product is a2 Milk, and it is promoted as providing relief to consumers who experience digestion discomfort when milk is consumed.

According to a2, about 30% of the nutritionally important protein in cows’ milk is beta-casein, which equates to about 2.5 grams per one cup serving. Research indicates that originally all cows produced milk containing only the A2 type of beta-casein, but at some point in history, owing to natural genetic mutation, a variant of the A2 gene and its associated protein appeared. Termed the A1 variant, it differed slightly in composition from the original A2 beta-casein and has since given rise to a number of minor related sub-variants, such as those termed B and C.

Both A1 and A2 beta-casein are constructed from 209 amino acid units joined together in a common sequence to form a chain, with one distinction in the 67th amino acid. In the case of A2 beta-casein, the 67th amino acid in the chain is proline in contrast to histidine, the amino acid in the corresponding location in the A1 variant.

“Owing to the small structural difference in the amino-acid chain of the A2 protein, during digestion it can be broken down differently than the other beta-casein variants that may be found in milk,” said Andrew Clarke, chief scientific officer. “Research indicates that consumers may benefit from the downstream effects of this distinction, in particular, improved digestive comfort relative to milk containing the A1 beta-casein.”

A blind, randomized human digestion pilot study recently was published by the European Journal of Clinical Nutrition. It shows differences in gastrointestinal effects between milk containing A1 versus A2 beta-casein protein, supporting findings from previous animal studies.

“We knew there were differences in animals consuming milk without any A1 beta-casein, but this is now supported by our new human study,” said Sebely Pal, associate professor, Curtin University, Australia, the lead researcher. “While these are preliminary results from a pilot study, the results show a clear difference in gastrointestinal function in adults consuming the A1 versus A2 beta-casein types. These differences have not only been found in people who consider themselves milk intolerant, but also in normal milk drinking people. The logical next step is to source further funding for more scaled human studies to further understand the digestion differences of A1 beta-casein in milk amongst different groups of people and that will be my focus going forward.”

Geoffrey Babidge, managing director and chief executive officer of The a2 Milk Co., said, “These results further underpin our belief that more consumers can enjoy the benefits of natural dairy milk without having to resort to modified milk and non-dairy alternatives.”

This is accomplished by sourcing milk from cows that only produce A2 beta-casein.

“About one-fourth of Holstein cattle carry traits for only the A2 type of beta-casein, with the other three quarter carrying traits for other newer variants,” Mr. Clarke said. “The Holstein cows that produce milk containing only the A2 type of beta-casein are identified, segregated and milked to produce a2 Milk.”

Since 2003, a2 Milk has been sold in New Zealand and Australia as a premium brand offering a choice in protein content. Consumer response has been positive, and there has been a growing demand and distribution for a2 Milk products, particularly in Australia, according to the company. In fact, unlike in the United States, the fresh white milk category continues to grow in both volume and value in the Australian market. Given The a2 Milk Co.’s strong growth rate of 1,200% in the past seven years, the company believes it has been a strong contributor to that growth.

Recently the company confirmed its plans to enter the U.S. fresh milk market with a staged approach within calendar 2015. The company is establishing its supply chain and qualifying cows free from A1 beta-casein, for which the company will pay farmers a premium.

“We hope to be in U.S. dairy cases during 2015,” Mr. Babidge said.

Adding value to fluid milk through milk selection, ingredient addition and even packaging appears to be a promising opportunity for growth for the marketers who choose to invest. It is critical that the value gets communicated to the consumer so they accept the premium the product may command.
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