Milk: It's what's for dinner?
April 26, 2011
by David Philips
Focusing on new day parts and new venues holds the key to reversing the stubborn long-term trend away from milk consumption, according to a plan developed by the Milk Processors Education Program, a Washington-based trade group charged with promoting dairy products.
Recognizing that earlier highly visible approaches have not been effective at generating growth, MilkPEP is embracing a new long-term study that sees the potential for increased consumption at dinner, after dinner and at locations away from home. Success will result in the capture of a larger “share of stomach” from competitors that include water and sports drinks. The plan also suggests the milk industry may benefit from partnering with complementary segments of the food industry, such as ready-to-eat cereal.
The tide has been working against milk producers for decades. MilkPEP cited recent data indicating a 1.8% decline in per capita consumption annually between 2000 and 2009. Between 1970 and 2001, overall fluid milk consumption dropped to 23 gallons from 31, according to U.S. Department of Agriculture data, a 26% decline. The 2001 level was down 44% from the all-time high of 45 gallons in 1945.
In recent years, MilkPEP has used its annual advertising budget of roughly $70 million to target a range of key demographic groups, including mothers, Hispanics and teenagers. Based on a study completed last year, MilkPEP executives are developing a long-range plan focusing on dayparts and venues rather than demographic groups. The plan will help guide all of the group’s efforts like the well-established “Got Milk” campaign and the brand new “Pour One More” campaign.
“We always were aware that there were these different occasions (when people are consuming milk),” said Vivien Godfrey, chief executive officer of MilkPEP. “But until now we had never seen these occasions as the primary lens for developing the strategies that would lead to more milk consumption.”
MilkPEP worked with The Monitor Group, a consulting firm, to conduct the study and develop the first phase of the plan, completed in January. The plan aims to reverse the erosion in per capita milk consumption, growing from a baseline level of 20.6 gallons in 2009.
The study’s authors took an upbeat view of near- and long-term opportunities for consumption trends in coming years, offering increased per capita consumption of 0.7 gallons per year as a conservative estimate with 3.4 gallons annually as high side.
Among the study’s findings was that overall intake of beverages did not change much during the past decade. So to bolster consumption, milk processors will need to wrest share from competitors. While those include juice and carbonated soft drinks, milk’s largest and fastest growing competitor is water, the study found.
By 2009, combined tap water and bottled water share of stomach had reached 26.5%, compared with 20.4% share for soft drinks. The two moved in opposite directions during the decade with soft drinks losing the top spot among leading beverages and dropping from a 23.8% share in 2000, and water moving up from 21.6% during the decade.
Milk, on the other hand, held a 10% share in 2000, a figure that slid to 9.3% by 2007, holding fairly steady in the two years that followed.
Ms. Godfrey identified keys she said would help with the challenging task of convincing consumers to shift to milk from water, beginning with milk’s nutrient density and its satiety-inducing qualities. Other market opportunities being contemplated include a positioning of milk as a sports recovery beverage, and capturing share that continues to be lost by carbonated soft drinks.
In addition to pursuing these objectives, the plan also offers broader recommendations for industry action outside the activities of MilkPEP. For example, the plan urges milk processors to partner with manufacturers and marketers of complementary foods like coffees and cereal in order to promote innovation. The plan also suggests regulatory changes may play a role in reversing milk consumption declines, including potential changes in the standards of identity for milk.
Time and place for everything
Expanding on the potential for focusing on new opportunities, MilkPEP noted milk’s two greatest market share strengths are in the morning daypart and school food service. The MilkPEP marketing program has helped update the image of milk as a beverage rather than a commodity but has done little to prompt consumption at night or in the workplace.
“Consumers still have a deeply set idea of where milk should and shouldn’t be consumed, so we still have some work to do there,” Ms. Godfrey said.
Getting consumers to drink more milk at work, with and after dinner, are among the opportunities the MilkPEP study called “Bigger better bets.”
“Opportunities exist to ‘defend’ breakfast in the home, ‘extend’ success in breakfast to lunch / dinner at home, and ‘create’ new milk-drinking habits outside of meal occasions,” according to the Monitor study.
Currently, 30% of milk consumption occurs during breakfast at home, a figure that rises to 60% when school lunches are added.
By contrast, all after-dinner milk consumption accounts for just 10% and all milk consumed at work, where adults spend most of their time during the day, totals just 3.5% of daily consumption. Milk consumed while eating breakfast at a restaurant accounts for 1% of all milk consumption.
The study offered examples of marketing efforts that successfully changed how consumers thought about how or where a food should be consumed. For example, granola/cereal bars have successfully migrated beyond home breakfast, and Taco Bell’s “fourth meal concept” was credited with helping grow sales to $4.9 billion from $4.5 billion in four years. The study said the Snickers-as-a-snack campaign contributed to sales growth over a 15-year period.
MilkPEP offered the new Pour One More campaign as an example of how the plan will be implemented. Developed in parallel with the plan, the campaign was launched with the actress Susan Sarandon encouraging parents to set a good example by drinking an extra glass of milk each day, to bridge a nutrient gap many American consumers have in their diet. The effort will encourage consumers to have one more glass of milk at home, particularly in the evening hours, with a meal or a snack.
Putting a brand on it
While the Monitor study focused primarily on areas that will be addressed by MilkPEP’s generic marketing campaigns, it also looked at ways to shore up the strength of milk brands. In this regard, the study contrasted the weak state of brand strength in milk against tremendous gains enjoyed by yogurt makers.
According to the study, milk suffers from a “vicious cycle” in which consumers perceive little value added, versus other product categories. The perception leads to minimal brand preference, lower margins at retail, and a lack of innovation from processors.
Yogurt, on the other hand, enjoys a “virtuous cycle,” resulting in higher margins, active investment in research and development, and innovative products that consumers will buy despite elevated price points.
“As part of the phase one work we have reminded the fluid milk industry that consumers are a smart bunch,” Ms. Godfrey said. “If you can create a product with a unique proposition you are going to have the interest of consumers. You as a processor need to determine what the consumer need is in order to decide how you are going to position the brand.”
Asked whether an example of this approach is the growth in the last few years of organic milk and milk from cows not treated with artificial growth hormones, Ms. Godfrey said that might be the case, but that there will be additional opportunities for differentiation.
“There is a marketplace out there to market milk of many varieties,” she said. “All of those are different propositions that can be offered to consumers.”
While the plan may be crucial to the success of MilkPEP, Ms. Godfrey said it is also critical to the dairy industry as a whole. She voices optimism that the MilkPEP’s constituents will support the approach. To date the plan has been well received, she said.
“Their minds are definitely open,” she said. “I see it in people’s questions and the way their eyes light up when we explain what we need to do to increase milk consumption.”