Texas Tech And Nutritional Supplements Articles & Resources

In the past year, public school administrators have begun to prioritize nutritional concerns over financial considerations and are putting the brakes on soft drink sales to students. Fast food chains, also, are starting to offer more healthful options. McDonald's (Oak Brook, Ill.) offers gable-top cartons of milk with its Happy Meal, while Wendy's (Dublin, Ohio) is offering a small PET bottle of milk with a recloseable top. Going even further, Wendy's will swap the French fries in its children's meal for melon, upon consumer request.

More recently, low-carb dairy beverages, which are milk with less lactose and more protein, have joined the other designer milk offerings that include lactose-free and reduced-lactose milks fortified milks, milks formulated for specific demographic: and even milk with soy protein added.

Redefining Milk

One cannot discuss milk sales trends without mentioning how milk has been reinvented and redefined for the consumer. One example is found in Dr. Pepper's (Cadbury Schweppes--Stamford, Conn.) early 2003 introduction of Raging Cow, a dairy-based beverage that the company claimed was bringing some excitement to the "boring" world of milk. The very idea of a soft drink company taking on flavored milk shows that milk is no longer just a commodity.

Also last year, two dairies introduced products that could be called low-carb milk. HP Hood (Chelsea, Mass.) introduced Carb Countdown, while SouthWest Foods (Tyler, Texas) introduced a line of low-carb milk, ice cream and yogurt under the LeCarb brand. Sold in "milk-ish" packaging in the dairy case, everyone but the government will call this stuff milk. While flavored milk is included in most sales trend reports (including those cited in this article), products like Raging Cow, coffee drinks and other dairy-based beverages are not included.

However, milk has not yet completed its transformation. There is the potential for even more innovation in the category, says Jerry Dryer, a market analyst. "I think the opportunity is there in terms of us developing some nice, high-end products using liquid milk protein concentrate for nutritional supplements like the Ensure beverages, and for making traditional milk products better, too. In effect, you can fortify milk with a liquid milk protein concentrate so that you have higher protein and maybe less lactose."

One company that has been successful at reinventing and repositioning milk is lip Hood. One of the oldest and most well known processors in the industry, HP Hood does not rest on its laurels. In 1999, Hood introduced Simply Smart, a line of reduced-fat milks. Hood also manufactures and distributes a leading national brand of milk, Lactaid, under a license from McNeil Consumer Healthcare (Fort Washington, Pa.). More recently, Hood has introduced a Lactaid brand product fortified with soy protein. Late last year, the company rolled out nationally a line of Hood brand products, Carb Countdown, aimed at low-carb dieters. Carb Countdown competes with the Le Carb drink line introduced last year by SouthWest Foods. Basically, both are milk with less lactose and more milk solids.

In these examples, processors are adding value to what has traditionally been the commodity side of the business--that is, white and chocolate milk sold in multi-serve packages for in-home consumption. John Kaneb, president of HP Hood, says he sees the industry putting more focus on making fundamental changes and adding value to these kinds of products.

"What you are talking about is using raw cow's milk in more imaginative ways. It certainly is very, very much a primary focus of this company" he says.

Dryer believes fortifying beverages with the right kinds of dairy ingredients could be a key to selling more milk in the form of nutritious dairy beverages. However, he is having second thoughts about soft drink companies helping the cause of dairy, even if they invent products that are largely made with milk.

"I think the downside is the soft drink guys getting into the business," he says. "They are selling milk and sugar now instead of water and sugar, and I think some of those products could give (the dairy industry) a black eye."

Thinking Outside the Home

It has been more than a year since the Los Angeles Unified School District voted to ban on-campus sales of carbonated soft drinks during school hours. Since then, a number of schools across the country have taken the same bold step. With the new vending options now available to dairy processors, this is yet another opportunity for manufacturers to expand their business in an arena where milk traditionally has not sold well---out-of-home, immediate-consumption sales.

Going back to the invention of the Chug (registered to Dean Foods--Dallas), new flavors, better labels and new bottle shapes have flowed continuously for more than a decade. Single-serve milk now is sold in attractive packaging, in eye-catching, high-tech vending machines. Single-serve, aseptic packaging options include HDPE bottles, as well as the traditional brick and the flashier Prisma packages. National brands of chocolate milk are offered in more convenience stores, drugstores and foodservice locations than ever before.

When discussing single-serve presentations and immediate consumption, much of the attention focuses on flavored milk. Dairy industry groups have worked hard to promote the residual nutritional value in the flavored milk, while downplaying concerns about excessive sugar or artificial colors. Of course, some processors have introduced products that are more healthful, without artificial colors or sweeteners, and with limited amounts of sugar. But recently, ordinary flavored milk, sugar and all, received a healthy dose of positive media attention

A study funded by the Northeast Dairy Foods Research Center (Cornell University--Ithaca, .), published last year in the Journal of Adolescent Health, concluded that consumption of sweetened dairy foods and beverages and pre-sweetened cereals has had a positive impact on the diet quality of . children and adolescents, whereas sugar-sweetened beverages, sugars and sweets, and sweetened grains had a negative impact on their diet quality. At the same time, the American Academy of Pediatrics (Elk Grove Village, Ill.) published a policy statement recommending that pediatricians work to eliminate sweetened drinks in schools and encourage alternative offerings such as low-fat white or flavored milk.

If all the efforts of the industry and individual processors in the flavored milk/single-serve/out-of-home arena have not yet paid full dividends, they likely will in the near future. Tom Nagle, vice president of marketing at the International Dairy Foods Association (IDFA--Washington), says flavored single-serve milk will continue to grow from these efforts. "For several years in a row, flavored milk has been disproportionately responsible for milk's growth. For the two years prior to 2003, flavored milk was 30%-40% of the total category growth.

"With all the different approaches that are being taken, if each one adds just a little, it will eventually result in a 1% increase in the (compound annual growth rate), and for milk, that would be pretty substantial," he explains.

Most sources say flavored milk accounts for % of all milk sales. Throw in value-added milk, specialty dairy products, and dairy-based beverages, and that number could be close to 10%. And it may be higher than that in a couple of years.

"Just as milk's decline has been slow over a long period, its rejuvenation may be similar," observes Clay Boatright, vice president of trade marketing with the Dean's Dairy Group. "I think flavored and value-added items will continue to grow."

More Growth in New Areas

As manufacturers of milk-based products continue to innovate, new segments of growth will appear. An area taking off in several categories is organic foods and beverages. Dean Foods recently increased its investment in the organic milk market by completing a full acquisition of Horizon Organic, a company it has owned a stake in for several years.

Experts say the weight-control category will continue to grow, and new scientific information could reverse some of the commonly held beliefs about milk contributing to weight gain. Milk's position as a good source of protein could help win over some of those consumers who have vaguely embraced the concept of high-protein/low-carb eating.

Anecdotes of processors offering home delivery, organic milk, stronger brands, more marketing support behind their products and better packaging show that milk-based products have come a long way and have a lot more potential. Many in the dairy industry say all the efforts to increase milk sales eventually will show a result.

Quarterly Sales of Flavored Milk, Eggnog and Buttermilk

 Dollar % Change Unit % Change
Reporting Period Sales vs. Sales vs.
13 Weeks Ended (millions) Previous (millions) Previous

6/30/02 $158 % 95 %
9/29/02 $162 % 98 %
12/29/02 $260 % 140 %
3/30/03 $176 % 103 %
6/29/03 $159 % 95 %
9/28/03 $161 % 96 %

Source: IRI/Dairy Foods Magazine

Quarterly Sales of Carbonated Beverages

 Dollar % Change Unit % Change
Reporting Period Sales vs. Sales vs.
13 Weeks Ended (millions) Previous (millions) Previous

6/30/02 $3,925 % 2,053 %
9/29/02 $3,926 % 2,075 %
12/29/02 $3,706 % 1,977 %
3/30/03 $3,563 % 1,870 %
6/29/03 $3,905 % 2,035 %
9/28/03 $3,949 % 2,052 %

Source: IRI/Dairy Foods Magazine

Quarterly Sales of Bottled Juices

 Dollar % Change Unit % Change
Reporting Period Sales vs. Sales vs.
13 Weeks Ended (millions) Previous (millions) Previous

6/30/02 $914 % 486 %
9/29/02 $896 % 482 %
12/29/02 $929 % 458 %
3/30/03 $977 % 478 %
6/29/03 $921 % 463 %
9/28/03 $911 % 467 %

Source: IRI/Dairy Foods Magazine