Milk Starts its Rebound at Retail

Look for a rise in consumer demand for milk, and an increased interest in flavored products in 2012.

“We see flavors, particularly chocolate milk, as a key opportunity at convenience stores in 2012,” said Vivien Godfrey, CEO, MilkPEP. “Convenience stores are really over indexed in terms of flavored milk, so of all milk sold in c-stores, flavored milk accounts for almost 10% of the total milk sales in the convenience channel, and that is higher than any other channel of distribution.”

Compare that to drug stores where only 1.8% of sales are chocolate milk, and it shows customers are going to c-stores for their flavored milk purchases. On the flip side, drug stores are selling much more white milk in gallons, according to MilkPEP.

Many milk suppliers also offer seasonal milk flavors and themed flavors, which could be an opportunity for c-stores, as the flavor trend grows, to offer more variety than the competitors they face in the market place, Godfrey added.

In spring 2012, a major campaign will be launched to promote chocolate milk as a refuel beverage for athletes.  “People in different universities have been studying the results of chocolate milk as a refuel method, so there is a great deal of science behind it, and we’re going to capitalize on the idea by building a refuel strategy to remind athletes to make chocolate milk part of their recovery routine because chocolate milk has a fantastic mix of carbohydrates, protein and electrolytes,” Godfrey said.

The move could position chocolate milk to compete in the $3 billion dollar a year sports drink industry.

Finding More Shelf Space
Some c-stores are already seeing demand for chocolate milk.

“For many years we have experienced a great following to our chocolate milk, said Pat Kelly, director of purchasing at High’s of Baltimore. “We carry half gallons, quarts and pints of chocolate milk. Although the half gallons and quarts do well, they don’t show a high ranking compared to its counterparts of white milk,” she said. “Where you really see the shift in ranking is in the pint size, single serve.”

Weigel’s Dairy is also no stranger to chocolate milk sales. In February The Tennessee Dairy Products Association awarded Weigel’s Dairy with a First Place Blue-Ribbon for its Chocolate Milk in the Tennessee State Fair Fluid Milk Quality Competition.

“The younger generation is going toward the flavored milk,” said company President and CEO Bill Weigel.  “We do a 2% chocolate milk that contains no high fructose corn syrup.”

Milk sales at Weigel’s have been rising since the start of 2011. “Milk was on a slight decrease for 20 years, but we’re not seeing that now at all,” Weigel said. “We think milk might be coming back as an item that is considered healthful, and certainly a healthier option to soft drinks.”

Sales of milk in c-stores saw double digit (11.3%) volumetric decline from 2008 to 2010, MilkPEP reported. “We have a hunch that convenience store milk sales have declined because c-store operators have been giving more space in the cooler to other products like energy drinks and have been losing sales of milk because they’re not offering sufficient variety to show customers their store is a destination place for milk products,” Godfrey noted.

Weigel’s found its pints of milk have become popular with the after-workout crowd. To make your store a destination for milk, “You have to have all the different sizes,” Weigel said. “Our single serve and our gallons are our big drivers and the half gallon and quart are really taking a backseat now.”

Managing Milk Sales

• Approximately 7.1% of all fluid milk sales occur in convenience stores.

• Almost 10% of milk sold in c-stores is flavored, a higher share than any other retail channel.

• In 2010, 456-million gallons of milk were sold in convenience stores.

• Convenience store milk sales have declined by more than 10% since 2008.

• Single-serve milk now represents 10% of all milk in convenience stores. Two-thirds of that is flavored milk.
Source: MilkPEP

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