Flavoured Milk
July/August 2000
Opportunities
to grow sales
According to the Australian Dairy Corporation, Australians
consume about 170 million litres a year of flavoured milk. The past
year has been rather flat for flavoured milk business. Figures supplied
by the Australian Dairy Corporation show that, between July last year
and March this year, flavoured milk sales grew nationally by just 0.3%.
For the same period, total consumer advertising on branded
milk products shrank by almost 22%. It seems that the industry has been
concentrating on mergers, acquisitions and heavy wholesale competition,
rather than on growing the market.
But there have been some interesting innovations as well
as emerging national brands, which make it timely to re-examine this
very profitable part of the drinks fridge.
ASS&CSN put a number of questions to the three major
processors about recent changes in the industry and opportunities for
growth.
QUESTION:
What have been the major innovations
in flavoured milk over the last twelve months?
"We saw an opportunity to better target women with
a lower fat product," said Jenni Anderson, Product Manager Milk
Beverages for Pauls. "So we reformulated and repackaged Rush
and repositioned it to broaden its appeal."
Ms Anderson said that, although the industry, as a whole,
had drastically reduced its expenditure on consumer advertising during
the last year, Pauls had in fact maintained its ad spend. This saw Rush,
since its relaunch late last year, move into the AC Nielsen C*Track
Top 5 in Queensland and Top 20 in Victoria.
Andrew Boath is National C-Store Manager for Dairy Farmers.
"Innovation has been limited to packaging and a proliferation of
low fat products," he said. "The trend towards resealable
PET and HDPE bottles has seen UHT milk enter the flavoured market. This
has allowed marketers to do case deals like any other soft drink. The
other major innovation has been shrink wrap labeling, which has provided
a big jump in shelf impact."
Bade Stapleton, Brand Manager for National Foods, said
his company had confined itself to developing new packaging in the short
term, but were pursuing a number of range & brand strategies for
the coming summer.
QUESTION: What
will be the major trends for the coming year?
"In the coming year, I think weíre going to see
major players crossing State borders in order to expand their customer
base," said Mr Stapleton. "Weíll also see a move to UHT, more
low fat products and still more innovation in packaging. More focus
also needs to be put toward developing retailing strategies for the
category to ensure greater shelf presence and increased stock weight"
"The most noticeable change will be packaging,"
said Ms Anderson. "I can see us moving more towards whatís happening
in overseas markets. Weíll see more resealable bottles and pack design
will need to be more funky and more aggressive on the shelf."
"Changes in the pipeline will be mostly packaging
changes," said Mr Boath, "with a pronounced movement to PET
bottles, which allow the product to be seen. I think weíll also be seeing
more upmarket flavours."
QUESTION:
How are the emerging national brands, like Classic, Dare, Wave, IC,
Rush etc, performing against regional brands?
"Brands such as Breaka and Big M have a strong heritage
within their respective home states. Itís not that consumers are slow
to accept new brands, it is more that the regional brands have such
dominant at point of purchase making it difficult for newcomers to break
through" she said. "In saying this however the last 6 months
have been interesting as we have seen Rush successfully reposition itself
outside its home state."
"Most people have grown up with a favourite milk
flavour," said Andrew Boath. "Milk has always had regional
brands which have incredible brand loyalty. Thatís why all of the processors
have kept their regional brands alongside their national brands. The
trend to national brands, if it is to happen, will be a very slow one."
"National brands are making inroads but still have
a long way to go," said Bade Stapleton. "Regional brands are
entrenched in the minds of the customers. Look at Farmers Union in South
Australia & Masters in Western Australia. Farmers Union Iced Coffee
is the strongest regional brand in Australia and actually outsells Coke
in South Australia. Customers have assumed ownership of this brand and
we have to carefully manage these brands with the plethora of ëhere
today - gone tomorrowí competitors."
QUESTION: What
are the demographics of flavoured milk sales and is the industry doing
enough to target female consumers?
"Flavoured milk has always been associated with
blokey men," said Ms Anderson. "But our most recent consumption
data is telling us that women are making a considerable proportion of
volume purchases, although in smaller pack sizes. Women should definitely
not be excluded from this category, especially given the health benefits
of milk compared to carbonated beverages."
Flavoured milk has always appealed to a male blue collar
customer in the 18 to 35 age group," said Andrew Boath. "Other
than by introducing low fat varieties, I donít think the industry has
done much at all to specifically target women."
"There are big opportunities to target females,"
said Bade Stapleton, "but the high volume consumers are still blue
collar males. The other issue facing the category is that we must make
flavoured milk more contemporary and relevant to todayís consumer. Flavoured
milk has not kept pace with other categories such as confectionery and
impulse ice creams."
QUESTION: What
do you see as the major challenges facing service staions & convenience
stores in respect of maximising their flavoured milk sales?
"Stock weights leave a lot to be desired,"
Jenni Anderson said, "and out-of stocks are a major issue.
"We need to see better ranging at convenience stores
with more fridge space devoted to flavoured milks. We also need to remember
that, although flavoured milk is consumed for all sorts of reasons,
it is fundamentally consumed similarly to a soft drink and should be
merchandised like a soft drink."
Andrew Boath believes the major challenge facing convenience
stores is an attitudinal one.
"We have to stop thinking about flavoured milk as
a dairy product. Dairy products are destination products which customers
will go looking for in the store. Flavoured milk is an impulse beverage
and needs to be ranged, merchandised and promoted like an impulse beverage.
"When this happens, everything will fall into place."
"The major opportunities for Petrol & Convenience
in respect to maximising their flavoured milk sales are increasing stock
weights, product positioning and product range, said Bade Stapleton.
"The great thing about flavoured milk is that it
can be delivered everyday. But that doesnít mean you only have to order
enough stock for one day. If you only order enough for 1 or 2 days then
there is every chance you will run out of stock.
"Out of stocks equals lost sales and lost sales
equals lost profit for the retailer plus discontented customers. Although
flavoured milk does have a limited shelf life (normally 13 days from
time of manufacture), there is no reason why you canít have 5 days stock
in the fridge at any one time. This would ensure that the product doesnít
run out and you donít lose sales."
AC NIELSEN C*TRACK Top Twenty
flavoured milks in each State by sales value.
QLD - VALUE
Ice BreakI/Coff 500 M l PVC
Breaka I/Coff 600 Ml CTN
Breaka Choc 600 ML CTN
Jacaranda Coff 600 ML CTN
Rush Choc 500 ML PVC
Ice Break I/Coff 1.25 L PVC
Dare Cof Exprso 500 ML PVC
Breaka I/Cof 750 ML CTN
Cruise Coff 600 ML CTN
Pauls Shyks Choc 500 ML CTN
Breaka Choc 500 ML PVC
Breaka Coff Lite 500 ML PVC
Breaka Choc 300 ML CTN
Breaka I/Cof 500 ML PVC
Breaka Choc 750 ML CTN
Breaka I/Coff 300 ML CTN
Breaka Choc Lite 500 ML PVC
Wave Choc 600 ML UHT TET
Dare Crare Crml Rush 500 ML PVC
Pauls Egg Nog 600 ML CTN
SA - VALUE
Frmr Union I/Cof 600 ML CTN
Clas Chc Ctn 600 ML CTN
Frmr Union I/Cof 375 ML CTN
Clas Coff 600 ML CTN
Frmr Union I/Cof 1 L CTN
Frmr Union I/Cof 2 L PVC
Feel Good Coff 375 ML CTN
Frmr Union I/Cof 500 ML PVC
Frmr Union Mocha 600 ML CTN
The Max Coff 600 ML CTN
Clas Chc PVC 500 ML PVC
Clas Strw 600 ML CTN
Clas Cafe Latte 500 ML PVC
Nestle Milo Mlk 500 ML CTN
Clas Eng Toffe 500 ML CTN
Take Care Coff 500 ML CTN
IcC I/Cof 500 ML PVC
Clas Bnana 600 ML CTN
Clas Chc Ctn 1 L CTN
Clas Chc Ctn 300 ML CTN
WA - VALUE
Brownes Coff Chill 600 ML CTN
Ic I/Cof 500 ML PVC
Clas Chc PVC 500 ML PVC
Ic Chil I/Cof 600 ML CTN
Brownes Chc Chill 600 ML CTN
Frmr Union Mocha 600 ML CTN
Brownes Orig Chll 600 ML CTN
Clas Vn/Mlt 500 ML PVC
Clas Eng Toffe 500 ML CTN
Wave Choc 600 ML UHT TET
Brownes Coff Kick 500 ML PVC
Brownes Bry Chil 600 ML CTN
Brpwmes Egg Nog 600 ML CTN
Pura I/Cof 600 ML CTN
Wave I/Cof 600 ML UHT TET
Brownes Coff Chill 300 ML CTN
Brpwmes Mocha Kck 500 ML PVC
Brownes Bana Chill 600 ML CTN
Clas Cafe Latte 500 ML PVC
Sustagen Choc 250 ML UHT TET